Saturday, January 3, 2009

Music industry: bad news keeps on rollin'

As with previous three years, digital downloads are up but CD sales and total revenues are down. The new wrinkle is that sales of vinyl albums have hit a record — at least for the 18 years they have been tracked.

The data reported by the various news articles use Soundscan data, which by definition is only US and Canada.

Nielsen SoundScan is an information system that tracks sales of music and music video products throughout the United States and Canada. Sales data from point-of-sale cash registers is collected weekly from over 14,000 retail, mass merchant and non-traditional (on-line stores, venues, etc.) outlets. Weekly data is compiled and made available every Wednesday. Nielsen SoundScan is the sales source for the Billboard music charts.
Facing this sort of bad news, the labels are doing what they can, but so far nothing is working:
In an effort to cope with changing technology and the threat of Internet piracy, the recorded music industry has been exploring new sources of revenue. Royalties from satellite and Internet radio and so-called 360 deals with artists, in which the label shares in concert ticket and merchandise sales, contribute to the labels' bottom line. Video games such as "Rock Band" and "Guitar Hero" also generate licensing fees.

Nielsen doesn't track those alternative revenue streams, which are not yet large enough to offset the decline in CD sales.
Of course, the story would be even worse overseas, where the pirated vs. paid download fight may be already lost.

On an evening when our PBS station is replaying a 2007 “British Invasion” reunion concert for the umpteenth time, another noticeable trend of the Soundscan data was the absence of “classic rock” artists among the leading digital songs and artists. This appears to draw a clear cultural (and technological) boundary between the album-oriented era of the boomers and the digital downloads favored by millennials.

The best-selling US albums of all time are dominated by older acts. Of the top five albums, all are by bands (or artists) that began their recording careers in the 1960s or 1970s — as are 8 of the top 10 and 19 of the top 25. Given declining album sales, those are records unlikely to be broken.

For 2008, the leading digital songs and artists were those from the past 15 years. (The one exception was Madonna, who was paired with a boy band star who started in 1995). Of course, these are leading in an era when more digital downloads are stolen “shared” than paid for.

When today’s consumers are paying less money to artists than did their parents (or grandparents), obviously it’s less lucrative to be a rock superstar. Will this declining ability to monetize also mean a concomitant decline in their cultural impact? Or has the declining value of superstar-dom come from the fragmentation of the distribution channels — the end of top 40 radio and similar gatekeepers?

Such a fragmentation of distribution has had a profoundly democratizing influence on books and the news media. There are signs that the “long tail” is having the same effect on the music industry.

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