[This post was authored by Greg Capobianco]
Many music biz mavens are waiting for the day when online audio streaming services become more popular than traditional digital downloads. That day might still be coming, but it turns out that the habits of the average consumer are slower to change than some would have anticipated (or even preferred).
According to Nielsen SoundScan and Billboard, it was only last year that digital music downloads attained a majority of sales, if just barely. With 50.3 percent of the total, 2011 was the year that digital finally eclipsed physical products. How did this occur? More or less as you might expect: a combination of continued rising digital sales and a corresponding drop in physical sales. Although physical sales only fell a mere five percent (compared to the nearly 20 percent decline in 2010), it was enough to cost ’em the top spot.
Meanwhile, digital track sales continued their upward trajectory with 1.27 billion paid downloads in 2011, an increase of more than 100 million over the previous year. Eight artists claimed more than 10 million individual track sales. (Or seven if you prefer not to include the cast of “Glee.”) Which indicates not only the continued clout of the major labels, but also consumer confidence in legitimate digital music services.
But shiny disc lovers shouldn’t fret too much — physical sales still rule the roost when it comes to complete albums. Even with Amazon’s highly publicized promotion of Lady Gaga’s Born This Way — which was made available for a mere 99 cents — digital accounted for just over 40 percent of the album’s total sales.
The digital sales portion of the year’s best selling album, Adele’s 21, was right along with the industry average of about 31 percent, whereas digital sales of the second best selling album of the year, Michael Buble’s Christmas, only accounted for 14 percent of its total sales. In other words, for complete albums, physical sales are still where it’s at. Digital album proponents should still be pleased, however, as last year, total sales jumped past 100 million for the first time.
Keep in mind that we’re talking about superstar acts driving sales on both sides of the coin, but the trends are likely reflective of purchases generally.
Regardless of format, the industry as a whole was up to 1.6 billion purchases last year, reversing 2010’s first-ever total units decline. Total album sales were up 3.2 percent as well, once again thanks to a jump in digital album sales. Which format saw the largest increase year over year? Good old-fashioned vinyl. More than one million more vinyl albums were sold in 2011, shattering the record set just last year.
So what about the rise of audio streaming services? They are most definitely on the uptick too, with more than 20 billion streams accounted for in 2011 (nearly 85 million of which were Nicki Minaj’s Superbass). It should be noted that revenue derived from subscription and streaming services are not yet officially tracked by SoundScan. But believe it or not, it was less than seven years ago when Billboard started including digital downloads in its charting calculations. So, you know, it may take a while. It will likely take even longer before payouts on those services come anywhere near physical sales or digital downloads.
Even more than we care about industry trends, we care about how artists are getting paid. With so many new platforms joining tried-and-true earners like road work, the revenue picture for musicians is becoming increasingly complex. Which is exactly why we’ve been hard at work documenting it. Check out our Artist Revenue Streams project for more information on our groundbreaking initiative to better understand artist compensation in the digital age. (And if you happen to be at the MIDEM conference in France, don’t miss project co-director Kristin Thomson’s presentation on our initial findings as part of Visionary Monday.)