JPF Home Page Forums General Messages Industry Message Forum US cd sales plummet as people turn to digital music downloads

This is an article that I found on the Drudge Report. I tried to link it for you to read but was unsuccessful. Maybe someone else more internet saavy than I am can do it. The headline speaks for itself. My questions are this. Are you satisfied with your digital sales? Would you rather just sell phsyical cds? Which stores sell more downloads for you? Half of my listens which pay a fraction of a penny are sold on Rhaspody. The most downloads that I have sold which pay 63 cents each are sold on Apple Itunes, and my full album sales which pay a little over five bucks are sold on Payplay. What is your opinion of this trend of people downloading singles?

I tried to get the link not sure if it worked so I got the article.
It does not surprise me much. CD's are expensive. When I was a teenager we could buy singles, 45 rpm records. Albums were also available but singles were more common.

http://www.macdailynews.com/index.php/weblog/comments/13034/

"In a dramatic acceleration of the seven-year sales decline that has battered the music industry, compact-disc sales for the first three months of this year plunged 20% from a year earlier, the latest sign of the seismic shift in the way consumers acquire music," Ethan Smith reports for The Wall Street Journal.

"The sharp slide in sales of CDs, which still account for more than 85% of music sold, has far eclipsed the growth in sales of digital downloads, which were supposed to have been the industry's salvation," Smith reports.

Smith reports, "In recent weeks, the music industry has posted some of the weakest sales it has ever recorded. This year has already seen the two lowest-selling No. 1 albums since Nielsen SoundScan, which tracks music sales, was launched in 1991. One week, 'American Idol' runner-up Chris Daughtry's rock band sold just 65,000 copies of its chart-topping album; another week, the 'Dreamgirls' movie soundtrack sold a mere 60,000. As recently as 2005, there were many weeks when such tallies wouldn't have been enough to crack the top 30 sellers. In prior years, it wasn't uncommon for a No. 1 record to sell 500,000 or 600,000 copies a week."

"The music industry has been banking on the rise of digital music to compensate for inevitable drops in sales of CDs. Apple's 2003 launch of its iTunes Store was greeted as a new day in music retailing, one that would allow fans to conveniently and quickly snap up large amounts of music from limitless virtual shelves," Smith reports. "It hasn't worked out that way -- at least so far. Digital sales of individual songs this year have risen 54% from a year earlier to 173.4 million, according to Nielsen SoundScan. But that's nowhere near enough to offset the 20% decline from a year ago in CD sales to 81.5 million units."

Smith continues, "Meanwhile, with music sales sliding for the first time even at some big-box chains, Best Buy has been quietly reducing the floor space it dedicates to music, according to music-distribution executives. Whether Wal-Mart and others will follow suit isn't clear, but if they do it could spell more trouble for the record companies. The big-box chains already stocked far fewer titles than did the fading specialty retailers. As a result, it is harder for consumers to find and purchase older titles in stores."

Full article here.

[Thanks to MacDailyNews Reader "Tommy Boy" for the heads up.]

MacDailyNews Take: Not to sound like a broken record, but when consumers have the ability to buy only the good tunes and are no longer forced to buy a CD full of filler crap, where's the surprise in these numbers and trends? Hey, I like that song! Now it costs 99-cents instead of the $15 for the full CD of yesteryear. There's a main reason for the sales decline. Here's an idea: make more good songs and less bad ones (and stop with the DRM B.S. and think about upping the audio quality for legal online tracks while you're at it) and you'll probably sell more songs.

I think you hit it right, Bill. It's the singles moving the action on-line. A single at the record stores, when they're available are $6, and the imported singles are going for $10+. Who wouldn't rather pay 79 cents from an on-line store. The recent U-2 single was made available in 3 flavors, with different "flipsides". Kinda angered me - it's obviously a method of cashing in on the hardcore fans. Springsteen did the same thing last year with an album.

Just got a review copy of Corinne Bailey Rae's "newest", which is the same album with an additional 10 cuts. How can a fan get the 10 cuts without purchasing the old album? Only on-line. The cd buyer has to buy the same album he already owns in order to get the new songs. Companies do weird things to pull money outta your pocket.

PS - I was in California last week & tried to dig up a Tower Records. The store in COsta Mesa was closed, and the next closest town, which I forget the name of, was also closed. They still have an on-line store, but without a directory of phsical stores. Anyone know if Tower is still open in larger markets?

Tower Records is no more. Overall sales might not be so dismal if the record co's didn't put out so much disposable crap!

I think this trend is further proof that most CD's, nowdays, have only one or two good songs and the rest are pretty much forgettable.

