Adoption of Digital and Physical Formats (2014-2023)

Observing the music sales market naturally raises the question of adoption. This is not about the legal understanding of the word “adoption.” It’s about product adoption. Undoubtedly, this issue is important, and not only from the perspective of the music market. We can talk about the adoption of analog versus digital cameras, printed books versus e-books, and so on. Our focus is on the music industry and the comparison between physical and digital formats. Let’s look at how their adoption evolved from 2014 to 2023.

What is Product Adoption?

Product adoption is the process by which consumers decide to purchase and use a new product or service on a regular basis. In the context of physical and digital formats, adoption means users transitioning from one format (e.g., physical media like cassette tapes, vinyl records, or CDs) to another (e.g., digital files and streaming).

According to the Polish PWN Economic Dictionary, product adoption refers to the process of market acceptance of a new product, which includes its introduction, interest, trial, evaluation, and regular use by consumers.

In the context of physical media formats, product adoption refers to the process by which consumers choose to use physical media, such as cassette tapes, vinyl records, CDs, DVDs, paper books and newspapers.

Adoption: The act or process of beginning to use something new or different.

Merriam-Webster Dictionary

Product adoption refers to the process by which consumers transition to using content in digital form, such as downloadable files, music and video streaming, e-books, MP3 music files, digital pressing, and digital vinyl.

Differences Between Physical and Digital Formats

There are undoubtedly many distinctions between physical and digital formats, but let’s concentrate on a few of them:

• Availability: The digital format is usually easier to obtain and available immediately after purchase, while the physical format may require delivery or in-store purchase.
• Storage: The physical format takes up physical space and can be more susceptible to damage, whereas the digital format requires disk space or internet access.
• Convenience: The digital format often offers greater ease of use, the ability to transfer easily between devices, and integration with various platforms.

In summary, the adoption of both physical and digital products is a key element of market analysis, allowing us to understand consumers’ changing preferences and habits in response to technological developments and the availability of new forms of content delivery.

What Do the Data Show?

Data spanning from 2014 to 2023 illustrates the current relationship between the adoption of physical formats and digital formats:

1. Increase in Digital Format Adoption: Between 2022 and 2023, digital formats were adopted by 8.05%. This continues a growing trend that has been evident since 2014, with an overall increase of 299% from 2014 to 2023.
2. Decrease in Physical Format Adoption: Between 2022 and 2023, the adoption of physical formats decreased by 3.54%. This continues a declining trend that began in 2014. Since then, the adoption of physical formats has dropped by 65.18%.

The above clearly indicates the dominance of digital formats in musical product adoption. In 2023, digital formats constituted a significant majority compared to physical formats. Digital formats were adopted approximately 11 times more than physical formats.

What the Chart Also Shows

1. Growth of Digital Formats:

• The line representing digital formats shows steady growth each year.

• This growth is particularly noticeable from 2019, where adoption sharply increased from 6.505 billion in 2019 to 8.498 billion in 2020, likely due to increased digital consumption during the COVID-19 pandemic.

2. Decline of Physical Formats:

• The line representing physical formats shows a steady but moderate decline.
• The largest declines are visible after 2018, which may be associated with the rising popularity of digital formats and changing consumer preferences.

3. Digital formats surpass Physical Formats:

• The chart clearly shows the point at which digital formats began to dominate over physical ones, which occurred in 2017. Since then, the gap between digital and physical formats has consistently widened.

4. Analysis of 2022 –2023:

• In the years 2022-2023, we observe a further increase in the adoption of digital formats (from 10.079 billion to 10.890 billion).
• Physical formats, on the other hand, show a continued decline (from 1.017 billion to 0.981 billion).

Summary

Digital formats continue to grow strongly, especially after 2019. Physical formats, on the other hand, continue to decline, with a noticeable decrease in adoption after 2018. Considering the above data, the overall trend indicates that consumers increasingly prefer digital formats over physical ones.

The data point to a lasting change in consumer preferences towards digital formats, which may have long-term consequences for the physical format industry. However, this does not mean that all physical formats experience the same level of decline. For example, sales of vinyl records are growing, but sales of CDs are declining.

In this context, it may be surprising that artists are quite reluctant to enter the digital world of Web3. Yet music onchain seems to be a certain future for everyone. It is worth watching the future developments of this music industry segment. But one thing seems certain: the adoption of digital formats in the music industry is a big challenge for everyone. Accepting digital adoption will require patience, systematicity, artist courage, time, education, and appropriate governance mechanisms.