Tuesday, September 2, 2014

Album Sales Hit A New Low

Michael Jackson: His Life In Photos

As streaming gathers momentum, the U.S. music industry keeps breaking sales milestones -- the wrong kind.

 

This week's 3.97-million album sales tally is the smallest weekly sum for album sales since Nielsen SoundScan began tracking data in 1991. It's also the first time weekly sales have fallen below four million in that time span.

WPMG - Teaser

 Last week was fairly slow for the top releases. The top album, Wiz Khalifa's Blacc Hollywood, debuted with sales of 90,000 units, a figure below the first-week sales of many other top debuts of 2014. Three other albums debuted inside the top 10 but averaged only 31,000 units apiece. And the Frozen soundtrack is no longer moving in excess of 100,000 units per week.

To compare, a year ago this past week (ending Aug. 25, 2013), 4.88 million albums were sold. But sales have been losing steam all year. The weekly average number of album sales fell from 4.75 million units in the first quarter to 4.55 million units in the second quarter. In the first 8 weeks of the third quarter, the average has fallen further to 4.2 million.

This decline is actually in line with historical trends. In 2013, average weekly album sales experienced a similar fate, falling from 5.7 million units in the first quarter to 5.23 million units in the second quarter and then 4.86 million units in the third quarter. This year, overall U.S. album sales are down 14.6 percent, while digital album sales are down 11.7 percent and track sales are down 12.8 percent.

As more and more consumers transition from purchasing music to streaming tunes, it's natural to see album sales shrink. This year, there have only been five weeks where album sales were above 5 million.

Larger retailers and CDs, vestiges of an older record business, have been hit the hardest. Through August 24th, CD sales are down 19.2 percent year-over-year while sales at mass merchants and chains have fallen 23 percent and 25.6 percent, respectively.

Record label sales executives are not surprised by the latest downturn. "Sales have been going in the wrong direction all year," says one label sales head. "I guess its overdue, when you look at [the growth of streaming]." This year, label executives finally conceded something there were reluctant to acknowledge last year: Streaming is cannibalizing digital sales.

Last year, when Billboard covered the then-historic lows in album sales last August, weekly sales had dipped below 5 million units for five weeks in a row. Weekly sales fared even worse in the following weeks, falling under five million units in 10 of the next 13 weeks. There was even another five-week run of below-five-million weekly sales from early October to early November.


The five-million-unit mark has been almost unreachable in 2014. So far this year, weekly album sales have fallen below that threshold in 29 of 34 weeks and in each of the last 18 weeks. No weekly sales tally has exceeded 4.5 million units since the middle of June.

"What can I say about this week's sales," says yet another distribution sales executive. "I remember when album sales fell under 10 million units and the industry reacted like it was a tragedy."

There is yet more bad news about the sales trend. Since album sales began to slide in 2002, the lowest-placed weekly sales floor by the end of the year tends to become the new ceiling for sales in the following year. Past history teaches us that, if weekly sales continue to fall below the three million mark, next year's norm will be in the three to four million range.

While some major label executives claim that revenue from streaming, which continues to grow, is offsetting declining digital sales revenue, not everyone agrees with that assessment.

"This year the bottom fell out of digital sales to a degree that we never anticipated, which is why many companies are not meeting this year's revenue projections," laments one indie distribution executive.

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