People go online and buy/download the one or two hits and the rest of the cuts are ignored. Thus the explosion in online sales can't make up for the lost profits that record companies would earn if we all bought the CD at $10 - $16.

The thing that gets me, though, is that the cost of digital distribution is nill compared to traditional distribution so online sales are almost pure profit.

I think iTunes pays the record company at least 70 cents for every 99 cent download and I've heard from many artists that they only receive a fraction of that. So that's a healthy profit for the record labels.

Again, I think it all comes back to the fact that there just aren't enough quality songs on any given CD.

It seems to me that the artist or record label look for one or two great songs,from where ever they can get them,to sell the CD. The other songs on the CD may be written by the artist, producer,staff writers,etc.These filler songs get just as much mechanical royalties as the great songs.Filler songs will not be released to radio,just the great songs as advertising to sell the CD.Maybe the great songs should be paid a higher mechanical royalty.

It's NOT just the majors who only have 1 or 2 cool songs on a CD. Of the 25K albums we got last year, only a handful had multiple songs that got nominated (i.e. were in the "hit" quality range). With all the songwriters out there begging people to record their songs, it's sad that people fill stuff with filler. BUT.. things should change a little with the new Performance Royalty rates. Though small internet broadcasters need exemptions, in general, this will finally give motivation to the labels to use outside songs instead of inside ones. An album full of 15 hits will make the artist more money now than a song with 2 hits and 13 filler songs they wrote so they could earn mechanical royalties. Covers will be a great thing soon!

Brian

PS: The math in the article doesn't exactly make senses. If the industry went from 100 million albums sold to 81 million, that's not that far off from 173.4 million singles sold on line. The decrease then is only about 6%. Anyone else notice that?

I'm one of those people who just gets all warm & fuzzy when I see a movie or documentary where they show someone suceeding in the record buisness old school.
Ya know like in the recent movie 'That Thing you Do" or in Ray or LaBamba or Walk The Line or any show, movie, sitcom where what they achiveved was special.

Your family is sitting all together in front of a big Black & White televison THRILLED that they even have one, people still wondering how are people in this little box lol..
Your gonna be on the Ed Sullivan show.. Not American Star Search Idol which is driven by the I LOVE to watch people be humilated and see how they handle it, what's Simon gonna say or do next with his face. Oh but you get that "today it's just different times same thing".. My band was on mtv 4 at 4:30 am twice ever. Aren't we special? No, no, no there was only 7 channels then and UHF if your butt was on one of those 7 channels it was A BIG DEAL!

Best of all - The kids all running to the local record store to pick up the record. Lined up outside... Hearing that song on a Jukebox when Coke was a new thing and the burger & shake was a thrill. Or later down the road where that album had photos's in it and posters and lyrics you could actually read. Or Giant rolling paperr like in Cheech & Chongs Big Bamboo!
Yes the IPod oh how thrilling sharing & romantic... remember our song from our first night honey.. with the earphones lol...

Oh and by the way much of what i'm talking about is before my time! So it aint got nothing to do with memory lane or thrills on blueberry hills.

Well of course you know by now I'm nuts.. but i got a great idea.
How about the record industry look back on ther own history and do a little history repeats itself nature takes over. Stop letting every person who plays 3 chords write all there own songs. Same goes for bands the best band ever started the ball rolling for ruining everything for songwriters,, that would be The Beatles of course.
Now it took a alot of years to do it but it is near complete everyone writes there own songs. Okay not everyone literally, but dont please dont make me make a list of now & then because it will whop you over the head and leave you dumbfounded.
Oh and they can stop waiting for another Beatles why are they looking for something that they will never live to see as neither might our planet!

Okay back to the brand new idea-(yeah brand new) lets use my name as an example to start with. And now I'll confirm that I'm nuts.

Hi Mike, you are basically a loser and pretty much worthless to us the record industry these slew of of songs are garbage but... you been working at this for 25 plus years give us 1-3 songs.. lets take your very, very very best song. And then leave you here good bye & thanks! Now lets ring the next doorbell So your John Daubert you been doing this for what? lol... Johns my friend so I can use his name Next, Next! keep going and going.. you get the point...

Take everyones very best work than give it to one of your best singers or bands or whoever and put it all on the same CD! Oh shoot a CD with 14 songs that were the very best of 14 different Songwriters! What a Concept!
Oh no no see then we would have to hire more people and develop the artists instead of just letting him or her and the producer and computer do it all and fast.
and share all the PUBLISHING and royalities oh no no...
We want to keep EVERYTHING ourselves!
Oh well ya know what they say about greed and poor poor label aint selling like you used to. Spend time & money and make money!

