The Official RIAA 2015 Statistics Are Out

The RIAA has released its statistics for 2015 and, as always, there are some surprises. The things to remember about the RIAA is that it works for the record labels (especially the majors), so some stats you have to take with a grain of salt. Here are some of the more noteworthy data points.

• There was a very slight increase in the recorded music part of the business, with revenues of just over $7 billion, for an increase of 0.09%

• Streaming accounted for more revenue than any other income stream for the first time, accounting for 34.4% of income, while download sales made up 34%, physical sales were 28.8%, and synch were 2.9% of total revenue.

• Paid subscription revenue increased 52.3% to $1.22 billion, compared to $800.1 million in 2014, while ad-supported streaming revenue increased 30.6 percent to $385.1 million. All very good news!

• Revenue from CDs, vinyl and DVDs of albums and singles fell another 10.1 percent to $1.9 billion (although that was less than predicted). CDs fell to $1.521 billion from $1.83 billion the year before based on 123 million CDs that were sold last year, which was down from around 143 million in 2014. 

• Vinyl sales continued to soar, generating $423 million from 16.9 million album sales and roughly 500,000 singles, an increase of 31.8 percent.

Here's the catch - the RIAA's numbers reflect retail sales, which means that the above numbers don't reflect how much the labels actually received for their music, although wholesale prices are from 65 to 70%.

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Will Music "Windowing" Become The Norm?

When Adele released her latest album 25, it wasn't officially available on most streaming services, which certainly helped her attain some healthy sales. Now nearing 20 million sales worldwide, many label execs have taken notice and want to institute the same policy with other artists as well.

Known as "windowing," the strategy has been used in the movie industry for some time. That's where a film is released on in the theaters for a period of time, and only allowed to go to rental and television only after it's finished its theater run.

The music version of windowing would have a superstar album release be only available via CD or download for a period of time before being released to the streaming services.

While that sounds all well and good on the surface, it also sounds like an industry pulling at straws in hopes of peeling back the flow of time. It won't work for a few reasons:

1. Consumers have now adapted to streaming and they're not going back. They expect to be able to find the music they want on their platform of choice right now and if your latest release isn't there they'll just move on.

2. Adele is a special case, with sales propped up mostly by soccer moms and baby boomer women (Sony did a study) who are predisposed to buy a CD or download.

Windowing is a bad idea, and while I don't think it will ultimately get any traction, it's only pushing back the inevitable. Streaming is here to stay until the next new technology is upon us, so let's all get used to it and maybe even enjoy it.

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On A Positive Note - Music Sales Up Around The World

While we're used to hearing about the gloom and doom in the recorded music industry, it appears that the first half of 2015 has actually been a bright spot in sales.

At the halfway mark in the year, many countries that had previously seen their total sales slip recently have actually recorded increases, and all of it has come from digital music.

Germany, Italy, Sweden and Norway have all seen their CD sales drop by varying amounts, yet their total sales have risen, with streaming revenues rising to the forefront, according to Nielsen. The US and Canada also saw sales increase, although total revenue figures haven't been released.

One of the trends that mostly continues downward is what's known in the industry as Overall Album Consumption (OAC). It's increasingly turning into a single song world as more and more people abandon not only album purchases, but listening via streaming as well.

Interestingly enough, OAC is down in most countries, but actually increased by 14% in the first half of the year in the United States. No definitive reason has been sited, but the feeling is that the figure will even out by the end of the year, yet still stay in the positive range.

What do these figures mean? It means that more and more people are paying for music. Where many consumers previously got their music for free either through piracy or via a free streaming tier, an increasing number are turning to streaming subscriptions.

Now with Apple Music finally launched, and with YouTube's Music Key around the corner, we should see additional increases by the end of the year. My prediction - we'll be surprised at how much the industry has grown at this time next year.

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England's Music Retail Outlets Actually Growing In Number

While music retailers in the US are getting more and more scarce, just the opposite is happening in merry old England. In fact, the number of retail outlets are up 20% from last year!

It's hard to believe that the UK now has 10,391 retailers selling music physical products, as compared to only 4,206 in the US, according to IBISWorld market research. And this from a country that has about a fifth of the population.

