It was so bad, maybe everyone just looked away. But the last week of May was the worst week for album sales in decades. It was definitely the worst week in the Soundscan era, which started in the early 90s. But then, Billboard did some back-of-the-envelope math showing that it may have been the worst since the early 70s.
How low? For the week ending May 31st, physical and digital albums in the US tallied 4,978,000 units. Sounds great for a small Scandinavian country, or a handful of chart-toppers. But not for the largest global market (by extreme comparison, the highest weekly total in history was 45.4 million in late 2000).
And so what? Isn't this just another boring stat on the way down? And isn't this just a problem for the majors? The same ones trying to bankrupt LimeWire founder Mark Gorton and CPR the CD?
Not exactly. Sure, majors are bleeding, and this CD downturn is making companies like EMI Music toxic. But it's also making life very hard for indie and unsigned acts, not to mention publishers large and small.
Imogen Heap had the honesty to admit that touring revenues were just not cutting it. And despite the hype surrounding live, plenty of artists are struggling to make the road profitable. And one reason is that artists are simply less able to sell their own CDs at merch tables.
Sure, die-hard fans will load up on lots of things - shirts, CDs, vinyl, even instant live recordings. But the bundled, marked-up disc is no longer a core, important part of the listening experience, especially among the younger demographic. Instead of a functional way to listen to music, it is now a mere carrying case for digital songs, and at best a souvenir. And, most fans already have the music before they walk into the venue.
Most successful consumer-facing companies have the ability to bundle effectively. Honda doesn't sell you a tire at a time. Budweiser gets you drunk off of a case. That we know.
But the second wave of disruption involves the album as programming. A 50-something fan, for example, grew up with the mentality that albums are the opus, a discrete artistic statement. But today's teenager was never reared on this experience. Instead, the playlist and one-off song are more critical, because that's the way it's been for over a decade!
But this goes far beyond the recording. Executives at EMI Music Publishing like to distance themselves from the carnage of their recorded sibling. But CDs are dragging mechanicals with them, and a flattening digital is making the situation worse. Talk to a publishing executive, and you'll realize that this once-stable business is also under serious pressure, especially given the time-delays involved (not to mention downward pressure on performance and sync royalties).
Looking back, one argument is that the recording industry was only booming on a format-fueled replacement binge. It had to crash back to earth, and piracy was simply part of the fireball. But the CD represented a reliable sales vehicle, a repeatable best practice that labels (and artists) large and small could profit from. What helped Public Enemy in the early 90s also helped an unknown rapper named Jay-Z.
But what is that sales engine for the 2010s, recording or otherwise? After years of disruption, DIY hype, and VC-fueled zeal, this is a question still staring the industry in the face. Sure, Trent Reznor can snap his fingers and make $750,000 on superfan box sets. Radiohead can shock the world with a name-your-price experiment. But those are not scalable ideas for a next generation of artists, rather, they represent interesting sales concepts for a limited group of established names.
And so this industry keeps searching, though great ideas and success stories are popping from every corner. Grizzly Bear can score a Super Bowl spot, Phish can still easily fill a venue, Apple can blow Feist into the stratosphere, T-Pain can create a killer iPhone app, Justin Bieber can create a spark on YouTube, Susan Boyle can turn a television appearance into millions of CD sales.
These are all great successes, but they are mostly one-off, highly unique case studies. More importantly, they are not easily-repeatable sales paths, at least beyond a tiny sliver of acts.
The last vehicle was invented in the 80s, and is finally heading into the sunset. Where's the next one?
Paul Resnikoff, Publisher.
Comments Closed
trevor Wednesday, June 09, 2010
Digital just never panned out the way anyone expected. I work with lots of artists, and digital don't pay the bills! But I'd offer that there's another problem. An artist can't quit his day job, but more, that great team the artist so badly needs can't quit their day jobs either. The road is brutal, so for everyone to quit their day jobs, a major and lucky event has to happen.