No we expect kids to know the difference and pay for music.. pay for music
Check this logic.. Lets sell our music on the number one thing in the world people take from! I could never quite grasp that. You turn on the computer get information and then expect free crap. Is it wrong but kids have been on the computer since childhood I work with young bands all the time they dont want to pay for ANYTHING! It's not there fault it's just reality for now. Technology gives them the means to rip everything and they have the know how so what do you think?

Okay
The record labels dont have time to listen to all those songwriters songs Mike.
Well lets see how many CD's and songs One person can listen to Hmmm
Lets talk to Brian about that!


Less musicians work and the lone songwriter is headed for Jurassic Park!
BUT the computers are awesome and without them many of us dont know each other. But music in general was booming great before they were a factor at all.

Mike,

I think you're possessed. Seriously. = )

Brian

Oh, and the answer is roughly 70,000 myself. Give or take 10K.

Brian

so far. Digital sales of individual songs this year have risen 54% from a year earlier to 173.4 million, according to Nielsen SoundScan. But that's nowhere near enough to offset the 20% decline from a year ago in CD sales to 81.5 million units."

I'm not clear what the numbers are saying. If they are looking at gross revenue vs. units sold?
173.5 million units at $.99 ....$171.9 million total sales

18.5 million drop in CD's But at what price? even at $10 per CD that's $185 million loss. $15 per CD $277.5 million loss.
Even a $185 million loss is more than the total sales of downloads.

So in dollars earned they are losing a lot.
I don't see how you can just compare units. If a cd has 15 songs on it and you sell 85 million that's 1.2 billion songs.

Or am I seeing it all wrong. I never was any good at economics or math.

Hi Brian

I am truly shot lol... I am music 24/7 it's 8:17 am over here guess who hasn't gone to sleep yet?

We were just having a conversation tonight in the studio about this stuff.
One of my collaborators has been in the industry forever wrote for the Partridge Family and Produced "Born To Run" Now I produce him.. the stories are priceless.

70,000 Oh My God! ya see what I mean how great of an A&R person would you be? They would hate you... lol - making everyone look really bad.

Mike

http://tinyurl.com/beacg
http://tinyurl.com/rpvtt

Most CD's at Best Buy (the #1 CD sales place) are 11.99. So 18.5 million units lost at retail is about 222 million. The Digital song sales cover 173.4 million. So the loss is around 48 million dollars. That's not a 20% drop. Plus, we aren't even factoring in that there's almost zero cost of product here. No cartage, no packaging.. no breakage.. no placement or in store costs.. less advertising costs.. and now they are supposedly no longer using payola which is 100's of millions in savings. Overall, I think they are more profitable this year than last based on those factors.

Brian

If I was an A&R guy, I would only get to listen to handful of the stuff I listen to now. I'd be spending all my time in meetings, on airplanes, on the cell phone, at conferences and events and concerts and playing golf. And even if I DID listen to 70,000 songs, they would only let me sign 1 or 2 artists MAX in a year and that is only if I had a proven track record. I know Major Label A&R guys who have gone 10-12 years and signed ZERO artists. It's the corporate monster. It changes people whether they want to be changed or not. The system is the problem, not the people in it.

Brian

I agree Brian. Even with my simple analysis the numbers don't really add up. Too many missing factors.
Anyone can manipulate statistics to get the conclusion they are looking for.

Brian, you're math here makes a lot of sense and is probably closer to the truth than the article.

The alarmism is probably orchestrated to supply a pretext for stricter content protection legislation that the industry is lobbying for.

Phil C.

I agree 100%.

I also believe that video really did kill the radio star.

There was a thread here on JPF recently: "How eclectic are your music tastes." It was really neat to see how varied people's music choices are but it also reminded me that MTV has built an empire on the marketing concept that music is more about how hip and/or sophisticated we are as opposed to simply appreciating it for what it is.

I used to think that MTV was all about image over substance. It didn't matter how pathetic your music was as long as you had a killer video. But with each successive MTV generation, I've seen idol worship slowly morph into what it probably always was: self worship.

How many MTV channels are there? And how many actually play music? Most of them are a depressing, narcissistic parade of reality shows where you, the music fan, get to be the star.

MTV has reduced music to just another fashion accessory, like a tattoo or piercing, that you wear to help other people see the real you; the real, beautiful you.

Ultimately, it's the elevation of style over inspiration. It's what allows an endless parade of trained monkeys sell millions of CD's because they "fit the suit." The suit that all their fans will be buying next week at the local outlet mall.

Phil C.

[quote=MTV has reduced music to just another fashion accessory, like a tattoo or piercing, that you wear to help other people see the real you; the real, beautiful you.

