CD sales finished the year 2.4% above 2003, marking the first time this century that music sales have experienced a year-to-year bump. But the big story for the music industry comes from the newer income sources.

In its first full year of tracking, Nielsen SoundScan reported 140.9 million digital downloads were sold in 2004. In the last six months of 2002, that figure was only 19 million. Last year was capped with a record week of 6.7 million digital downloads sold.

Simultaneously, musicvideo sales saw a substantial boost, rising 84% over 2003 to 36 million units.

Universal Music edged out Sony BMG in digital tracks market share, 30.76% to 30.22%. But two Sony Music labels led the way in the two categories: Columbia was the No. 1 digital download label and Epic, for the fourth year in a row, was the No. 1 musicvideo label.

CD sales rose to 651.1 million sold from 635.8 million in 2003. Album sales hit 666.7 million in all configurations, a rise of 10.5 million units or 1.6% from 2003. More than 5.5 million albums were sold as digital downloads.

As the fourth quarter began, the year appeared headed toward a much greater increase, with an 8% bump seeming likely. But sales, compared week to week, began to seriously slide in October and November, gaining back some ground in the final three weeks of December. Year also benefitted from 53 weekly sales sessions.

U on top

Among the major distribs, Universal Music Group was again No. 1 with a 29.6% marketshare, a 1.5% rise from the previous year. Sony BMG, which merged in 2004, took 28.5%. Warner Music Group, bolstered by an active catalog group, claimed 14.7% of the marketplace, a 1.7% dip from ’03. EMI also posted a small year-to-year gain, 0.02%, to 9.9%.

For current releases, UMG was up 2 percentage points from last year, claiming 32.2% of the market for current albums. Its total topped Sony BMG’s market share of 29.8%. Warner Music Group dropped 2.4% from ’03 to a 13% share, while EMI was up ever so slightly to 9.3%. Current album sales amounted to 427.9 million copies; catalog hit 238.8 million; and deep catalog was at 165.3 million sold.

Sony’s Columbia Records was the No. 1 label for the seventh year in a row, claiming just under 7%. The top 10 label groups were, in order, Columbia, Warner Bros., Interscope-A&M-DreamWorks, Island-Def Jam, RCA, Atlantic, Epic, Universal, Capitol and Zomba. Sony BMG had four of the top 10 label groups; Universal, three; Warners, two; and EMI, one.

Usher’s “Confessions,” which LaFace/Zomba released in March, sold 7.9 million to become the year’s top seller. In second was Norah Jones’ “Feels Like Home” (Blue Note), a February release, which tallied 3.8 million. Eminem’s “Encore,” which Interscope rush released Nov. 12, hit 3.5 million. The album was the No. 1 album for the last week of 2004, selling 198,000 for the period that ended Sunday, according to Nielsen SoundScan.

Country stars saw a bit of a recovery last year from 2003, when only one country record appeared in the year-end top 10. Kenny Chesney’s “When the Sun Goes Down” (BNA) did slightly more than 3 million in the 11 months since its release. Gretchen Wilson’s “Here for the Party” (Epic) was the year’s top-selling debut at 2.9 million. Tim McGraw’s “Live Like You Were Dying” (Curb), released in late August, sold 2.8 million. While country as a genre grew 12%, the top 10 country albums represented 27% of all country albums sold.

Two holdovers from 2003 posted neck-and-neck numbers for ’04. Maroon 5’s “Songs About Jane” (Octane/J) sold 2.7 million in ’04 while Evanescence’s “Fallen” (Wind-up) tallied 2.6 million albums. “Fallen” was the No. 4 album of 2003, selling 3.3 million copies.

Simpson selling

Ashlee Simpson’s “Autobiography” (Geffen), a July release, sold 2.5 million as did the hits compilation “Now That’s What I Call Music! Vol. 16.”

Ten additional albums sold more than 2 million copies last year: Avril Lavigne’s “Under My Skin” (Arista), Shania Twain’s “Greatest Hits” (Mercury Nashville), Kanye West’s “The College Dropout” (Def Jam), Nelly’s “Suit” (Universal), Josh Groban’s “Closer” (Warners), U2’s “How to Dismantle an Atomic Bomb” (Interscope), OutKast’s “Speakerboxxx/The Love Below” (LaFace),Jessica Simpson’s “In This Skin” (Columbia) and Alicia Keys’ “Diary of Alicia Keys” (J Records) and “NOW Vol. 17” (Capitol).

Hoobastank’s “The Reason” was the most downloaded song of 2004, selling 380,000 digital copies. Five other titles topped 300,000 in digital sales, though only Usher’s “Yeah!” was released in 2004. “Yeah!” was also the most played song on radio in 2004.

Nielsen SoundScan reported that album sales at mass merchant outlets were responsible for 38% of all music sales — 252 million units — the highest total since the service started tallying sales in 1991.