No Growth In Digital Music Sales?

by: Frank Barnako

I was shocked to read in yesterday’s Wall Street Journal that sales of music online were slowing.

In a story about Yahoo (NASDAQ:YHOO) offering songs from Norah Jones and Relien K that will play on any portable music device, it was stated "digital sales have stalled." That just didn’t make sense, given the continually strong sales at Apple’s (NASDAQ:AAPL) iTunes Music Store.

But it is true this year, quarter to quarter, as the chart shows.  But it's better than last year. But, if you compare the third quarter of 2005 to the second quarter, you'll see digital sales actually fell.  In '06, there was no fall off.  Year-to-year comparisons show lots of growth. 

digital sales was also was surprised by the story.  "Each individual quarter shows healthy year-over-year increases there is no evidence whatsoever that 'digital-music sales have stalled,” it said.  The blog predicted the fourth quarter this year will be a record setter, with a strong first quarter in '07, too, thanks to people cashing in iTunes gift certificates.

The Associated Press picked up the story today, adding that during the summer tracks from Jessica Simpson and Jesse McCartney were available in the unprotected digital format from Yahoo.

Disclaimer: I own shares of Apple Computer.