Even though there's more places to buy CDs and vinyl, that doesn't mean it translates into increased sales. In fact, physical product sales in the UK were down 5% last year. Just as a comparison, US physical sales were down 14%.

What that seems to indicate is something that many in the industry (including myself) have been saying. If music is more available, then there's more opportunity for an impulse or gift buy.

That doesn't mean it would stem the tide of digital music services, but it could slow it down a bit, just like in the UK.

Nonetheless, if you're in the US or the UK, cherish your local music retailer and do your best to keep him in business. You may regret it someday when he's not around.

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The Pandora Effect On Music Sales

A study by Pandora earlier this year has found that the more a song is streamed on the service, the more actual sales it will generate. If that's the case, it turns out that Pandora is a radio-like service in more ways than one, as radio plays have always lead to sales as well.

The study, which was outlined in a Billboard article, found that the average positive effect resulted in a 2.31% increase in music sales for new music, and 2.66% for catalog in something they called "track equivalent albums," which is a metric that counts 10 tracks as an album.

This ratio really changed between music released by major and indie labels. New music from the major labels played on Pandora resulted in a 2.82% positive effect, but only 0.62% for indies, who fared much better on catalog at 3.85% compared to the major's 2.36%.

The study also looked at how the number of streams affected sales as well. It found that if the streams were at least 25 times the sales, the positive effect was around 5%. When the streams to sales ratio was 150, the positive effect grew to 15% (I'd like to see the methodology for this, as the results seem dubious).

As a result of all this info, the researchers could put a value on each Pandora stream that was higher than the actual royalty paid. For instance, new music was valued at 0.265 cents while the actual royalty paid was 0.13%. Catalog music didn't fare nearly as well though, being valued at only 0.135 cents for only a 4 percent increase.

While the numbers look impressive, it's important to remember that the study was sponsored by Pandora in the first place, and these numbers will be used in the various upcoming lawsuits and hearings that the service is involved in. That said, there have been previous independent studies in the past that have found similar results, like this one from the NYPD Group.

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Is Wu-Tang Clan’s New Album A Look Into Future Music Industry Sales?

The only copy of "The Wu - Once Upon A Time In Shaolin"

When Wu-Tang Clan announced recently that they’d be pressing only one copy of their upcoming album The Wu - Once Upon A Time In Shaolin and would put it up for auction after a museum listening tour, the general thought of music industry insiders was that this was a giant publicity stunt.

Well, stunt it is that’s working beautifully in raising the group's visibility, but it’s also an excellent case study in one of the principles of the Economic of Free, a theory put forth a few years ago in Chris Anderson’s book called Free: The Future of a Radical Price. Whether they know it or not, Wu-Tang is proving that the little understood second principle of the concept works like a charm.

While Anderson doesn’t outline the concept of the Economics of Free (E of F) specifically like I’m going to in his article, breaking it down into the following two principles makes it easy to grasp and see in action. Let’s take a brief review in how E of F applies to music sales in the world we live in today.

The Two Kinds of Products

First understand that the typical artist has two kinds of products; infinite and scarce. Typical infinite products are music or videos in a digital form, which cost nothing to reproduce. Scarce products include tickets to live shows (not very scarce, but more so than digital music), custom CDs and CD box sets, signed merchandise, exclusive access to musicians, backstage passes, private concerts, and anything else that has a limited supply.

Giving Some Away

Keeping that in mind, Principle #1 is “Give some or all of your infinite products away for free in order to charge for the more scarce ones.” We see this all over the web every day in the form of the many “freemiums” that are offered. For instance, sign up for the free tier of Pandora or Spotify, and if you like it, you can buy up to the next level of service that makes it ad-free with better audio quality.

Instead of using money, many Principle #1 transactions revolve around social currency, like giving away a free download or exclusive content in exchange for an email address. That allows the record label, artist or band to continually offer other products that you might buy later that potentially carry a higher profit margin. Read more of Forbes.

The Best Way To Boost Your Album Sales

It's a sad commentary when the best way to boost you iTunes sales if you're already famous is to pass away. This is what happened to the Everly Brothers catalog after the passing of Phil Everly recently.

Everly Brothers albums were up a whopping 455% last week, according to Nielsen SoundScan, and their individual songs were up 696%.

