HITS Daily Double
"There's more competition than ever for the music shopper, but consumers report they still enjoy and value physical music products."
—-Jim Donio, NARM


Orgs See Opportunity for Growth in Physical Sphere, Backed by NPD Group Survey
Forget everything you've read about the desultory state of record retail.

According to NARM and a study conducted by the NPD Group, all hope is not lost. There are, in fact, "opportunities in the near-term to increase sales among an active group of consumers who still purchase physical music products." In addition, the report is urging the industry to "exploit digital music technologies to spur greater overall music sales in the future." Well, dunh.

NARM President Jim Donio insists: "The digital revolution is an unquestionable reality, and there's more competition than ever for the music shopper, but consumers report they still enjoy and value physical music products, which accounted for 94% of total music sales in 2005."

So the sky isn't falling?

NPD Group's senior industry analyst Russ Crupnick denies people make fun of his name and refer to him as West Side Story's Officer Crupnick, while adding, "Consumers are clearly making the most of all the choices they have to discover and purchase music, and physical product is still a very large part of the equation."

Several findings of the survey include:

*Among teens, sales of CDs are up 5% in 2005, illustrating a halo effect from digital music, interaction with video games and other venues for new music discovery.

*Even with gains among teens, the music industry is losing older consumers at an alarming rate. "Older adults have the interest and the disposable income, so the industry can't afford to take them for granted," Crupnick said.

*Heavy buyers spent nearly $250 on average last year on CDs. These core music consumers, who represent 41% of music revenue from CD purchases, remain passionate about collecting physical music. They're also learning about music from sources other
than traditional radio, including video games, TV shows and movies.

*54% said they felt music was an excellent or very good value, which compares favorably to their views of the value of DVDs (58%).

*A growing number of music buyers of all ages now patronize mass merchants and stores where they can also buy DVDs, consumer goods, health and beauty aids, and other products.

Concluded Donio: "It's obvious that there is a core group of current consumers who are still predisposed to buying CDs in retail stores, so record labels and retailers should capitalize on this group now by creating demand and curiosity for music before consumers ever leave their homes. When consumers hit the store, they want great selection and merchandise that is well-organized and easy to search. They're also looking for discount bins where they can find new music or old material to round out their collections. In addition, while today's digital experience may be about home and friends, there may be some areas where stores might be able to cultivate digital opportunities."

There. Feel better now?