Vinyl, Cassettes & Retail

It Isn’t Pretty: RIAA 2010 Music Sales Data [CHART]

image from The RIAA has released sales dates for US music shipments in 2010. The numbers speak for themselves – a 12% increase in the dollar value of downloads can't make up for  a 22% drop in the sale of physical goods. That lead to a 10.9% overall drop in the total value of recorded music sales. The RIAA 2010 Year-End Shipment Statistics:

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graphic via The Daily Swarm

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  1. How about margins? Aren’t margins on digital significantly higher than those on physical?
    Without that data being discussed or included, these charts are meaningless.

  2. If you look at the charts, the figures are net of returns. That means that they don’t include returned unsold stock – the physical product has either been sold or is still in stock at the stores.
    In the case of digital, shipment=sale, of course.

  3. ‘s a matter of fact, no.
    The main reason for this is that the iTunes model of digital retail (which has become something of an industry standard) provides a 30% cut for the retailer. Thus, the label gets only around 70 cents for a 99 cent download.
    Now, the average price of a CD – based on these numbers – is just under $15. The duplication costs will be around $1 (but probably less). I don’t have any figures as to distributor/retailer margins on CD sales, but if the average label margin works out above 54% or so, in dollar terms it will be higher than the digital album margin. I’m guessing that the label margin on CDs might be something like 60%, maybe more.
    That’s before we get into the issue of unbundling.

  4. This chart details perfectly what the fans want. They want digital and specialty items. They don’t want CD’s, DVD’s or the other crap they try to push that really is the same thing packaged differently.
    Maybe if they focused on giving the fans what they want, instead of suing them, those numbers might actually work in their favor.
    Faza’s right tho, they make more on the physical stuff, which is why they keep forcing it on people.

  5. A while ago, the Charts were dependant on how many units were shipped, not how many were sold. The shipment numbers mean nothing. It may well be that this year, more of the shipments were actually sold than last year, which would mean an increase in revenue. Just because less was shipped does not mean that less was sold.
    Phil, this chart details what the RIAA wants us to believe that the fans want. Going all digital is just a cost cutting measure to them, but many people including me want their new music on well mastered, good sounding CDs.
    Anyway, Piracy only is for those who want more to be considered cool (so they can afford the latest trend in portable gear i.e. iphone, Android, etc.) than to have a physical music carrier that’s got a good sound quality and good longeivity for the price.
    As far as longeivity is concerned: I’m sure most kids today don’t bother about whether their kids will one day be interested in looking through their old music collection like they themselves did. But unless they are becoming their own backup experts, their collections are likely not to survive the “upgrade” to the next trendy piece of portable hardware.
    Yet, that also spares them any thoughts on how to explain the guilty pleasures of their younger days to their kids.
    But the currently still ongoing process of one portable player device being succeeded by the next is somewhat similar to the advent of electronic synthesizer and keyboard instruments in the 80s, just on the consumer side. The latter culminated and ended in the general acceptance of ProTools and its competitors which are the widespread industry standard by now. It is likely that there will be a portable consumer device one day that has got a similar outreach of things you can do with it, effectively ending the gear replacement cycle, just like it happened with electronic synthesizers.
    The iPod and iPhone will get lucky, just like the Fairlight and the Synclavier have, because they will be considered vintage.
    However, just look at the impact that the then expensive but now cheap sounding keyboard sounds of the 80s have had on a genre like soul music. It was turned completely on its head with the arrival of the then new hip-hop style and the fact that the hit songs with the most modern keyboards sounded passé fairly quickly.
    On the other hand, the soul music classics from the 60s and 70s are well liked to this day, these classic stylings are even still being recorded by current artists.
    Now imagine that development on the consumer side involving portable devices. What is the analogy of hip-hop in this picture? What is the analogy of sample clearance? The consumers want lossless transferability of their content between all of their devices but the rights holders and device constructors are still trying to force ways that it is not their content at all. Think about digital rights management. It’s the equivalent of needing a dongle for to use an ancient 80s era keyboard. I mean you don’t need a dongle with a piano.
    It is far too early to tell which one will end up to be the ProTools of portable consumer devices, but at one point, it will no longer be the device itself that will be upgraded to the next generation, but the firmware that runs on it.

  6. There is not really any argument or polemic here. There are people who will always buy the physical media. Just go to the Classical Music Guid forum and read these folks talking about CD’s and LP’s. They are very negative towards downloads.
    But there are many many people who want the music as inexpensively as possible. And I think they are the mass. And they will be served or they will go to illegal sources.
    There has been technologically a paradigm shift in music to downloads as they most efficient means of delivery and ownership. That is just an undeniable fact.
    The future of the industry depends on people figuring out how to allow for artists to make not just a living, but a living that they have earned within the context of this new paradigm.
    I buy a fair amount of music, mostly New or alt. Classical and Jazz. I buy only in .mp3. That is just the way it is, and the way it will remain until the next paradigm shift.

