Turntable.fm’s founder Seth Goldstein is a sharp guy who’s had his hand in more than one brilliant startup. He was an original investor in del.icio.us which was acquired by Yahoo in 2005, he started socialmedia.com, and he’s “Entrepreneur in residence” at Fred Wilson‘s investment firm Flatiron Partners (which recently invested in Turntable.fm).
If you think that resume describes him as an insightful person with an interesting perspective, you might like this video of an interview with him at Billboard’s Future of Sound Conference.
2011 is turning out to be a good year for the record industry, which is seeing growth year over year sales for the first time since 2004. Digital album sales are leading the way in terms of growth – they’re up 19% over 2010. Digital track sales are up 11%. Overall music sales are up 8.5% to $821 million.
In early July Eminem‘s Recovery became the first digital album to sell more than a million units, with Adele‘s 21 not far behind. Earlier in the year the Black Eyed Peas made themselves the first to sell more than 7 million digital song downloads of I Gotta Feeling.
Digital song sales for the first half of the year were off very slightly (.2%) from the same period last year, indicating that the price increase from 99 cents to $1.29 on iTunes did have some negative impact on the number of tracks sold.
Meanwhile, full album sales were down as well – 11% to 154 million from 172.9 million units in the corresponding period last year. But digital album sales actually rose nearly 13% during the same period, offset by the continued decline of physical cd album sales which were down 18%. Last year album sales dropped 8.5% but digital album sales rose by 16%.
Lady Antebellum had the best selling album for the first half of the year.
So what does all of this mean? It appears that the negative impact from the 30% price increase on iTunes was minimal. It also looks like record labels and artists may have found a formula for increasing album sales – some combination of pricing, marketing and artistry that is convincing more and more people to purchase albums rather than single songs.
In a really nice illustration of the ways that hip big brands are looking to use digital music to connect with their consumers, Doc Martens is marking its 50th anniversary by offering a cool promotion. They’re rolling out a digital ad campaign that promotes their 10 covers of 10 pop songs that span the 50 year history of the brand.
From their website: “To celebrate our 50th Anniversary we have asked 10 bands to record their version of cult classic tracks that represent the spirit of Dr. Martens over the past five decades. We are also working with 10 directors, who will be making music videos for each of the new tracks.”
The tracks and videos will be released throughout the year, bringing folks back to the site to see/hear the new stuff. Selections include the Noisettes covering Buzzcocks’ “Ever Fallen in Love (With Someone You Shouldnt’ve)”; Dam Funk performing Human League’s “Things That Dreams Are Made Of”; and Stone Roses’ version of the Raveonettes’ “I Wanna Be Adored.” The release of all this is coordinated with some limited edition versions of their most popular styles.
I don’t wear Doc Martens, never have. So why am I writing about this? This is the kind of promotion that illustrates how engaging digital music platforms are to advertisers. Digital music is hip and cool and a great vehicle for connecting brands and their consumers. If you’re not thinking about your streaming music platform as one of these opportunities, and seeking out advertisers who can leverage that, you should be. Define your audience. Create ways that brands can connect with them. Help advertisers see the opportunity.
Music sales have been changed by the Internet. That’s perhaps the most obvious statement I’ve ever written on Audio4cast. Nonetheless, it’s interesting to look at how the Internet has impacted music sales, and a post on Nielsen’s blog recently did just that, discussing a recent article in Billboard magazine.
Individual tracks accounted for 57% of all digital music sold in 2008. More intriguing is the fact that the top 200 tracks accounted for 14.5% of sales in 2004 and rose to 15.8% in 2005, 17.1% in 2006 and 2007 and 17.2% in 2008. Through October 25, 2009, the top 200 tracks’ share stood at 18.7%.
Not exactly what you were thinking, right? We all think of the Internet as fostering diverse listening and independent artists. So why are sales concentrating more on the most popular songs, not less?
It turns out that popular tracks may be benefitting from a “herd effect due to the viral nature of the Internet. The awareness generated by that small number of songs could drown out less popular songs.” In other words, top 40 playlists are still driving music sales. In any week, one of out four songs sold belongs to that top 200.
On the other hand, Album sales are trending in the other direction. “The top 200 digital albums have accounted for a smaller share of total digital album sales since 2004.” “The top 200 digital albums have shown an opposite trend in market share, steadily dropping to 21.9% in 2008 from 28.7% in 2004.”
Listeners that purchase albums online are listening to fewer hit albums and more eclectic album offerings, while those that purchase single tracks are concentrating on the top 200 songs more and more. The numbers show that it’s not exactly the expansive and expanding marketplace many have imagined. While the Internet has become the place to find and listen to music by independent and unknown artists, the diverse offerings have yet to impact digital song sales, which remain concentrated on the hits.