Now to put that into perspective, that meant that only 5,000 albums total were purchased!

The biggest seller being "The Very Best of the Everly Brothers," which moved 2,000 copies. It actually made #8 on the Country Catalog Albums chart with this number. Their top selling single was "All I Have To Do Is Dream," which was up by 490%, but that just meant 4,000 total downloads.

This is just another point that sales are not what they used to be, and probably won't be in the future.

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New Tools Reveal Music Industry's Secret Strength

If you believe everything you read, the music industry is swirling the financial drain. There’s always some new study or article that purports to show how business is much worse than it’s ever been. But every industry goes through changes at some point and either evolves or dies. Why should the music industry be any different?

The fact of the matter is that if you combine the global revenue from recorded music, licensing, publishing, merchandise and touring, 2012 was better than ever for the music business as a whole, with over $67 billion in global revenue. That said, revenue for the recorded music business slipped about .3% last year, according to the International Federation of Phonograph Industry (IFPI). 

But there are some bright signs even in the recorded music part of the business. Take Adele, for instance. Read more on Forbes.

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Why Japan Is Nearly The World's Largest Music Market

A recent report from the IFPI (International Federation of the Phonographic Industry) stated that Japan is poised to become the largest music market in the world. Yes, you read that right. In 2012, Japan was only 1.3% behind the United States in music sales even though it has only 41% of the population.

This seems to be a totally astounding figure, but as usual, the numbers don't tell the entire story. It seems that the Japanese market is a very different animal than the rest of the world. Evolver.fm got to the bottom of the issue by asking Alan Swarts, who's a former VJ for MTV Japan and knows the landscape there very well. Here's why he thinks it's different:

1. Everything is more expensive in Japan. CD's there are about $30 US. 

2. CDs have a fixed price. Unlike everywhere else in the world, music, books, and DVD prices are protected by the government and can't be discounted. 

3. Obsessive collectors inflate the market. As a result, a hit act will usually release multiple packages containing concert DVDs, remixes and outtakes, which makes for stronger sales. 

4. There is no digital piracy. Hard to believe, but illegal downloading almost doesn't exist. Most people buy music from legal sources. Let's chalk that one up to the ingrained ethics of the population. 

5. Digital music is still in its infancy. Even though iTunes exists, it's been somewhat squelched by a very powerful recording industry there. Digital never caught on because the music industry, with the help from the government, never let it.

So there you have it. The music business is growing and thriving in Japan like nowhere else, but this might also be the only place where it can still happen. It will be interesting to see if streaming catches on, as Japanese users completely skip over downloads.

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A Look At Music Sales So Far

At the half-way point in the year, we can look at music sales and wonder where everything is going again. Here are the facts:

• Justin Timberlake's The 20/20 Experience is the years biggest seller, with just over 2 million sales.

• No other album sold more than a million, with Bruno Mars Unorthodox Jukebox at 985,000, Mumford & Sons Babel at 600,000 and Blake Shelton's Based On A True Story at 703,000

• Album sales are down by 5.6% over last year.

This just goes to show that we really do live in a single's world. When the business was at its peak, these would've been poor sales for a week, let alone 6 months. On the singles side:

• Macklemore and Ryan Lewis sold 5.56 million dowloads of "Thrift Shop," which is the fastest selling song for the first 6 months of any calendar year.

• Pink's "Just Give Me A Reason" was second with 3.5 million, Bruno Mars "When I Was Your Man" with 3.4 million, and Rihanna's "Stay" with 3.3 million followed.

• Digital singles are down by 2.3% from last year.

Obviously some big releases by Jay-Z and Kanye West don't figure into the numbers here, so by the end of the year the overall sales performance can look completely different, but so far, sales aren't setting the world on fire.

Could it be the fact that more people are streaming instead of buying? Perhaps the music isn't compelling enough? What do you think?

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Music Spending: The Same As It Ever Was?

SXSW is rapidly becoming THE place for all types of announcement and product releases, from hardware to software, album releases to media studies. Where once other conferences like MacWorld, New Music Seminar, MIDEM or MusicTech were the center of attention, they've all ceded their importance to the show held yearly in Austin.