  7. The most interesting feature of this chart is that the average retail price of single downloads actually increased in 2010 – by over 9% (I take it that this increase was due to increased proportional purchases of higher tier – $1.29 – songs).
    If we combine this with the fact that total sales had also increased, we can plainly see that digital singles are underpriced.
    Don’t believe me? Then recall that the Law of Demand stipulates that quantity sold is inversely proportional to the price (unless we’re talking about certain bizzare types of goods and I don’t think digital singles qualify). This is opposite to what we’ve seen here. The best explanation is that the decrease in demand coming from increased prices is being offset by latent or emerging demand (new customers coming into the market).
    Since the aim of the exercise isn’t to shift most units, but to make the most money, in a situation like this we can raise the price until the decrease in demand (expressed as a percentage) is the same as the increase in revenue (ditto). At that point, we will be maximising sales revenue.
    It’s the sensible thing to do, but unlikely, given that the digital singles market is dominated by one retailer, in a position to dictate wholesale prices. If Amazon’s recent price cuts are any indication, there’s little hope right now of digital singles price increases.
    That is unless the rightsowners act in concert and force an increase in wholesale price unto retailers.

  8. What about all the independent artists whose sales are not included in this? This is like Sysco saying food consumption is down because their sales are down. The music marketplace has decentralized. There is no one source for info on the state of the industry, especially not this chart.

  9. I want to clarify my earlier comment on “what fans want”. While many do still want the CD, more do not. I grew up when vinyl and cassettes were the formats. I grew up with physical, and enjoyed the art, lyrics and other goodies that came with it.
    These days, while I long for those days where I could sit and look at the latest record and bang my head, physical media is no longer practical. I’m not an audiophile – I care more about what the band is doing with their sound than where the sound is coming from.
    There is a huge disconnect between what artists provide to their fans, and what the fans actually want. People want affordable music that’s convenient and instant. Digital music takes care of 2 out of the 3, and since it’s only a buck, it’s perceived as cheaper.
    There’s still room for the LP, and especially vinyl, but sadly I think those are more specialty items than standard issues.
    You can argue all day long on physical vs. digital, but the data is there and it’s clear. Whether it’s an MP3, or a streaming service like YouTube or Pandora, digital is here, and it’s how people are consuming. It’s difficult to monetize and build an artist business around streaming, so the question isn’t digital or physical, it’s how am I going to give my fans what they want at a price point they can afford, while still making a living?

  10. If this was any other company the CEO would be fired. This is the only business model in the world that blames their SHITTY sales on the consumer… Music today sucks its anti white anti rock beliefs are sinking this shit…

  11. i honestly dont think the digital vs analog or the delivery method matters at all. I think there are several factors involved here. First, the record companies refuse to admit that americans want something other then Nickelodian and Disney kid music or Rap and RnB
    2. the industry has pigeon holed itself into a market of 18 and under completely leaving out the market that has the money. The market that spent TONS of money in the 80s to create the industry . That industry has basically shit them out.
    3. there are no more characters in rock music anymore.. we used to have Eddy Van Halen/David Lee Roth-Slash/Axle-Jimmy Page/Robert Plant- Kiss.. Ect..hell I dont even know what the singer of shinedown looks like much less his fucking name. nowadays we have these throw away artists that make it on youtube. These guys arent true musicians they are a scam and I think people realize this and they dont value their music.
    4th the race to the age bottom. How many times do I have to see some fucking 12 year old gettn famous on youtube because their parents forced them to learn an instrument to perfection. Now what we see is the disney revolution where an adult with a TRUE voice cant be heard because they are not 12 years old with perky tits for all the pedophiles (yes I blame disney for many pedophile crimes)
    5. The record industry (minus country) is so anti white and racist I cant imagine a white rock band over the age of say25 EVER getting radio play these days..

  12. The Man:
    You had me up until the anti-white/racist comment. Yikes. I’m not sure what record industry you’re referring to, but if you’re referring to the major labels, they’re simply pro-green regardless of race. There are plenty of white artists (and those over 25) getting airplay on commercial radio. White, Black, Hispanic and Asian rock artists typically don’t get played on Top 40 (CHR) radio, if that’s what you’re referring to by referencing radio play.
    That fact has more to do with your points above the racist comment. Major labels still control CHR radio because of the expense of getting a single added to the format and the longstanding payment relationships between major labels, independent promoters and the stations.
    Major labels aren’t signing or promoting rock bands–regardless of race–because CHR radio isn’t interested in playing rock. It’s only currently interested in dance-oriented pop, which is primarily made by younger acts that can be molded by producers and labels.
    Active and Alternative stations play primarily white artists. If you don’t like the fare on commercial terrestrial radio, there are many internet stations programmed by independent voices that play all varieties of music–including white rock artists you might not hear on terrestrial outlets.
    Seek out and support those internet stations. You’ll probably discover lots of great music and help increase the influence and awareness of internet radio.

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