US Music Shipments Drop Again

Recorded music as a packaged-goods commodity continues to decline, according to figures released March 4 by the Recording Industry Association of America (RIAA).

Shipments to retailers from record labels in 2003 dropped 7.2% from the previous year's level, the trade group reported. A total of 798.4 million units in all formats (CD, DVD, cassette tape, and vinyl) were shipped in 2003, compared to 859.7 million units in 2002. The decline followed a 7.8% drop in 2002 from the previous year. On a dollar basis, shipments from record companies to retailers went down 4.3% in 2003 versus a 6.8% decline in 2002. The slowdown is part of an ongoing multi-year trend for the music industry, which has responded by downsizing its labor force (see related story) and pursuing merger deals to improve efficiency.

A bright spot in the otherwise gloomy picture was a boost in shipments during the fourth quarter, a period including the winter holiday shopping season, when shipments to retailers increased 5.5%, helping to offset a 10% drop during the first half of the year. Despite the overall decline, some formats showed astounding gains—CD singles were up 85.5% for the year, DVD music titles were up 56%, and music videos in all formats grew by 38.7%.

Shipments of CDs were off 3% in 2003, with 609.8 million units shipped to retailers in 2003, compared to 628.4 units shipped in 2002, a decrease of 5.1% in dollar value. Somewhat countering this trend is the growing popularity of "bonus packages" or what the RIAA called "value-added CD/DVD combinations," in which music CDs are bundled with related DVDs. The combos are a recent innovation but are proving to be winners with consumers, according to the report.

Last year was noteworthy for offering music fans "the widest choice and variety of ways to access music ever available, including through satellite radio and webcasting streams," the report mentioned. Sales of officially sanctioned digital downloads, a market segment described in the report as "in its infancy," weren't included in the RIAA's figures for 2003. The overall 7.2% drop from 2002 was a slowdown of the rate incurred in previous years, and was cited by trade group chairman and CEO Mitch Bainwol as evidence that his industry "appears to be going in a more positive direction."