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.

A Pointless Debate

Recently David Touve, an Assistant Professor of Business at Washing & Lee University posted a blog asking “Is a stream on Spotify (or any music service) really worth less than an iTune sale?”

His attempt to show that an iTune sale or a Spotify stream are basically worth the same, in terms of payment to the artist, is arrived at by fuzzy math that assumes a listener will play a song purchased from iTunes 250 times. (Where he gets this number is anyone's guess. A quick look at your iTunes app will show that most songs get played far less.) By prorating the cost of the song by 250 plays, he would have us believe that the price per play is $0.0028, which he believes compares favorably to the urban myth of Spotify's $0.0033 per stream payments.

The Serpent's Fruit

I posted a link to a news article in the TMD ITN page but thought that it deserved a closer look. It’s not about music per se, but it is about digital distribution, which is definitely something that musicians have to deal with nowadays.

However, this time it is books that are in the news, specifically e-books and how they are priced.

A class action antitrust lawsuit has been filed in a US District Court by the Hagens Berman litigation group alleging that five major publishers conspired to raise the price of e-books and force Amazon to drop its $9.99 e-book pricing.¹

According to the lawsuit they didn’t act alone. They conspired with Apple, Inc.

Land of the Free?

I was working on another post when two music news items caught my eye. Both about the same thing. Labels who are removing themselves from the streaming service Spotify because the streaming payments are so small it makes it not worthwhile having their catalog available.

One of the reasons that streaming services, and new music gurus, give to justify low payments, are that the labels and artists, due to piracy, now have to complete with free. And we are talking payments below 1/3 of a penny or lower with streaming services.

It is interesting to note that the labels in question couldn’t be farther apart in musical style.

Who Are They Fooling?

So, after years of waiting, Spotify is here in the U.S. What does this mean for artists? Already the contradictions have started. Sean Parker, who is on Spotify’s board, is giddy over the fact that the service will enable “music to be shared freely across the world -- all the while empowering artists to reap the economic benefits of selling their music". ¹ Am I the only one that sees the contradiction in this statement? There is no income from shared music.

As we all know, when the milk is free, you don’t buy the cow. The idea that a Spotify user, especially one that is paying $9.99 to be on the top of Spoitfy’s three tiered system, will go out and buy music they already have access to is absurd on its face.

An Average Album

In the post The Façade we looked at how in order to compete with major and indie labels and their artists, I set out to make my, artist owned, label look as professional as possible. This had some unintended consequences. People really thought that my label was a big deal and, along with that, I must be super rich.

The idea that musicians are all rich and famous has been around for decades. It’s part of the dream that the music industry pushes every year in their giant commercial, The Grammys.

Each spring the music industry puts on a star-studded spectacular award show featuring that year's most popular artists. The top acts in the world of Pop, Rock, R&B and County perform their hits and take home their awards, all in an effort to generate more interest and sales in their albums and songs. The Grammys want you to live vicariously through the lives of these stars, and give the impression that everything about music is glamorous, exciting and super-rich. (We also see this slight-of-hand at the Oscars. Glitz, glamor, fame and money.) They are selling the dream.

The Digital Domain: 1's and 0's or just zeros?

In the last several posts we've looked at how many recordings an Indie musician would have to sell to make a couple of economic target goals: the U.S. minimum wage, and rent, specifically mine, which is a little more than $1,300. Up till now we've only looked at physical product, CD's, comparing sales on an artist's website, at a gig, and through retail stores. We have seen that the farther away the artist got from the customer the more units they have to sell to make our target goals. For example, if an artist sold a CD at a gig for $15 they would be able to apply more of the income from that sale to their rent than if their recording was sold through a retail store via a distributor, both of whom would take their cut.

Below is what this looks like on a graph.


Click image to enlarge

Now we're going to enter the mysterious world of digital downloads. I use the word "mysterious" because some of the of the definitions of that word, such as "difficult or impossible to understand", "having an atmosphere of strangeness or secrecy" and "deliberately enigmatic" are perfectly suited to the digital download world.

The Tale of Retail

In the last post we saw how a recording artist needed to sell 85 CDs each month to make U.S. minimum wage, $1,160. Not every Indie musician can do that. We are competing for sales with a lot of very heavy hitters, the two biggest being iTunes and Amazon. And to make things worse, hopefully they are selling our stuff too, which means our own websites and performances are competing with two of the largest marketplaces in the world.

One of the ways that an Indie artist used to be able to do to get their music out in stores was get their recordings carried by independent distributors. This was especially true for New Age artists, or its off shoot genres, Celtic, Native, Flamenco, Chill... At one time there were a lot of little stores out there that mostly sold books, crystals, incense, wind chimes, and music. They had recordings that the big box music stores did not.