Is Downloading Killing The Music Industry?
Written by Glenn Peoples Monday, 14 December 2009 13:18
Digital has not marked the death of the album, but labels and artists should re-think how they sell music, according to a new study. Working Knowledge had a Q&A with Proferssor Anita Elberse from Havard Business School that disucssed her latest work "Bye Bye Bundles: The Unbundling of Music in Digial Channels".
By analyzing the data of a random sample of SoundScan data of over 200 artists from January 2005 to April 2007, Elberse sought to find out what happens when people start buying digital music. The answer will come as no suprise to anyone in the music business......consumers started buying individual tracks instead of entire albums. Informally called 'cherry picking', this tendency of consumers to pick a song or two instead of the entire album is an erosive force to revenues that has not subsided.
Elberse's paper is deeper than this obvious nod to format substitution and among her findings from the sample of srtists she studied, she found:
- A drop of about one third of the total weekly sales of an album and its songs can be tied to consumers switching from physical to digital formats.
- For every 1% increase in the downloading rate, there is a 6% decrease in album sales and a 9% increase in single track sales per bundle of an artist's music. That means that as more people start buying digital music, they spend less money buying fewer albums and more tracks.
- Albums that have one or two stand out tracks are more susceptible to cherry picking than albums with songs of more even quality.
- Albums with more songs are not at an advantage over albums with fewer songs. An album with eighteen songs has a lower per-track price than an album with ten songs, but consumers were just as likely to cherry pick from an eighteen track album as one with ten tracks.
Elberse's paper offers many important ideas to taek away for labels, managers and artists both signed and unsigned and hopefully this should prompt them to re-think how they approach the packaging of recorded music. Adding songs to an album will not reduce cherry picking. It may seem like you are giving consumers more bang for their bucks but Elberse's research show consumers are no less liekly tp upgrade to an album with more tracks than one with less. To get consumers to buy an entire album instead of a few tracks, other approaches (such as track prices relative to album prices) may work better.
- One or two songs and a bunch of filler with out an album at a disadvantage. Once the album was unbundled at digitals stores, consumers were able to avoid the lower quality songs altogether. In the digital age, an album with songs of similar quality should fare better than an album with larger deviations in quality from one song to another.
Since most albums are promoted via singles or at the very least 'emphasis tracks', consumers are going to be more sttracted to some songs more than others. That means that the consumer has to decide whether or n ot to spend considerably more money on additional, less familiar songs when opting to purchase an album over a track.
Elberse summarizes much of her findings here:
- I think labels should rethink the essence of a bundle. An album with around 12 songs may be a fine format for some artists, but why whould it necessarily fit the majority of musicians? Digit channels give labels great flexibility to try alterative formats. My results show that giving preference to quality over quantity and designing smaller, more consistent bundles may be beneficial.
Original article kindly supplied by www.theunsignedguide.com
Author: Glenn Peoples
Origin: Billboard Biz (12.02.09)
