Break It Down. Music Sales in 2011

Soundscan released their 2011 numbers for music sales. As we saw earlier, the first two quarters of the year saw a boom in music purchases and although sales lost some of their momentum during the last half of the year, 2011 was the first year since 2004 to see growth in album purchases from the previous year.

Before we go through the numbers, it is worth restating that TMD is primarily written for musicians and listeners of smaller genre categories. Independent music. As we will see, the major labels always claim the top prizes and determine the direction that the rest of us follow, if we can. A big IF.

The Good News: Barely
The good news is that album sales in the US grew a whooping 1.3%. Not much, but better than the landslide that has been happening for most of the 2000’s.

As always, the main forces behind these numbers are due to a handful of albums. This year there were only 13 albums that sold 1 million units or more. Led by Adele’s “21”. Those 13 albums make up only 0.0169% of the 78,875 newly released albums Soundscan counted for 2011. So for Independent musicians the story is pretty much the same. Only artists on labels can make it big, and realistically, even for those artists, the odds are still slim to none.

This percentage of top selling artists seems eerily similar to the amount of super, super rich people in the US.

It should be noted that Adele is on a small label, XL Recordings, whose list of artists include The White Stripes, Radiohead, Gil Scott-Heron and Sigur Rós. The term “small” being relative. Nevertheless, Adele's "21" seems to have been the main engine for increased sales in 2011.

The other interesting thing in these numbers is that the #2 best selling album of the year was Michael Bublé’s Christmas album. It reached that spot with only three months worth of sales. Some analysts have speculated that many of these were bought as gifts and people don’t like to give, or get, a digital file as a gift. Perhaps... I would suggest that more likely the demographic of his audience are not big iTunes users. That is to say they are older.

Lastly, 2011 was the first full year since the widely popular, but illegal site, Limewire was driven out of business by the courts. Illegal downloads dropped almost 20% when the site was shut down. This gap may have convinced some people to go legit to make music purchases. (Piracy continues to be a major problem and the debate over how to deal with it has gotten nasty, and remains unsolved.)

The Mixed News: Disemboweling the Music
As we noted in the post The Digital Domain: 1's and 0's or just zeros? many people are disemboweling albums by purchasing only a few songs. Cherry Picking. This is so common that the purchase of 10 individual tracks is now call a “Track Equivalent Album", or TEA. ¹ 2011 marks the first year when the combination of digital albums and TEA sales passed the 50% mark of total sales. 50.3% to be precise.

However, when music buyers decide to buy an album in its entirety, the majority still purchased that album as a physical CD. Yes, the shinny discs! If fact, 68.7% of album sales in 2011 were CDs! This is similar, albeit weaker, to what happened in the UK in 2011 where, according to BPI, the main British PRO, 76.1% of total music sales were CDs.

Geoff Taylor, the chief executive of the BPI, said that "Digital developments grab the headlines, but the CD remains hugely popular with consumers, accounting for three-quarters of album sales.

"Physical ownership is important to many fans and the CD will be a key element of the market for years to come."

Let's hope he is right.

That said, CD sales still fell 5.7%, but this is a major gain from the 18-20% losses that have been happening each year for the last four to five years. Many analysts are saying that the music business has turned a corner. That would seem to be premature given the volatile nature of the changes brought about by digitizing music for the consumer.

The Bad News: Lambs or Lemmings?
Part of why over all CD sales improved is that the major labels began heavily discounting their catalog (Older recordings). Many big box stores like Wal-Mart, Target and others sold CDs for as little as $5.99. This is a perfect example of the major labels heading off in a direction that the rest of us can’t afford to follow.

If you are a large label with a catalog of thousand of recordings you can make up the extremely discounted price through quantity. However if you are a Indie musician with, at most, a half dozen recordings, there is no way you could make a living wage selling your CDs so low. (Some executives at the major labels even questioned this practice, where it was heading and how small the margin at these prices is, even for the majors.)

Similar to the 13 best selling titles of this year, only a relative handful of albums sell enough to cover the such a low price. And we would guess most of these albums were the top sellers of their time.

Another way that the big labels are heading in a direction that the rest of us can’t follow is streaming, especially with Spotify. All the major labels are investment partners in Spotify, allowing them to make money from revenue that artists, whether signed to a label or independent, can not. This would include money from ad revenue and subscriptions. Spotify doesn’t pay “per-stream”, so they can parcel out payments anyway they see fit. However, the artists are stuck with the “average” payments of $0.0033 to $0.0013 per stream.

Getting back to Soundscan’s numbers, is worth noting that, as we have mentioned in previous posts, smaller genres don’t really measure up to the most popular ones. In fact while rock was up 1.9%, R&B, country, latin, christian/gospel all declined. Hidden inside the 4.2% decline of R&B is rap, which grew 3.3%. Other hidden numbers, jazz grew a whooping 26.1% Why jazz? Because Michael Bublé’s Christmas album was put in that genre.

The bottom line is that over all this is good news. But there are still a lot of issues out there that need to be addressed, especially for independent musicians: low payments; making a living; productions costs; the cost of touring and promotion; the rising cost of living; pirates, sharks, and Google; illegal copies; dealing with DMCA takedowns and a lack of basic information for the listening public.



1. TMD likes tea, but we don't like TEA...