Online Music Sales Down, File Sharing Up

NEW YORK — While online music sales continue to decline, millions of Internet users continue to use online file-sharing services, comScore Networks reported this week.

Online music sales through the third quarter were $545 million, down 25 percent from the $730 million spent over the same period last year, according to comScore. The decline has accelerated throughout the year as sales of recorded music decreased 12 percent, 28 percent and 39 percent in the first, second and third quarters of 2002, respectively. Conversely, online sales of all products increased 30 percent, 28 percent and 30 percent over the same three quarters.

The analysis was based on the actual online activity of more than 1.5 million representative Internet users.

After the fall of file-swapping pioneer Napster, U.S. consumers visited alternative sites, including KaZaA. As one of the few remaining file-sharing applications offering free downloadable music, KaZaA drew more than 9.4 million average monthly U.S. home users in the third quarter, according to comScore.

Last month, Nielsen/NetRatings reported that KaZaA recorded more than 8.4 million unique visitors in August, growing 148 percent since the beginning of the year [IQ Daily Briefing, Oct. 11]. Nielsen/NetRatings also reported that more than 32 million surfers, or 27 percent of the active online population, visited a music site during the month of August.