And since the music world is now revolving around SXSW, it's only appropriate that Nielsen Entertainment should introduce their latest study of spending on music there. The study looked at the consumption habits of 4,000 "music fans," who's category accounts for 75% of music spending in the US, and takes into account everything from the purchase of music, concert tickets and artist merchandise.

As you can see from the infographic below, the most serious music fans, the "aficionados," can spend as much as $422 a year on music. The fact is that Nielsen also discovered that they illegally file share more than any other segment, with an average of 30 a year, which didn't seem to impair their actual spending on music music (perhaps it even enhanced it). This segment accounts for as much as 40% of music spending.

The next segment spends between $196 and $363 per year, with a subcategory called "Big Box" who shop at mass retailers partial to pop and country music.

Finally, the least engaged consumer spent between $44 and $121 per year on music. 60% of this category has never seen their favorite artist live and is more likely to use a free streaming service like Pandora. 25% of these use Spotify or Rhapsody.

I don't know that the general findings of this study are any different from any other era or decade of music. There's always been a multi-tiered system of music consumers that ranged from ambivalent to passionate to aficionado, so that hasn't changed. I don't even think that the spend levels have changed much, adjusted for inflation. In fact, this probably holds true for other segments of the entertainment industry as well.

What is interesting is the way music is being consumed, as shown by the study. Take notice the differences between the category between CD sales (purple) and digital tracks (orange). Then take notice how much live events (red) make up each category. Finally, check out where paid online subscription comes in (dark green).

This all goes to show that, if anything, there's a chance industry growth. In fact, Nielsen exec David Bakula estimates that it could grow as much as $2.6 billion, which is certainly good news for the for anyone with ties to the business.

The study does point out what everyone seems to forget is that when we speak of the "music industry;" there's a lot more to it than just recorded music. While recorded music is less than half of what it was at its peak, the rest of the business remains somewhat healthy.

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Global Best Sellers Of 2012

Think you know what the best sellers are from 2012? You might be surprised. Here are the worldwide single and album Top 10 thanks to the IFPI. Of course, expect these numbers to change in 2013 as streaming becomes more widespread. Music subscribers were up 44% last year to 20 million and download sales were down 12%, and if that continues, these charts will change forever.

Global Album Best Sellers in 2012

	Artist	Title	Total (m units)
1	Adele	21	8.3
2	Taylor Swift	Red	5.2
3	One Direction	Up All Night	4.5
4	One Direction	Take Me Home	4.4
5	Lana Del Rey	Born To Die	3.4
6	P!nk	The Truth About Love	2.6
7	Rod Stewart	Rod Stewart	2.6
8	Rihanna	Unapologetic	2.3
9	Mumford & Sons	Babel	2.3
10	Maroon 5	Overexposed	2.2

Source: IFPI

Global Singles Best Sellers in 2012

	Artist	Title	Total (m units)
1	Carly Rae Jepsen	Call Me Maybe	12.5
2	Gotye	Somebody That I Used To Know	11.8
3	PSY	Gangnam Style	9.7
4	fun.	We Are Young	9.6
5	Maroon 5	Payphone	9.1
6	Michel Teló	Ai Se Eu Te Pego	7.2
7	Nicki Minaj	Starships	7.2
8	Maroon 5	One More Night	6.9
9	Flo Rida	Whistle	6.6
10	Flo Rida	Wild ones	6.5

Source: IFPI

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2012 Music Sales: No Reason To Celebrate Yet

In the last few days just about every print and online publication has had an article about the triumph of the music industry last year. It seems that sales were up for the first time since 1999, which no doubt is a good thing. But look a little closer at the stats and you have to come away with a "hmmmmm."

According to reports from both the international trade group IFPI and research company NPD Group, last year's sales jumped 0.3% to around $16.5 billion, and digital music, which increased 9%, represented 34% of that total. All well and good there.

Then you read that a lot of that was due to the fact that music piracy was down a lot last year:

• Consumers using P2P services to download music declined 17%
• The volume of illegally downloaded music files from P2P declined 26%
• Music files burned and ripped from CDs owned by friends and family fell 44%
• The number of files swapped from hard drives dropped 25%
• The volume of music downloads from digital lockers decreased by 28%
• 40% of consumers who illegally downloaded in 2011 stopped doing so in 2012

On the surface, all good news. By every account, music piracy is on the decline. But think about it - all this and total music sales only rose 0.3%?

