Best of '99: Youth Share Of Music Market Has Dropped, Report Says

RIAA survey says MP3 files may be responsible for shift in sales, but some say that's bogus.

[Editor's note: Over the holiday season, SonicNet is looking back at 1999's top stories, chosen by our editors and writers. This story originally ran on Wednesday, March 24.]

The Internet, and in particular the controversial MP3 downloadable music format, may be responsible for a shrinking of the youth portion of the music-buying public, according to a recording industry trade group report.

The implication is that the Internet is beginning to cause a significant shift in the music marketplace.

But some in the industry hesitate to draw such links.

"I don't think there's probably that much of a relation," said Lars Murray, director of new media at the Rykodisc label. Earlier this year, Ryko began selling hundreds of songs from its CD catalog in MP3 format through the Internet music label GoodNoise.

"I'm not sure free music could account for that much of a drop," Murray said.

In its annual consumer profile survey, released Tuesday (March 23), the Recording Industry Association of America said that 15- to 24-year-olds comprise 28 percent of music buyers, down 4 percent from two years ago. While the survey did not ask participants if they downloaded MP3 files from the Net, a spokesperson for the RIAA says the correlation is a matter of common sense.

"The 15- to 24-year-olds are the ones who are downloading MP3 files more than anyone else," said Alexandra Walsh, an RIAA spokesperson. "If you've got this huge swell in free music being downloaded off the Net, it's going to have to have some sort of an impact [on music industry sales]."

The MP3 format (shorthand for Motion Picture Experts Group, audio layer 3) has exploded in popularity in the past two years. While users praise its near-CD sound quality and convenience, the RIAA and the industry's five major music corporations have opposed MP3s, saying their lack of copyright protection promotes unauthorized distribution on the Internet.

The report -- compiled from onetime surveys conducted throughout 1998 of 3,051 music purchasers -- focuses not on how much music was sold, but rather on who bought the music and which genres were sold. Earlier this year, the same trade group announced music shipments for '98 were up almost 6 percent over the previous year.

The report suggests the Internet itself, as a new medium, may also account for the change in the market segment made up of 15- to 24-year-olds. "Potentially the rise of the Internet as a free entertainment center, and the accompanying availability of free MP3 music files, could be contributing factors," the report said.

A spokesperson for Minneapolis-based Musicland Group said he has not seen the Internet draw purchasers away from his company's stores. Rather, he said such hot teen pop artists as Britney Spears — who currently is riding high on the hit

"... Baby One More Time" (RealAudio

excerpt) — are drawing young people to stores in droves.

"We had Joey McIntyre from New Kids on the Block appearing at the Mall of America in Minneapolis last Wednesday, and we had about 5,000 screaming girls there," said Brant Skogrand, spokesperson for the 1,346-store chain, which includes Musicland, Sam Goody and other stores. "They've still been coming out to our stores and buying hot groups like 'N Sync and Backstreet Boys."

Insiders from the MP3 industry said they were not surprised by the RIAA's figures.

Gene Hoffman, president of GoodNoise, said young people would resume their role as the majority of music buyers if record companies would make more music available for legitimate purchase by download on the Net.

"The consumer trend is away from buying CDs, because that's the only format that's available right now," he said.

Michael Robertson, CEO of MP3.com, Inc., which runs an MP3 clearinghouse on the Net, said he had no doubt the online world was cutting into music's share of the entertainment market, but he questioned how big a role music piracy may have played in that.

In other news, women outnumbered men — 51.3 percent to 48.7 — as music consumers for the second year in a row, according to the RIAA report.

And overall, those buyers turned a deaf ear to rock last year. The genre was down almost seven percent, while gospel, classical, pop and other genres caught consumers' attention.

"There were not a lot of major hits from established rock artists last year," Walsh said. "There's not as much touring, either. Large-venue rock concerts had their heyday in the '80s and early '90s and they've definitely been dropping in popularity. And that used to drive a lot of sales."

"Rock has declined a little bit, but there's still some great stuff that's been coming out that falls in that category, like Offspring," Skogrand said. "It still has hot singles come [out] of it, and Orgy has been pretty popular."