Monday, March 20, 2006

Results of NPD Study for NARM

A new study conducted for the National Association of Recording Merchandisers (NARM) by The NPD Group reveals that there are stil opportunities in the near-term to increase physical CD sales among an active group of consumers.

According to Russ Crupnick, vice president and senior industry analyst for The NPD Group, "among teens, sales of CDs are up five percent 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 data indicates that 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. "To spur greater sales among this audience, it's important to make them aware of available music that might interest them, so they shop for music more often."

Although consumers are buying and sharing digital music at increasing rates, the report shows they rate physical music product as a good entertainment value. Heavy buyers spent nearly $250 on average last year on CDs. These core music consumers, who represent 41 percent of music revenue from CD purchases, remain passionate about collecting physical music from their favorite artists, whether on CD, or on CD/DVD and DualDisc formats that also offer video content.

A majority (54 percent) said they felt music was an excellent or very good value, which compares favorably to their views of the value of DVDs (58 percent). 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. This trend represents another challenge for traditional music retailers, since it increases competition for shoppers' attention and wallet share.

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