Something's not working with these numbers, but I suspect it's the same as when the RIAA and IFPI were claiming that for every one sale, somewhere between 9 and 19 were pirated, depending upon the day and what side of the bed the researcher got up on. Let's face it, numbers like these were never dependable in the first place.

Here's something else that's scary. The biggest selling album of 2012 was the same as 2011; Adele's 21, this time with 8.3 million compared with over 18 million the year before. Once again, on the surface it's great that any album in the Music 3.0 age (soon to be Music 3.5 by the way) can sell this many, but bad in that there was no new album released in 2012 with enough juice to overtake it.

I don't want to come off like a naysayer, since I'm the biggest proponent that things aren't as bad as they're sometimes made out to be, and what we're living through is only the natural evolution of things. I'm just saying to always take industry numbers with a grain of salt.

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You should follow me on Twitter for daily news and updates on production and the music business.

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Music Sales Needed For Minium Wage

A few years ago there was an interesting infographic that floated around the Internet regarding the number of sales of various music products in order for an artist to make the US minimum wage of  $1,160 per month. Based on an analysis of attorney Steve Gordon, the chart has been updated for 2012, and the good news is that there's more potential income streams than ever. The bad news is that the magic number isn't any easier to attain if you're in DIY mode.

Take a look.

If you take notice, you need a large number of streams on Spotify to make money as an indie, but it's almost impossible if you're on a major label, since they take most of the income. That sounds pretty bad, but the reality is that if you're getting a huge number of plays and you're on a major, then you're probably touring and making money that way. As is the premise of the Music 3.0 strategy, your music is your marketing.

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Music Sales For 2012 Not Pretty

Soundscan released its mid-year music sales report on Wednesday and for the most part, the state of the industry is not pretty.

Album sales are down 3% from last year, but that's not the worry. The biggest seller is still Adele's 21, an album released at the beginning of last year. New albums from superstars like Justin Bieber, Madonna, Bruce Springsteen and Nicki Minaj have yet to make much of a sales dent.

150 million albums have been sold so far this year, behind last years 155 million. Adele's 21 has sold 3.69 million this year and more than 9.4 million in the US since it was released in January of 2011. What's a bit depressing is that 21 is the only album that's cracked the million barrier this year. Lionel Ritchie's Tuskegee is close with 912,000, and the latest boy band sensation One Direction and their Up All Night comes in third at 899,000.

But only 11 albums have gone past 500,000 this year so far, despite all the superstar releases. This is also down from last year when 16 went gold by this time.

Singles are a bright spot, however, as they're up over last year by 6%. The top selling track is Gotye's "Somebody That I Used To Know," with over 5.5 million downloads since the first of the year. fun.'s "We Are Young" is the runner up with 5.09 million sold, with Carly Rae Jepsen's "Call Me Maybe" (which is selling for a quarter on Amazon MP3) coming in third with 4 million downloads.

Even those numbers are down a bit though. In 2012, 47 songs have sold at least a million, while in 2011, 52 songs had reached that point by this time of the year.

Is streaming starting to take it's toll?

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What It Takes To Earn Minimun Wage

Here are some depressing stats if you're an artist. In order for a solo artist to earn the US monthly minimum wage of $1,160, this is the quantity of music you must sell:

• Spotify streams - 4, 053,110

• Last.FM streams - 1,546,667

• Rhapsody streams - 849,817

• iTunes Tracks - ($0.99) - 12,399

• iTunes Albums ($9.99) - 1,229

• Retail Album CDs ($9.99) - 1,161

The list sure makes CD sales look good, doesn't it?

In actuality, if you think you're going to make a career in music as an artist, it's best to get it out of your mind right now that the bulk of your income will be from music sales of any type. It's never been that way before in the business, and it certainly isn't that way now. In fact, 95% of the money that most major artists make come from sources other than music sales, like publishing, touring, merch and sponsorship.

Remember, as stated over and over in Music 3.0, your music is your marketing. It enhances your ability to make money in other ways.

