How the Internet Has Rocked the Music Industry

The Internet has ripped the price tag off of music. In seconds, web surfers can access millions of song on YouTube or an unlimited live stream with digital services such as Spotify.

With smartphone apps, free music is even available to-go. So, with free all-you-can-stream services, have people stopped paying for music? The numbers say yes.

The number of physical record stores dropped a whopping 77.4% between 2000 and 2010, and are expected to decline another 11.6% by 2016, according to The Wall Street Journal. Some local music shops and large national chains may have to file for bankruptcy.

In 2011, digital music sales surged 8% globally, accounting for $5.2 billion in legal downloads. More people may be listening to music, but physical album sales will continue to decline.

How the Internet Has Rocked the Music Industry

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How the Internet has Rocked the Music Industry

Online music downloads and streaming caused the traditional ways of buying and listening to music to suffer. But just how bad is it?

The Decline of the Record Store

Between 2000 and 2010 record store sales declined more than 76%.

  • It may be dropping another 77.4% by 2016.

Between 2000 and 2009, CD album sales declined by 50%.

Record stores were in IBISWorld’s list of 10 U.S. industries that were dead or dying fast.

Sign of the times:

  • In 2004, HMV—a company like Virgin, but based out of the UK—pulled out of the U.S. market.
  • In 2006, Tower Records closed all of its 89 U.S. stores. [5]
    • The company’s parent filed for Chapter 11 bankruptcy in early 2009.
  • In 2006, Sam Goody’s parent company filed for bankruptcy under Chapter 11.
  • In 2009, the last of the Virgin stores closed its doors.

In January 2012, digital music sales surpassed physical music sales for the first time ever. Digital sales made up 50.3% of all music sales.

In 2011:

  • Physical music sales = 5% down
  • Digital music sales = 8.4% up

From MP3s to Streaming

Originally, digital music was confined to the computer. MP3s were mainly distributed online. File-sharing services became popular, like Morpheus & Audiogalaxy

Then, Diamond Multimedia created the RIO, a digital audio player. Music became:

  • Portable
  • More affordable
  • Available with large selections

iTunes and the iPod both debuted in 2001 and allowed listeners to take their music on the go. The iTunes Store launched in 2003 and sold tracks for just 99 cents.

Spotify is now a very popular way to access music. Instead of storing music on a hard drive or MP3 player, users can stream songs.

  • 1 $0.99 iTunes purchase = 64 Spotify song listens

The MP3 player phenomenon and music streaming have allowed users to download and listen to individual songs instead of entire albums.

This marked a huge change in the music industry. In fact, from about 1999 to 2009:

  • Sales of full albums dropped 55% to less than 400 million.
  • Individual, digital track sales went from 0 to 1.2 billion.

The Old Lives On

Despite the growth in digital media, about 2,000 indie music stores still survive.
Some attribute this to the remaining popularity for vinyl.

  • In 2011, vinyl album sales increased by 39%.
  • So far in 2012, sales are up about 10%.

Vinyl remains relatively popular because it:

  • Causes feelings of nostalgia.
  • Provides quality sound.
  • Is actually tangible.


Even though the digital music revolution caused both independent and chain record stores to suffer, some retailers continue on with the help of avid supporters. Regardless of the growth and decline of music forms, there are pros and cons to every type, and only the future will tell what additional changes are to come.

This infographic was provided by Total Bankruptcy.

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This entry was posted on Wednesday, July 25th, 2012 at 1:49 pm and is filed under Economic News: How Are We Doing?. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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