2008 Full Year Sales Data on CDs vs. Online Music ... No Surprises

[mkrishnan]

http://www.nytimes.com/2009/01/01/arts/music/01indu.html

Total album sales in the United States, including CDs and full-album downloads, were 428 million, a 14 percent drop from 2007, according to data from Nielsen SoundScan. Since the industry’s peak in 2000, album sales have declined 45 percent, although digital music purchases continue to grow at a rapid rate.

The year’s biggest seller was Lil Wayne’s album “Tha Carter III” (Cash Money/Universal Motown), which sold 2.87 million copies, followed by Coldplay’s “Viva la Vida or Death and All His Friends” (Capitol), with 2.14 million. “Fearless” (Big Machine), the second album by the 19-year-old country star Taylor Swift, was third, with 2.11 million. (Ms. Swift also scored the sixth-highest seller this year, for her self-titled debut, released in 2006, which sold 1.6 million copies in 2008.)

...

Sales of digital music continued to rise steeply last year. Just over a billion songs were downloaded, a 27 percent increase from 2007, and some record companies say they are finally beginning to wring significant profits from music on Web sites like YouTube and MySpace.

But analysts say that despite the growth and promise of digital music — in 2003 just 19 million songs were purchased as downloads — the money made online is still far from enough to make up for losses in physical sales.

I'm sure it will be a compelling argument for the record labels to once again obstruct Apple and Amazon in their desire to sell music online, try to negotiate for stifling price increases that will drive people back to piracy, and engage in other crimes against humanity.

(Go Taylor Swift, though! I <3 her )

 

[Thomas Veil]

No, the data aren't surprising, but what do they consider "losses"? I doubt very much any of these companies are so destitute that they're going to be going to the government for bailouts.

 

[mkrishnan]

No, the data aren't surprising, but what do they consider "losses"? I doubt very much any of these companies are so destitute that they're going to be going to the government for bailouts.

No, I agree, although some of these companies are pretty big and work in multiple aspects of the entertainment industry, and so overall poor health causes them to shed jobs in one area or another (Sony is laying off a large number of people).

But I think the bigger problem is this: While revenue is shifting online, it isn't keeping pace with the decline of CD sales. On the other hand, they make very healthy profits from their concert-selling related business -- tickets, merchandise, etc. The problem with all this is it makes them be more conservative in their strategy. They pump more money into developing the cash cows -- Miley Cyrus, Guns N' Roses, AC/DC tours, whatever. That has a negative consequence for listeners when it means fewer small but highly talented bands get contracts and major label releases. And point to In Rainbows all you want, but the average up and coming band does not have the clout of Radiohead or NIN to just walk away from the recording industry.

That and, as I said, they will probably make another round of misguided attempts to sabotage legitimate online music selling because, in their puny, diseased minds, this is an appropriate response to the problem.

I'm all for alternative methods to vitalize the upcoming talent end of the music business without feeding into the insanity of the large record labels, but I'm hedging my bets.

 

[bruinsrme]

No, the data aren't surprising, but what do they consider "losses"? I doubt very much any of these companies are so destitute that they're going to be going to the government for bailouts.

I am not sure if the record labels get a cut from the concerts but tickets prices are crazy.

I haven't purchased a CD is years. The only music disks I have purchased are DVDs of the concerts.
When I can put over 1000 songs on my iPhone from a sizable library which are easily downloaded without taking up any extra living space, for me, there is no need to purchase a hard copy.

Losses, well I have noticed the music sections at the nearby bestbuys are getting smaller.
I just downloaded 50 songs this morning while sick in bed hacking up half a lung. No need to drag myself to the store to pick up the latest version of pink floyds dark side of the moon or britney, she is sooooo talented. (some one get her a brass pole)

 

[bruinsrme]

Concerts
Eagles $189 x 4
Jimmy Buffett $163 x 8
Van Halen $179 x 4
John Mellencamp $152 x 1
Police $225 x 4

At these prices I surely contributed to any losses seen in cd sales and Eddies rehab.

 

[mkrishnan]

At these prices I surely contributed to any losses seen in cd sales and Eddies rehab.

I listen to, well, newer music, and so my tickets aren't so unreasonably priced, but I do very much sympathize. Just the set of tickets you bought for one of your concerts would make for a very healthy yearly budget on buying music, either in CD or digital form.

 

[Abstract]

Over 1 billion song sales? Wow, imagine how much these record companies save in operating costs by not having to manufacture CDs and distribute them around the country. Could it be around 14% or more? All they had to do was sit there and take in profits. It's not like there are costs associated with setting up their own online shops. They're doing it through Apple, and some sales through Amazon. How much does it cost for them to rip a CD and send it to the iTMS?

 

[nanofrog]

I listen to, well, newer music, and so my tickets aren't so unreasonably priced, but I do very much sympathize. Just the set of tickets you bought for one of your concerts would make for a very healthy yearly budget on buying music, either in CD or digital form.

Especially if you can find bargains online.

 

[thecritix]

I am not sure if the record labels get a cut from the concerts but tickets prices are crazy.

Most often not, though increasingly the majors are using whats called a 360 deal..

This is where they take a cut of everything... and screw the artist even more.

Basically acts such as your American Idol stars are probably on a 360 deal, (the acts that the record label knows they can screw!)

When you actually look into what an artist gets from a CD/itunes sale its shocking!

 

[nanofrog]

Most often not, though increasingly the majors are using whats called a 360 deal..

Somehow, I don't find this surprising.

I like to see when an artist can find a way to do things through an alternative method, and become successful at it.

 

[mkrishnan]

When you actually look into what an artist gets from a CD/itunes sale its shocking!

As long as they're able to maintain a reasonable lifestyle and continue developing their music, what should I care? If an artist gets a few extra million dollars to spend on jewelry and cars and whatnot, how does that better me than if a record company takes the money, dilutes most of it among its workers, execs, shareholders, etc, and also puts a small amount of it, certainly, into new talent development? It would seem the latter is far more compelling to me.

I don't like it when record companies sue individuals via their RIAA proxy, although I am no fan of piracy. I don't like it when they drive away talent by making the economics of the industry infeasible for them. But once an artist passes through the gates of affluent, whether they make it to rich or filthy rich or not, to me, is neither here nor there.

 

[dmr727]

The other problem is that they're losing money on people like me. Because I can pick and choose which songs I want to buy, I rarely buy the whole album anymore. So instead of spending $15, I'm usually spending about half that, many times even less.