Ultimately, it's the elevation of style over inspiration. It's what allows an endless parade of trained monkeys sell millions of CD's because they "fit the suit." The suit that all their fans will be buying next week at the local outlet mall.

Phil C. [/quote]

Hi Phil

Boy you ain't kiddin!

Only thing is they ain't selling! Hmmm Lets see Led Zeppelins 4th Album

No Title - No Photo Of the Artist - No Words Written On The Cover except Produced By Jimmy Page - No Single (Really) They were always forced into finding and using one. And most of all NO VIDEO result 28 million sold

There double album "PG" sold 16 million - on a doulble album man...
The industry ain't that stupid they know Alanis Morrisette sold like 20 million albums a decade ago.

Just another reason why before ths decade the 80's is the one I dislike the most.
Saw problems as soon as it started


Where is that little brown box that sat next to my bed with the 2 knobs, that only played music. Ya know the one where I couldn't see how HOT your were.
The gorgeous people like - Neil Young, Bob Dylan, Joni Mitchell, Billy Joel, Everyone in The Band, Janis Ian, Elton, The Allmans AM RADIO's "Ramblin Man"

Bring back the Teen Beat magazine so we have the one place to stick these people Justin, Britany, Paris and the host of others... put them where they used to put Bobby Sherman, Leif Garret, David Cassidy, they are musically no better.
Dont give them 10 year long careers.... and shove them down all our throats.

Balance!

I would turn on the radio and here Chuck Mangiones "Feel So Good: an insrumental on the radio all day smokin! And that damn song "Still The One" by Orleans ya know the could put it in a time capsule would be a HIT in any decade song.
Those guitars those harmonies made me a musician.
Musicain = Music - Music = Musician

Nothin' else to add except, Amen.

Phil C.

If its anything like the UK there are more bootleg illegal DOWNLOADS than anything else. Even the fleamarkets, traditional places to buy hooky CDs, are feeling the pinch. Heck there are free shareware sites that even let you download the artwork and have new albums and singles before they are officially released. I think that has caused slump in sales generally. Who is gonna pay for something when you can download free and have it before anybody else. Most of these sites operate from E. Europe or other god forsaken places where there is no enforcement able to shut them down. God help us all.

Covers might be the initial reaction from big corp but flood the market and it doesn't work anymore. It may be wishful thinking but I certainly like the idea of seperating the songwriter from the performer when it's warranted. The greats write their own songs but if it becomes financially painful for the big corps to subsidize the less-than-great-writer artist, maybe the producer will develop the balls to tell the artist to buy an outside song.

This thread has led to a vision of writers home mixing their stuff and putting it out on the web on centralizing sites like SoundClick; liason people regularly scanning those sites for material without performance or engineering bias (though quality will always have an influence); local studios taking chances and partnering with local bands and artists, acting as labels; big corps (shruken from today but still very influential) pushing artists, but with material taken from a larger pool; and even small studios and big corps putting out themed CD's with multiple artists doing their best stuff, often written by someone else; and net stations flooding listeners with a huge range of alternatives.

Performers would compete for cuts on themed CD's as much as writers do today, engendering artists to seek out songwriters. Local studios would attend and even sponsor open mics. Middlemen would be everywhere, and some would be successful in an expanded market. As record stores disappear, local venues could start selling CD's (marketable because of quality and convenience).

One thing I was thinking about for writers was that we could expand the marketable subjects of our songs. It wouldn't always have to be so personal. Think about the subjects of Gershwin tunes, Stephen Crane songs, etc. Boy-girl will always be, universally, but we might be able to write about damn near anything! Consider historical eras when the market was very different from now.

Let's go over the numbers one more time.


(For their purposes, the RIAA counts an album as 10 units. I'll use that conversion factor).

In the previous year: 112.6 digital downloaded singles and 101.9 CDs sold. 1,019 plus 112.6 equals 1,131.6 units.

This year: Digital downloads increased 54% to 173.4. CD sales declined 20% to 81.5. 815 plus 173.4 equals 988.4 units.

The one-year decrease in sales (1,131.6 units to 988.4 units) is 143.2 units (a 12.7% one-year decline).


The labels are structured so that they have other revenue streams (publishing, ring tones, etc.), of course. But, there may be a long-term shift in the market.

My opinion (which agrees pretty much with what I've read earlier in this thread): A major could have success with full CDs if they required that more songs be written by professionals ("outside" writers). The artist-"writers" would oppose this revenue stream drying up, but if it were a requirement of signing a contract they'd accept it. In the long-term, everyone would be in a better position because the product would be improved (and the sales would be there).

Greg Paul

Brian, It think the operative word here is increased TO 173 million. That means the increase in downloads is not 173 million but about 60 million. Frank V.