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TheStreet Open House

Why iTunes Libraries Look Like CD Collections

Stock quotes in this article: AAPL, AMZN, GOOG

PORTLAND, Ore. (TheStreet) -- In my garage, there are two seat-cushion-sized Case Logic binders filled with hundreds of compacts that sit next to an old stereo system that came with the house and required a butter knife to open its CD player.

Like the CD collections of many music fans of my generation, it eases to a gentle halt sometime around 2001. There are a handful of exceptions, but it mostly remain frozen in the post-Napster, pre-iPod/iTunes/Amazon world of Sam Goody, Compact Disc World, Columbia House, the BMG music club and countless independent record stores that populated it. It speaks to a certain period in history and says quite a bit about how it ended.

Many of my friends keep similar collections kicking around the dark recesses of attics, basements, storage units and closets. They're kept for sentimental value and as backups, long replaced by iTunes, Windows Media, Amazon (AMZN) and countless other digital players. They've been ripped down, filed away and all but forgotten -- passed over for the digital file format that was supposed to march music fans into the 21st century and beyond.

We should have known better. How could 20th Century listeners who went through vinyl, eight-tracks, cassettes, mini-discs, CDs, Hit Clips and various other formats believe that the MP3 and other digital sound files were going to be the last word in music ownership -- or that ownership would still be as prized a concept at it was in their youth? As we speak, the iTunes library and others like it are turning into hard drive, cloud-stored versions of those forgotten CD collections -- and buying patterns indicate that resemblance will only become more acute with each passing year.

As Nielsen SoundScan indicated earlier this month, album sales were down 8.4% in 2013. For the first time since Apple launched the iTunes store in 2003, digital downloads declined from the year before. It was by less than a percent, but it was less than a percent in the wrong direction.

There were only two forms of music buying that gained traction in 2013. The first was vinyl which saw sales increase 33% last year. If you look back to 1993, vinyl sales rose 250% in the last 20 years as overall music sales slid 50%. However, vinyl is still only 2% of the overall music market compared to 41% for digital downloads and 57% for CDs. It should be noted, however, that CD sales dropped 15% last year and have fallen steadily since the early 2000s.

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