It was Mr. Digital Music Single, in the Study, with the Candlestick
Sales of digital music can't stop, won't stop. The upward trend keeps on headin' up, as Nielsen SoundScan reports that digital music sales are 50 percent stronger through the first half of this year as compared to the same period in 2006. So far, Nielsen SoundScan reports that 417.3 million digital music tracks have been sold this year. For those of you keeping score, that's the total number of music tracks and ringtones sold in 2005.
Don't expect the music industry to break out the champagne, though. Good news for digital sales means bad news for the traditional album, which is down another 15 percent. People simply aren't buying physical albums the way they used to, and we've argued before that this is a natural effect of digital music sales. You don't need to buy an album anymore to get one or two songs you might like.
Albums look to be headed into a serious decline, however. In 2006, album sales were also down, but in the same period year-over-year, the shrinkage was only 4 percent. This year's decline, so far, appears to show a quickening decline, slipping to 15 percent fewer sales.
Lessons learned?
Despite the tough times for albums, the music industry is slowly but surely learning the most important lesson of all: give consumers what they want, and they happily open their wallets. That could mean a business model change for the industry which has long since focused on the album as its revenue workhorse.
That may also help explain why companies like Universal are looking to aggressively renegotiate their contracts with the likes of Apple. Who controls the pricing is a major deal, especially at a time when singles are taking away big revenue business. I've been told by contacts in the business that the labels would like to see significantly higher prices for contemporary singles, and it's rather clear why. What ultimately matters in this industry isn't single sales or album sales, it's revenues, and the nature of the revenue stream is changing.
That's why we can ignore the equivocations over the data. The AP coverage of the report notes that when you count groupings of digital singles as albums (say, 10 singles = an album), albums sales are only down 8.9 percent. Two points on that. First, 8.9 percent is still a heck of a drop: twice that of last year for the same time period. Second, I'm not sure what this data tells us... except that when we arbitrarily count a collection of singles as albums, it looks like more albums have sold. But more albums didn't sell.
The real reason these calculations are being made is to try and size up the state of the music industry as a whole, and in most of the industry's history, that measurement has been made via album sales. It's wrong, however, to try and crib album sales with digital music data and claim it's the same thing.
Digital music sales are a new business and a new way of thinking about and interacting with content. The industry should be paying closer attention to its meteoric rise and less attention to the dying, arcane album. It should absolutely drop the rhetoric about how piracy is destroying the business, because the sea change in sales patterns shows that something else is is afoot. In fact, the explosion in digital music sales should be encouraging to the industry. It means that when users are sitting at a computer and looking for music, more and more each year are turning to legal download services.
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