Teens buying fewer CDs

Purchases down 15% in 2003

By MEREDITH AMDUR

Teenagers shrugged their collective shoulders at music CD sales last year, despite the music industry's progress on curtailing piracy.

According to data compiled by market researcher the NPD Group, teens age 13 to 17 spent 15% less money on music CDs last year than they did in 2002. The precipitous decline is partly due to increased online file sharing, partly due to less buzz about new releases and -- perhaps most worrisome for the music biz -- more competition for alternative entertainment dollars such as videogames. Software sales in that category actually rose a healthy 12% in 2003 among the same group age group.

The seeming disaffection of fickle teen consumers comes just as less-than-terrible year-end music sales figures suggested that the industry might be nearing the bottom of its endemic industry sales slump.

According to Port Washington, N.Y.-based NPD, overall dollar sales of music CDs declined 8% in 2003 compared to 2002. An estimated three-quarters of the overall decline is directly attributed to unit sales declines last year, while the balance is tied to recent retail price cuts. Among teens, however, sales declines were a much steeper 15% in 2003. And it's unlikely that much of that decline was offset by legal Internet sales from services like Apple's I-Tunes, since only a half of 1% of all Internet users are currently using the new commercial music stores.

Vidgames a distraction

NPD vice president Russ Crupnick believes that while the music industry is always quick to blame illegal peer-to-peer music file sharing for its woes, such activity is only a part of the picture. "Another aspect of these sales declines is based on competition we're seeing from alternative entertainment-related spending options for teens, such as cell phones and videogames."

Then there's the trickier topic of repertoire. NPD data suggests that 2002 releases like Eminem, Nelly and Linkin Park were more appealing to teens than last year's releases, which included 50 Cent, Good Charlotte and Simple Plan. In 2002, there were 30 album releases that sold more than 500,000 units to teens. Only 15 releases reached that level in 2003, noted NPD.

And it may not just be teens giving the shrug to music purchases. Among 35- to 44-year-olds, sales fell 13% last year, while gift purchasing of music among the same age group fell a hefty 20%.

Said Crupnick: "If kids aren't clamoring for music, not only do we lose sales to younger consumers, but also parents will be less likely to shop the music section on behalf of their children."

DVDs a draw

And if teens are diverting more of their dough toward vidgames, older consumers are clearly more enamored of DVDs these days. An NPD survey last fall showed that 26% of DVD purchases were made by 35- to 44-year-olds, Crupnick said. "That's fierce competition for the consumer's entertainment dollar."

Fortunately, the silver-haired crowd may provide the silver lining. CD purchases by consumers 55 to 64 actually rose 6% last year, thanks in part by the continued success of crossover jazz phenom Norah Jones' 2002 release. Rod Stewart and "American Idol" runner-up Clay Aiken also chalked up sales among the older set, as did country music artists Alan Jackson and Toby Keith.