DOWNLOADS GOING DOWN

While physical formats have turned around a decline, paid downloads continue to plummet

IN THE NAPSTER ERA, paid downloads were a music industry savior, generating $1.3 billion at their peak in 2012, according to Luminate. But the format seems like it’s headed toward extinction. Digital track sales have plummeted over the past decade, from

1.3 billion in 2012 to 152 million last year, a decrease of 88.6% — in 2022 alone, they dropped 25.1% from the previous year.

The declining importance of the format is evident in the desktop version of Apple’s once mighty iTunes Store, which now buries such purchases halfway down its Apple Music homepage. At Amazon, searching for MP3s diverts consumers to the Amazon Music streaming platform, where options include streaming as well purchasing digital music, vinyl or CDs.

“It’s a business that has been in steady decline for years,” says a source at a major label, adding that the company doesn’t receive complaints from consumers about the lack of prominently displayed downloads on retail sites. “We’re in a streaming economy now.”

That said, the sale of 152 million tracks translates to revenue exceeding $152 million, and many artists and labels say the format remains both useful and lucrative. If an artist racks up a significant number of digital sales — like Bonnie Raitt, who sold 9,000 downloads of “Just Like That” in the week following her February Grammy Award win for song of the year — it can boost chart performance and validate career relevance. (A download sale is weighted more heavily in determining Billboard chart metrics than a single stream.)

And download sales can be valuable in other ways. In January 2021, two years after Avery

Anna became TikTok famous as a high school student for singing country songs in a bathtub while self-isolating during the pandemic, her track “Just Cause I Love You” shot up the iTunes chart. “When we see something pop up on that chart, that certainly makes us pay attention,” says Warner Nashville senior vp of commercial partnerships Tim Foisset. Downloads are “an early indicator that there is something there — a certain fan base is going to engage with a certain artist.” Five months later, Warner Nashville announced it had signed the Flagstaff, Ariz., singer-songwriter.

“It’s part of the list of tools we employ to move on the chart,” Foisset adds. “While it isn’t crucial to our day-to-day decision-making or overall revenue, this is something that still can be important when we’re building a story for a song or a developing artist.”

Downloads generally appeal to an older crowd that prefers ownership to the song-renting nature of YouTube or Spotify. But younger K-pop and Taylor Swift fans respond to exclusive deals, like Swift’s 12-hour January sale of limited-edition digital copies of Midnights with exclusive cover art. Christine Barnum, chief revenue officer of distributor CD Baby, calls the format a piece of virtual merchandise that is “a much more approachable version” of a non-fungible token.

So far, though, that hasn’t connected with listeners the way that physical formats have of late. According to the RIAA, cassette sales jumped 28.3% from 2021 to 2022, from 343,000 to 440,000. Vinyl’s growth has been well documented, rising 847% from 2012 to 2022. Year-over-year growth decelerated in 2022 to a modest 4.3%, rising from 41.7 million in 2021 to 43.5 million.

Overall sales of physical product are dwarfed by streaming, which accounted for 84% of the industry’s total 2021 revenue of $12.4 billion. But revenue for physical sales reversed a decline during the pandemic, rising in 2020 for the first time in 16 years from $1.1 billion in 2019 to $1.2 billion in 2020, then continuing to grow to $1.7 billion in 2021.

Fans can’t hang downloads on their walls, though, and the format continues to slide. “Not very important,” says Ben Swanson, COO of top independent Secretly Group. “We still track it and sell it, but we don’t use that data meaningfully in budget discussions or anything like that.”

While Miley Cyrus’ “Flowers” has topped Billboard’s Digital Song Sales chart for the past five weeks, Jonathan Daniel, manager at Crush Music, says the revenue is not very significant for a pop star on her level. The download success, though, is useful to show that an older audience has come around to the former teen star’s work. “It’s a relative gauge of a slightly older listener — more of a [adult top 40] or adult contemporary format than, say, a pop or alternative-format listener,” says Daniel, who also represents Sia, Green Day, Lorde and Fall Out Boy.

Amazon and Apple representatives didn’t respond to requests for comment. Several online retailers, however, still emphasize downloads. Beatport’s customer base relies on them for its DJ sets — its download sales have increased by 5% to 10% every year since 2017, according to CEO Robb McDaniels. “We’re probably one of the only places in the world where download sales are increasing,” he says. “I think the labels are happy to see that.”

Barnum adds that downloads remain crucially important for indie artists who make far less than Cyrus’ level of revenue. “It’s a great tool — ‘I bought your download’ as opposed to ‘I played something on Spotify,’ ” she says. “Point zero-zerozero-something cents versus a dollar.”