Sunday, January 25, 2015

Are Music Sales Really Dead? CD Sales Are Still Huge and Digital Streaming Points To The Future

Are Music Sales Really Dead? photo - Lucas Jackson/Reuters

Vinyl records might be the next wave in the minds of diehard music fans, but as a label, I can tell you that we still sell more cd's overall. Even for one of our biggest selling albums, we still have not sold out of the original run of vinyl that was pressed, purchase here. Vinyl is ultimately the better medium relating to album art, sound, presentation and overall vibe, but is only for the true audiophile collectors. Hopefully these buying audiences will grow in volume as more of the bands within our music group, gain a larger foot hold and appreciate the superior packaging.

The mass consumption of music is going to be driven by streaming services through large aggregators such as Spotify, Pandora and maybe even Beats Music. Check out a great presentation on this from Midem that will further help to understand where things are heading. 

While reading articles such as the one below from The Atlantic and viewing the sales data, one element is ringing true. With the explosion of the amount of music readily available, only the great stuff continues to break through. In essence nothing has changed from the artistry of creating great music, but now the future is fully in the hands of the creators as audiences are on tap and ready for new sounds that will shape the future, as the music is so readily available. If any bands tell you there is no money in music business anymore, they are only half right. There is no profit to be made from the mediocre. Great music drives the fans to buy tickets to the shows and to purchase quality merch, but managing a budget, managing a plan of attack and having executable goals are the route to success.

Read the original article on the Atlantic Monthly

"CDs are dead. 

That doesn't seem like such a controversial statement. Maybe it should be. The music business sold 141 million CDs in the U.S. last year. That's more than the combined number of tickets sold to the most popular movies in 2014 (Guardians) and 2013 (Iron Man 3). So "dead," in this familiar construction, isn't the same as zero. It's more like a commonly accepted short-cut for a formerly popular thing is now withering at a commercially meaningful rate.

2013 - 2014 net change in music sales / streams

The recorded music industry is being eaten, not by one simple digital revolution, but rather by revolutions inside of revolutions, mouths inside of mouths, Alien-style. Digitization and illegal downloads kicked it all off. MP3 players and iTunes liquified the album. That was enough to send recorded music's profits cascading. But today the disruption is being disrupted: Digital track sales are falling at nearly the same rate as CD sales, as music fans are turning to streaming—on iTunes, SoundCloud, Spotify, Pandora, iHeartRadio, and music blogs. Now that music is superabundant, the business (beyond selling subscriptions to music sites) thrives only where scarcity can be manufactured—in concert halls, where there are only so many seats, or in advertising, where one song or band can anchor a branding campaign.

Nearly every number in Nielsen's 2014 annual review of the music industry is preceded by a negative sign, including chain store sales (-20%), total new album sales (-14%), and sales of new songs online (-10.3%). Two things are up: streaming music and vinyl album sales. Somewhere in America, an enterprising sociologist is fitting this into an interesting theory about how the emergence of new technologies in media ironically amplifies our interest in pop-culture anachronisms.

So what about vinyl? It is rising, yes, rising like a wee baby phoenix, from a prodigious pile of ashes. Nine million two hundred thousand vinyl LPs were sold in 2014, up 51 percent annually, even faster than the growth in video streams. Nine million is a lot more than zero, but commercially speaking, its overall impact on the market is meager. Vinyl accounts for 3.5 percent of total album sales. The CD market (which is dead, remember) is 15-times larger.

And how about the hits? The top 1 percent of bands and solo artists now earn about 80 percent of all revenue from recorded music, as I wrote in "The Shazam Effect." But the market for streamed music is not so concentrated. The ten most-popular songs accounted for just shy of 2 percent of all streams in 2013 and 2014. That sounds crazy low. But there are 35 million songs on Spotify and many more remixes and covers on SoundCloud and YouTube, and one in every 50 or 60 online plays is going to a top-ten song. With the entire universe of music available on virtual jukeboxes, the typical 3.5-hour listening session still includes at least one song selected from a top-ten playlist that accounts for .00003 percent of that universe. The long tail of digital music is the longest of tails. Still, there is a fat head at the front.

And if CDs are truly dead, then digital music sales are lying in the adjacent grave. Both categories are down double-digits in the last year, with iTunes sales diving at least 13 percent."