Market research firm eMarketer recently published a study about U.S. consumer spending on music since 1980. Most commenters have seized on the fact that the study shows a higher percentage of people are buying music today than ever, but that those users are spending much less, probably due to the rise of single-song downloads. (eMarketer calls these "MP3 downloads"--in fact, the #1 source of legal downloads, iTunes, offers them in the AAC format, and many other sites offer downloads in the Windows Media Audio format.)
But I also noticed that music spending per capita rose dramatically in the late 80s and early 90s, peaking in 1995, then has declined ever since.
The conventional wisdom is that these changes were driven by technology: as CDs replaced other forms of recorded music in the late 80s, music sales were artifically boosted as everybody repurchased their LP (or cassette, or 8-track) collections in the new format. That replacement cycle ended just as piracy and single-song downloads emerged, hence, spending per capita plummeted.
But as, there were way more megaseling albums--15 million or more--released between the period of 1987-1996 than any decade before. This suggests that there was more interest than ever before in new music--not just replacements.
Where's that interest today? The last album to move 10 million copies in the U.S. was Norah Jones's 2002 debut, Come Away With Me (Outkast's Speakerboxx/The Love Below, released in 2004, went 11 times platinum but was a double album, meaning "only" 5.5 million copies sold.) The top selling album of 2006, the soundtrack to the TV show High School Musical sold only 3.7 million copies. Could there really be another few million burned or pirated copies sitting around?
Possibly. I think there are a lot of other factors at play, though. Market fragmentation is probably number one--you don't see many top-selling albums that appeal to multiple age groups anymore. The obscure, unsigned local bands I've recently played in actually drew people who knew about us only from MySpace, and some of these kids (all under 25) viewed MySpace as a more valid source of musical information than radio or TV--they prided themselves on downloading songs and following local bands they learned about there. (Although the latest dirt says that MySpace is no longer trendy, while Facebook's on the rise again.) In other words, the mainstream's way more fragmented than it used to be, or maybe it no longer exists. That tail's getting awfully long.
Competition from new forms of entertainment is another factor--one analyst expects Halo 3 to earn $200 million in its first weekend. When's the last time an album release generated that much excitement?