Fade out: trend for buying tracks online threatens album sales

Online music fans prefer buying individual tracks rather than albums, and old songs over new releases, research has revealed.

The discovery poses a challenge for the music business, as the public embrace the idea of digital music. Apple's iPod music playeris proving to be one of the most popular gadgets this Christmas.

The study of online music habits, which applies to legal and illegal downloads, is backed up by separate evidence this week as British artists including Badly Drawn Boy and the Cocteau Twins see the first revenues from their music - available online to American buyers.

The findings suggest that people want to buy singles, not albums. But the business relies on sales of pricier albums carrying a dozen or more tracks.

A study by NPD Group, a New York-based consultancy, investigated illegal and legal music acquisition and discovered that 85 per cent of the time, people only downloaded one track from an album. In only 6 per cent of cases did they download three or more album tracks.

That contrasts strongly with shops, where the majority of revenues come from album sales. But in the past few years singles sales have plummeted and record bosses are considering abandoning them altogether.

Online buyers also preferred "back catalogue" - music more than 18 months old - over new material. That is borne out by the payments made to the British artists, by Apple's iTunes Music Store, which yesterday announced it had sold 25 million songs for 99 cents (57p) each since opening in April.

One thing is the same online and offline: the "star system", where a few top names sell in big numbers but most do not.

Consolidated Independent, which digitised the music for the British artists, said that of 4,879 tracks provided to Apple, only 1,000 were downloaded between October and November. Of the four most popular albums, three were "catalogue": the Best of the Cocteau Twins, the Pixies' B-Sides and Badly Drawn Boy's Hour of the Bewilderbeast, all dating from 2000. The only new album in the top four was Peaches' Fatherfucker, released in September. That contrasts with shop sales where "back catalogue" sales and new music sell the same amount.

But Steve Johnston, head of licensing for musicindie, which aims to get the UK's independent record labels onto new formats, thinks that may be because early users of online services are filling in gaps in their collections.

He said: "It's easier for them to find a particular track they want online." In Britain, lovers of music and gadgets have found that the iPod lies at the intersection of their desires.

It starts at £249 for a model that holds the equivalent of about 250 CDs - in a cigarette packet-sized container.

"Of all the [electronic] goods being bought on the internet this Christmas the ipod is by far the most popular," said James Roper, chief executive of IMRG, an online retail trade body. The online store Kelkoo had sold "hundreds" in just a few days.

More online stores from companies including Apple and Coca-Cola are due to launch next year. That will also encourage a shift away from retail to online buying: the Apple iTunes store claims to offer 400,000 songs; a typical large retail store would have about 100,000.

Mr Johnston said the business is still struggling to cope with the huge changes. "For instance, a lot of hip-hop tracks have permission to use samples on CD, but not online - so a lot of that stuff isn't available online yet."

Yet record industry sources were positive about the data. One source at a major record label said: "It's all different online. There, you can display the older stuff for as long as you like.

"It's always available, and the profits are actually better than on the new stuff, because you may have covered the recording and marketing costs years before."

Sound sales: The web's most popular artists

Top 10 tracks on Apple's iTunes Music Store yesterday

• "Hey Ya!" - OutKast
• "Milkshake" - Kelis
• "It's My Life" - No Doubt
• "The Way You Move" - OutKast & Sleepy Brown
• "White Flag" - Dido
• "All I Want For Christmas" - Mariah Carey
• "God Rest Ye Merry Gentlemen" - Barenaked Ladies
• "Stacy's Mom" - Fountains of Wayne
• "Big Yellow Taxi" - Counting Crows
• "Feliz Navidad" - José Feliciano

Top 10 albums

• Holidae In - Chingy
• A Boy Named Charlie Brown - Vince Guaraldi Trio
• Fear - Sarah McLachlan
• The Diary of Alicia Keys - Alicia Keys
• Harry for the Holidays - Harry Connick Jr
• Boogie Woogie Christmas - The Brian Setzer Orchestra
• Afterglow - Sarah McLachlan
• A Winter's Night - Various artists
• Counting Crows: best of - Counting Crows
• Soulful - Ruben Studdard