Even With Album Sales Falling, Headphones Sales Are On The Rise (SNE)

Though album sales, both physical and digital, continue to fall with each passing quarter, it appears all hope is not lost for the music industry as a new report from market research company >NPD Group has revealed a significant year-over-year increase in headphone sales in both units (17%) and dollars (30%).

"The headphone market has seen great unit and revenue growth as the market for portable audio continues to expand due to smartphone proliferation," said Ross Rubin, executive director of industry analysis at The NPD Group. "Low barriers to entry are attracting many boutique brands, though, which are quickly creating a crowded field."

As Rubin mentioned, a lot of this growth can be attributed to the recent influx of celebrity endorsed products through boutique brands, most costing well over $100 per unit. In fact, 30% of those surveyed reported endorsements playing an extremely or very important role in their decision to buy.

How much of a difference does a name really make? According to NPD, the total growth for headphones costing $100 or more was 1.5% in 2010, making the niche's total market share 3.5%. This near-doubling in growth can mainly be attributed to the large growth of the market itself. Beats by Dre, headphones endorsed by superstar producer Dr. Dre and considered by many the tipping point for this endorsement trend were first introduced to the market in December 2008. Since then, numerous artists including Lady Gaga, 50 Cent, and P. Diddy have come out with their own products and the results seem to show it is exactly what consumers want.

"From the lightweight foam-padded headphones that accompanied the first Walkman to the iconic white ear buds that come with the latest iPhone, headphones have been as much of a fashion statement as an audio accessory," said Rubin. "In particular, younger consumers are associating artists they admire with a premium portable audio experience."

At the time of posting, Sony SNE, the industry leader in headphone sales, had yet to comment on these figures. The company has made no public plans to enter the endorsement-related market, but did recently unveil their Piiq model, which carry a very similar design to many of the popular boutique headphones.