Music Sales and the Future of the Industry

In what is becoming as predictable as a new years day hangover, the start of 2015 has also seen the announcement of  a decline in music sales for 2014.

According to Billboard, Nielson’s 2014 music sales review is reporting a 11.2% drop in album sales and a 12.5% decline in single sales.

The report did not comment of the total decline of CD and digital sales, but it did note the 51.8% increase in vinyl sales, although this only accounts for 3.6% of the entire music market.

The report is however focusing on the 54% increase in demand for streaming services, a figure that is likely understated as it doesn’t includes non-interactive services such as Pandora. This figure is apparently the equivalent to an extra 56.1 million album sales, making it larger than the decline in physical and digital units.

The troubling thing is that whilst Billboard are suggesting this increase in demand is moving record labels back toward profit making status, it is seemingly at the expense of artists. Whilst Pharrall’s Happy  was the highest selling single with 6.41 million units sold, it has been previously reported that 43 million plays of Happy on Pandora translated into only $US2700 for Pharrall.

It’s also difficult to quantify units streamed as an equivalent to sales. Whilst some use streaming services instead of purchasing albums, many treat these services like a radio station – they simply consume what is aggregated for them, and would never have purchased this music otherwise. And whilst these services can be a handy tool for discovering new music, there is little evidence to suggest that this is actually occurs for most users.

The other concerning element is that music steaming isn’t as cheap as it initially seems. Whilst the subscription price is reasonable, only $12 per month for Spotify, data usage still needs to be seen as an expense. Mobile data expense and limitations means that streaming outside the home could be prohibitive. There is also ramifications for music consumers who find themselves on the wrong side of the digital divide. The last thing the music industry needs is for music consumption to become an elitist pursuit.

Overall it seems the music industry is still in a state of limbo. No one seems to know when or how this will be gotten out of. Yet the artists keep writing and performing the same as it ever was. If streaming is the way out, it seems it will be at the expense of artists. But then this inequality has been documented time and time again over the industry’s 110+ year history. Let hope though that music consumers are not left worse off.

 

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