Digital music sales grow, but slowly "Digital music offsets drop in CD buying," says the headline in the LA Times. But buried in the story is the fact that digital sales are slowing down, and the music industry, overall, is still ailing.
[S]ome analysts said that the 65% growth in downloads paled in comparison with the 150% rise in digital purchases a year earlier, a sign that the industry could be in for tougher times.
"Digital downloads are growing, but not at a fast enough rate to compensate for a decline in physical sales," said Richard Greenfield, a senior analyst at Pali Research in New York.
Greenfield noted in a report that if digital sales increased by less than 40% in the future, total sales in the industry might fall below even the lackluster 1% growth reported in 2006.
Digital downloads are slowing because the iPod market has matured, so fewer people are purchasing large volumes of digital music, Greenfield said. And the music industry's response to piracy has been less than adequate, he added.