NEW YORK--The music industry saw 1 million fewer buyers of digital downloads in 2009 than the prior year, according to NPD Group.
Russ Crupnick, an NPD senior industry analyst, told a gathering of music and technology executives on Wednesday at the Digital Music East conference here not to panic.
Those who stopped purchasing music online were mostly older consumers who came online for the first time in 2007 and 2008, tried out downloading music, then lost interest, Crupnick said. The good news, he said, is that consumers still have a huge appetite for songs, as the amount of money customers are spending on downloads has risen from an average of $33 a year to $50 a year.
"You got some maturity in the marketplace," Crupnick told the audience. "If I ran a record label, the first thing I would do is go out and hire a consumer promotion person from Kraft or Colgate. The consumer is saying they wanted to be promoted to and persuaded to come try this."
Crupnick said Kraft and Colgate marketers are experts in respectively boosting sales of macaroni or toothpaste, very mature product segments, through promotions. He told the audience that NPD's research indicates that consumers need more incentive to buy.
He suggested that recording companies try bundling songs, say, three for a $1.
More to come...