PartlyCloudy Wednesday, June 09, 2010
It seems that everyone in this business is just so amazed at the world around them, they spend so much time just awed at the changes. It's bad and not adaptive. I'm in my 50's, so things are obviously different for me, but I can't walk around thinking, "wow, my son doesn't care about albums," or "people are downloading the entire Hendrix catalog in 20 minutes," or "no one buys records anymore, when I was a kid I used to run to the record store." Do I say, "wow, people drive so fast these days" or "no one sits down to have meal"? yes, but I've adapted to society and the world around me, this industry should too.
snfubar Wednesday, June 09, 2010
As much as I love these stats on declining album sales... ALBUM SALES ARE OVER... any meaningful metric of week to week, year to year sales needs to include ALBUM EQUIVALENT SONG SALES for the same period.
I mean seriously. The Album dying is not news anymore... what is more important is to gauge the gap between the dying album format and the take up of ALBUM EQUIVALENT SONG SALES.
Yes - I know the aggregate numbers will still be down, but this is much more meaningful view of the market we are in. It would also be great to incorporate the slim if nonexistent weekly tally of streams/revenue.
The music industry is no longer defined by a single predominent format... the album. It's time to start placing as much emphasis as possible on the metrics that will actually help guide us with a greater understanding of Real Consumer Trends.
presnikoff Wednesday, June 09, 2010
snfubar, I've always felt that the Track Equivalent Album method was very misleading. In the end, fans are buying ten songs, not an album, and we could be talking about ten discrete buyers here.
So, instead of a bundled solution, this is just adding up one-off purchases. Economically and structurally, that means something totally different, and the data supports this. Generally speaking, fans are purchasing less than they used to, simply because they have the option to cherry-pick. To cobble together that activity and convert it into an album doesn't really make sense imo.
snfubar Wednesday, June 09, 2010
Hey Paul -
thanks for the reply. I love what you do here.
however - I must disagree with you, as Track Equivalent Album stats help to frame the conversation in terms of revenue and total volume - and that's what pays the rent.
adding TEA to the sales reported would create another 2.1 million albums sold or bring the week's total to about 7 million units as oppose to just under 5 milllon.
I wonder if there were 7 million unit combined totals last year, that weighed more heavily towards albums say 6.5 million albums and 500k songs as a mix...
What I'm seeing is the tipping point and we should all want to understand the weekly product mix and how it relates to bottom line revenue historically.
I understand your comment about consumer habits and trends - but as consumers are moving away from albums, labels are going to have to figure out how to survive on songs.
presnikoff Thursday, June 10, 2010
snfubar, I must dig my heels in here. Why not just count total revenue, which I think we agree is the most important? Why pretend a bunch of singles is an album, when fans didn't purchase that way?
If a pizzeria sells slices, does it make sense to aggregate ten slices and pretend they were sold as a large pie? As the owner, I would rather know the real source of my revenues - if single slices are contributing 30 percent to my bottom line, I want to know that, instead of pretending that they are whole pie sales. That way, I can tailor my product approach and sales incentives accordingly.
tommyboy Wednesday, June 09, 2010
Great article Paul, and as tragic as this album sales record seems, you are only telling half the story. Two other factors have made the situation even worse; the decline in album wholesale prices and inflation.
In 2000 the average album wholesaled for $12.15. Today the average wholesale is around $10.31 with Universal pushing for wholesale prices between $7.50 and $8.00.
If you apply the Consumer Price Index from 2000 to the $10.31 wholesale price point it comes down to $8.03. In short, the value of 4,978,000 albums in 2000 would have been $60,482,700 but today their value is under $39,923,560. These values are closer to albums sales dollars from the late 60's than the 70's Billboard speculates.
For reference, the first Beatles album in America came out in 1964 at $4.98 list. In today's dollars that would be $35.00 for a 28 minute, monophonic 8-song album.
But we won't be talking about anything this depressing on July 19-21st at the New Music Seminar. We will be discussing how to build a new sustainable music business built on entirely different principles. Paul, I look forward to seeing you there.
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