The NPD Group: Always a Bellwether for the Music Industry, Teens Are Changing How They Interact With Music

U.S. Teens Listening to More Music in More Formats, but Buying and Sharing Less

PORT WASHINGTON, N.Y.--(BUSINESS WIRE)--According to The NPD Group, a leader in market research for the entertainment industry, teens (age 13 to 17) acquired 19 percent less music in 2008 than they did in 2007. CD purchasing declined 26 percent and paid digital downloads fell 13 percent compared with the prior year. In the case of paid digital downloads, 32 percent of teens purchasing less digital music expressed discontent with the music that was available for purchase, while 23 percent claimed to already have a suitable collection of digital music. Twenty-four percent of teens also cited cutbacks in overall entertainment spending as a reason for buying fewer downloads.

“The music industry still hasn’t recovered from declining CD sales, and now they are being challenged anew by slowing digital sales among teens”

The downturn in paid music acquisition was matched by a downturn in the quantity of tracks downloaded from peer-to-peer (P2P) networks, which fell 6 percent in 2008. The number of teens borrowing music, either to rip to a computer or burn to a CD, fell by 28 percent.

”While we expected to see the continued decline in CD purchasing among teens in NPD’s music tracking surveys, it was surprising to see that fewer teens downloaded music from P2P sites or borrowed them from friends,” said Russ Crupnick, entertainment industry analyst for The NPD Group. “These declines could be happening due to a lack of excitement among teens about the music available, but it could also reflect a larger shift in the ways teens interact with music, given that so much music is now available whenever and wherever they want it.”

NPD’s music tracking surveys noted sharp jumps in teen’s usage of online listening sources and satellite radio in 2008. More than half of teens (52 percent) listened to online radio in 2008, compared to just 34 percent in 2007. Downloading or listening to music on social networks also saw a large increase – from 26 percent in 2007 to 46 percent in 2008; satellite radio listening among teens increased from 19 percent in 2007 to 31 percent in 2008.

“With popular music sites like Pandora, imeem, and MySpace Music complementing offerings by terrestrial and satellite radio, more teens may be getting their fill of music and feeling less compelled to buy music or share it with others,” according to Crupnick. In fact a recent NPD MusicLab survey revealed that 54 percent of teens who heard a song they liked on MySpace Music were likely to simply listen to that song again on the site, compared with only 1 percent who claimed they would click through and buy the song on AmazonMP3, which is MySpace’s online partner for purchased music downloads.

According to NPD’s Digital Music Monitor, 70 percent of Web-using teens actively used a portable music player in the fourth quarter of 2008, which is virtually unchanged from the same quarter the year prior. “As the portable music player market matures, there’s a greater chance that teens will have already acquired the bulk of their collections, which reduces the desire to buy music or the need to get more by sharing and swapping with others,” Crupnick said. “In fact it’s possible teens could start spending more time creating playlists and posting them online, than they would spend sharing actual song files.”

“The music industry still hasn’t recovered from declining CD sales, and now they are being challenged anew by slowing digital sales among teens,” Crupnick continued. “Perhaps the next wave for teens comes when just listening to music replaces purchasing actual files, which might end up creating new revenue streams, such as brand- and ad-supported music. It might also put a premium on selling downloads, merchandise, and show tickets directly to teen fans.”

Data note: Information in this press release was derived from NPD’s Digital Music Study, which are based on ongoing tracking surveys of U.S. consumers. Data was based on a sample of more than 4,000 consumers. Additional information was derived from NPD’s MusicLab consumer surveys, which were conducted in January 2009, based on a sample of more than 4,000 consumers. All results were balanced to reflect the U.S. Internet population (age 13 and older).

About The NPD Group, Inc.

The NPD Group is the leading provider of reliable and comprehensive consumer and retail information for a wide range of industries. Today, more than 1,600 manufacturers, retailers, and service companies rely on NPD to help them drive critical business decisions at the global, national, and local market levels. NPD helps our clients to identify new business opportunities and guide product development, marketing, sales, merchandising, and other functions. Information is available for the following industry sectors: automotive, beauty, commercial technology, consumer technology, entertainment, fashion, food and beverage, foodservice, home, office supplies, software, sports, toys, and wireless. For more information, contact us or visit http://www.npd.com/.