• Reuters, Friday, January 4, 2008 10:48 AM

The music industry had an awful 2007 as total album sales plunged 15 percent to 500.5 million units, according to tracking data from Nielsen SoundScan. Online album sales barely rose at all, up 2.4 percent to 30.1 million units; growth was 19 percent in 2006. The figures represent the lowest total and the steepest decline since Nielsen began measuring music sales in 1993. Experts (predictably) blamed piracy for the declines, but they also cited competition from other entertainment sectors like videogames.

However, overall music sales, which include single and digital track sales, rose 14 percent to 1.4 billion units, driven mostly by digital tracks, which rose 45 percent to 844.2 million units. However, the industry driver showed a significant growth decline, up 45 percent in 2007 after 65 percent growth in 2006.

So what of music's future? The data clearly shows that the album model is outdated; digital track sales encourage people to only buy those tracks they like. Even so, experts say piracy will continue to crush sales. Music exec Kenneth Kraus, who represents Kid Rock and Carrie Underwood, says things will only get worse over the next four to five years, because "a whole generation of kids" have grown up downloading music for free and cannot fathom paying for it.

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