Let’s Get Physical

Usually on TunesDay we talk about a song and that’s the title of the post.

CD

(Photo credit: grytr)

Today, however, we won’t be examining any old Olivia Newton-John songs and will, instead pose a question.  When was the last time you bought a piece of physical media? A CD or a DVD is what I mean. Well, this TunesDay we’re going to answer that question as well as have a think about what it all means. Maybe we’ll throw in a little point about statistics while we’re at it. Ready?

The good folks at Nielsen Soundscan and Nielsen BDS have some news for us about the amount of musical content consumption over the first six months of the year:

For the first six months of 2014, sales of albums are down 14.9% vs. the first six months of 2013. Vinyl AlbumSales and On-Demand streaming continues to show strong gains – Vinyl LP sales are up 40.4% and overall On-Demand streaming up 42% over last year, with on-demand audio up 50.1% and on-demand video up 35.2%.
 
Wow!  Everything old is new again – look at vinyl.  Here’s the statistics lesson – vinyl grew from 2.9 million albums sold to 4 million.  Yes, it’s up 40% but it’s a tiny percentage of all the content sales (maybe 2%).  Always put numbers into context – on their own they can be pretty deceiving.
On to the bigger point.  Once the music industry stopped fighting consumer demand and allowed the changes brought about by digital technology, I think they got a better picture of what was good and bad in terms of the music they were selling.  Album sales, both digital and physical, continue to fall.  As a heavy consumer of music I can tell you that there was nothing worse that spending $15 (in the old days) on an album to get the 2 great songs you wanted to hear.  That changed with the iTunes model of single track sales and the broader point of letting consumer buy just what they want is not lost in that.  Maybe that fall is about the inability of artists to put together a great album?
What stands out to me in this report is the continued growth of on-demand streaming – Spotify, Pandora, and others.  Audio on-demand streams grew 50% and unlike our vinyl example, the numbers are significant – almost 34 million streams up from just under 24 million.  Assuming each stream is one song, that’s 10 times the equivalent number of albums (10 tracks to an album) as were actually sold.  I suspect a good chunk of that music wasn’t new – the long tail at work.  So we’ve gone from consumers having to buy a physical product which continued excess materials (for which they had to pay to get what they want) and needed to be stored someplace (you should see the piles of records and CD’s in my house) to choice as to buying specifically what they want with no storage issues to paying just to hear what they want without owning or storing anything.  The content is the same, the business model radically different.  Maybe something in there points to a trend in your business?
Some might look at the Nielsen numbers and think music is in trouble.  I think it’s pretty healthy as long as we’re focused on the business music is really in now.  What do you think?
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Filed under digital media, Music

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