The fat head of music sales is getting fatter

But Justin, don't you think that much of the gain in the proportion of music sales in the big boxes come at the expense of the independent music stores? Physical album sales and total album sales are declining, percentage-wise while digital albums and internet album sales increased more than 100%, and digital track buying up 65%.

(Source: Business Wire reports January 4, 2007 "2006 U.S. Music Purchases Exceed 1 Billion Sales; Growth In Overall Music Sales Exceeds 19%, Digital Track Sales Increase 65% from 2005 Nielsen Music 2006 Year-End Music Industry Report")

The story gives us these "factoids":

# Internet album sales reached a record high of 29 million unit sales; an increase of 19% over 2005 sales total.

# 41% of all albums purchased were at a Mass Merchant outlet compared to 40% in 2005 and 38% in 2004 (35% in 2003 and 34% in 2002).

#Chain music stores accounted for 41% of all album sales, compared to 45% in 2005 and 48% in 2004.

#Independent music stores accounted for 6% of all album sales compared to 7% in 2005 and 9% in 2004.

# Overall Album sales (including Albums and Track Equivalent Album sales) declined 1.2% compared to 2005.

#Total album sales declined 4.9% compared to 2005.

I don't think the picture is as rosy as the WSJ is trying to say. Like the news publishing business, you could probably say that Tribune et all now comprise some amazing proportion of newspaper sales, due to their voracious consuming of the locals as well as the loss of local newspaper enterprises, but people are turning more and more to digital news while the newspaper business is in the process of eating it's seed corn. Just because you are getting a larger proportion of sales, doesn't mean the sales aren't declining. You are just getting a bigger piece of a shrinking pie. Plus, I think that the big boxes are contributing to the actual decline, by offering only the superficial crap, people must go elsewhere for stuff they really want to hear and buy, as Anderson contends.

What say ye?

I think ultimately, the music industry will have to give up it's business model, and I don't mean in the area of selling CD's at the stores, that's already a given, with transition in progress.

What I mean is, a large reason album sales are declining is becaue of the "ability" to pick and choose songs as you see fit. Traditionally artists put a few "hits" on their albums, a bit of filler, and then a couple of songs they felt passionate about for personal reasons. An ode to a loved one, a political message, skits, out-takes, etc.

With digital media, those who just want the "hits" pick up 2 or 3 for that same amount in US dollars (or *cough* free) and never have to buy the $17 album. As such, those extra tracks are wasted effort, and if the album only has 1 "hit", the cost effectiveness of the entire production is a loss without it selling platinum. Well, there's the catch, the "album" can't sell a million copies if consumers are only buying the lone "hit", even if it sells a million times. That's 1/17th the profit that an album used to earn when singles where relatively hard to come by and/or not cost effective. (maxi-single used to be like $5 for song +3 remixes, for example).

Instead of making these well-rounded albums (in their opinions) that have 1 or 2 songs directe at 5-7 different types of listners, artists and the companies are going to have to focus on much more targetted music, with a model that focuses on songs, vice albums, if they are to continue to succeed once the world becomes fully digitized. (I count on that being about 15 years)

Maurice