Have music sales hit the bottom?
Have we hit bottom?
That’s the question Reader Music scribe Tim McMahan and I have been discussing via email for the last month.
As we followed the first 4 weeks of sales for Bright Eyes’s latest effort, People’s Key, now at 60k after 4 weeks, I discovered overall sales in early February were so strong they actually beat last year.
When was the last time you heard that? We’ve heard plenty about declining sales (relentlessly like a drum circle that never ends) and we’ve recently read loads about the leveling off of growth in digital music.
This is 2011. The music industry is supposed to be toast, all record stores gone and everyone wired, wirelessly.
I was in New York in early March for meetings with the National Association of Recording Merchandisers and the topic of recent strong sales was discussed. The post-Grammy/Valentines week followed by Adele’s impressive first week sales of over 350k the next week caused our trade association to reach out to Soundscan which tracks physical and digital sales at physical and online retailers for more info.
Soundscan replied with the unthinkable. Not only were sales considerable those two weeks but it was the first back-to-back weekly increases vs last year since 2006. Wow.
The music industry has given up a lot of ground since 2000. But 2000 was such an aberration. 1 billion in unit sales seems unbelievable today with sales around 500 million and most articles and examinations point towards the rise of Napster as the turning point. Napster, Ipod, whatever.
There was more at work than evolving technology. Simple economics was also at play and that has nothing to do with the digital revolution.
Let’s take a look at the popular music industry since the advent of the album as consumers music medium of choice, about 1966. From 1966 to 1984, 18 years, total unit sales of albums measures in around 8 billion units. That’s through the album, 8-track and cassette eras.
It’s interesting to note that when each of those three formats were introduced it did not cause consumers to go out and replace their albums with cassettes or 8-tracks. If you wanted your album on tape, you recorded it.
But the compact disc was different. Suddenly, consumers wanted to own their music on CD and so a buying binge of replacing albums with CDs began in 1985, just like the conversion from VHS to DVD in the last fifteen years.
This replacement phenomenon is unique and skews all sales data after introduction of the new format.
So, when you look at unit sales from 1985 to 2003 the number adds up to around 13 billion. That’s a big number, not quite double from the preceding period.
How much of that jump in sales was consumers replacing their albums on CD?
I would argue it’s around 4 billion units, equal to half of all sales from 1966 to 1984. Did half of the boomers replace their albums with shiny plastic discs? From my inside perspective, I would say yes.
Subtract that 4 billion units out and that drops sales for 1985 to 2003 to 9 billion. A 1 billion increase from the previous period. A lot of units but it puts unit sales in proper perspective.
So, sales have been declining since 2000, eleven years now, but in retrospect that decline appears inevitable. The replacement buying binge wasn’t going to last forever. And the decline only became a topic once the mass merchants grew frustrated. They had been riding that horse to overall increasing store sales for a few years and now the mare was tired and coming up lame. Someone had to be to blame, darnit. Wall Street needed an explanation.
Where does that leave us now. So, we had two weeks in a row of good business. So what.
Well, it’s now been 4 weeks in a row. And the 13% down-for-the-year number from early February has been pulled back to 7%. With strong releases coming from Radiohead (March 29th) and Record Store day April 16th, things are feeling optimistic. Late March kicks off the best new release season of each year as key artists work to release new albums right before the summer touring season.
The 4th quarter release schedule gets a lot of press, but this time period is when the biggest albums of the year drop. Look back to last year. Eminem, Black Keys, Jack Johnson, She & Him, Deftones. In 2009, Eminem (again), Green Day, Phoenix, Dave Matthews, Black Eyed Peas. You get the idea.
I’ll report back in June on whether we maintained any momentum or if these windmills tilted out.