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Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

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Music Sales Increase Again

For the second consecutive year, music and CD sales have increased in the US, according to NPD's annual music survey. The study found that total music sales were up 4 percent in 2011 over the previous year, and the number of CD buyers up 2 percent.

Paid downloads were up 14 percent, and the average annual spend on iTunes, Amazon and other music stores was up 6 percent over the previous year to $49.

While many in the music industry might debate the stat, NPD found that illegal downloading was also down, decreasing to 13 perent of listeners from a peak of 19 percent in 2006.

Why all the good news? NPD sites several factors, including the improving economy and better music, but the final factor sits right where I've always suggested in previous blog posts and books. The research firms feels that increased use of online subscription music services like Pandora and Spotify was responsible, since consumers get a chance to sample the song, then become fans and choose to buy it rather than download it illegally.

One last stat that I found interesting; the study found that listing to online radio grew 29 percent from a couple of years ago, which means that a full 43 percent on Internet users currently engage in the action.

As I've always said, the music business in not dying. It may be changing, evolving and morphing, but people still enjoy music as much as ever.

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Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

You should follow me on Twitter for daily news and updates on production and the music business.

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What Do Artists Earn Online?

Okay, ready to have your mind blown? Here's an infographic that describes just how much you have to sell to earn the US monthly minimum wage of $1,160. On the right is the percentage of sale that you actually make. The graphic comes from informationisbeautiful.net.

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You should follow me on Twitter for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

The Official 2010 Music Sales Stats, Or Are They?

As you can see from the chart on the left, the RIAA recently released their official 2010 music sales statistics. As with most stats, they can be interpreted different ways, both good and bad. Here's one way to look at them.

• 1.265 billion downloads were sold worth $2.38 billion. That's a lot of music.

• Ringtones (seen here as Mobile) were down by just about 28%, but worth $526 million, still a lot of money.

• There were almost 30% more subscribers to subscription music, but the revenue was down by almost 6%. Not a good sign.

• No surprise here, but CD sales were down by 23%, but that meant that there were still 226 million sold for a revenue total of $3.36 billion. That might not be as much as what was sold at the height of the business, but it's still a lot of music.

• Vinyl was up by 26%, but that only meant 4 million units for $87 million in income, a mere drop in the bucket.

• One excellent stat for musicians is that performance royalties were up by 60% to $249 million.

Now keep in mind that what these stats represent are every sale that's been recorded by Soundscan (the service that measures music sales whenever a barcode is scanned), but doesn't represent anything sold independently on artist websites or distribution sites like CD Baby or TuneCore. It's been suggested that there's actually a huge hidden and uncounted amount of sales that you'll never see represented. As a result, the music business may be much healthier than the RIAA stats indicate. The problem is, we'll never know for sure.

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Check out my Big Picture blog for daily discussion of music, recording, and production tips and tricks.

Proof That The Music Industry Is Not Dead

You keep hearing that the doom and gloom about the music industry, and indeed it's in a terrible funk, but here are a couple of graphs from the RIAA (the record label trade association) itself that prove that music is in fact more popular than ever.

The charts provide an excellent overall picture of exactly what kind of music product has been sold since 1973. These charts take into account all kinds of music distribution formats, from vinyl albums to cassettes to 8 tracks to CDs to digital downloads.

The first chart just looks at albums.

You can see that the the best years were from 1995 until 2001 with the peak of almost 1.1 billion units in 2000. By 2010 sales were down to about a third of the peak sales, but digital album sales were increasing at a fairly rapid pace.

Now lets look at singles.

As you can see, the single was virtually a dead format by 2003, but once iTunes came online, the single took off into the stratosphere sales-wise to 1.1 billion in 2010.

What's the take away? In 2000 the music industry had it's best year ever with about 1.2 billion units (albums and singles) shipped. In 2010, the music industry shipped 1.4 billion units (combined albums and singles). The difference is that most of them were singles, which threw off a tenth as much revenue.

If you look at it from a revenue standpoint, the music industry is suffering, but we already knew that. But if you look at it from sheer popularity proven by overall units shipped, you can make a case that it's more popular than ever. The average fan just won't pay for filler anymore, nor does she have to - and that's the biggest difference of all.

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