As technology advances, the constant distribution of music through a variety of avenues has affected music sales in an unexpected way.

According to research done by NPD Group, about 24 million customers did not purchase music in 2009 compared with 2007. Although it seems as if the U.S. Record Industry lost a big chunk of change, Vice President and Senior Industry Analyst for the NPD Group, Russ Crupnick, was optimistic as he presented more facts about the past results and ideas for the future.

Crupnick disclosed NPD Group’s findings at the Digital Music Forum on Feb. 24 in New York while stressing that “we need to energize all segments.”

From 2007 to 2009, Crupnick announced that there were 33 million fewer CD buyers, which, when added to the 24 million fewer buyers in general, led to a 21 percent decrease in the total amount of buyers in the U.S.

Even with the decline of purchasers, however, there was a two percent increase in the amount of money spent by each buyer. Analysts at Billboard calculated that this information “implies a 19 percent drop in total music spending over those two years.”

In short, regardless of the increase in spending per consumer, there was still a drastic overall decrease in revenue for the U.S. Record Industry. It seems as if CD sales are continuously being hit the hardest.

In the past two years, CD sales have lost an almost equal amount of customers. In 2008, there were 17 million fewer CD buyers, and in 2009 there were about 16 million fewer customers purchasing CDs. A loss of 33 million customers in CD sales in only two years is a big change that leaves those in the industry wondering: where did the customers go?

Recently, many people have been resorting to other means of obtaining their favorite songs. The Internet, for instance, has quickly become a favored medium amongst consumers. Options such as online downloads, radio stations, and music videos are becoming cheap and easy substitutes to directly purchasing CDs.

One of the main boosts for the music media industry is the ability for consumers to listen to tracks online before purchasing. For example, Pandora, an online music radio station, has become a popular site that has about 40 million registered users and about 15 million hits a month according to an article by Bill Van Rysdam (Culture Map).

Although Pandora offers a vast compilation of free music for its registered users, many are skeptical that it not only takes away from live radio, but that Pandora decreases the need for people to buy songs online. The NPD Group found the opposite through their research.

“NPD has found that free online radio leads to a 41 percent increase in paid downloads” according to Billboard. This is because customers are now able to listen to tunes from the Internet as many times as they desire before purchasing. People can finally decide whether they like a song enough to buy it.”

According to NPD Group, the “awareness and usage of Pandora, a leading online radio station, doubled year over year to 18 percent of Internet users; one-third of those who were aware of Pandora report using the service.”

Even though Pandora’s business model has helped increase online downloads, NPD Group also found that there was a 13 percent decrease in paid downloads resulting from free on-demand music.  There was also a decrease in the total purchasers of online downloads in 2009. According to Crupnick, the number of purchasers of online downloads went from 35.2 to 34.6 million.

Crupnick dismissed the thought that pirating music contributed to this loss, and instead attributed the lack of smart marketing to specific generations as the main cause.

“The number of people who purchased downloads dropped…as new digital buyers tried out the format and quickly lost interest,” according to Billboard.

An article on CNET News that analyzed Crupnick’s presentation stated that “those who stopped purchasing music online were mostly older consumers who came online for the first time in 2007 and 2008, tried out downloading music, then lost interest.”

The NPD Group findings ultimately suggested that the music industry needed to invest more in their marketing strategy in order to win back and keep their clientele. One idea included a selling technique of bundling songs three for one dollar in order to give consumers more incentive to buy.

“If I ran a record label, the first thing I would do is go out and hire a consumer promotion person from Kraft or Colgate,” Crupnick said. “The consumer is saying they wanted to be promoted to and persuaded to come try this.”

Luckily though, there is still a vast majority of consumers who are willing to spend money on music. The average spending per person on music downloads annually increased from $33 a year to about $50 a year. That is a pretty steep increase that proves there is room to grow in the marketplace.

Ultimately, the NPD Group found that even though the sale of CDs has consistently declined, there are still more options when it comes to marketing and selling music on the Internet.

“The trends we’re seeing in our consumer tracking studies are evidence of the continued transformation of the music industry,” Crupnick said. “The music industry now has to redouble efforts to intercept and engage these listeners, so they can create revenue through upselling music, videos, concert tickets, and related merchandise.”