Business Matters: If Big Radio Had Pandora's Royalty Rate, It Would Owe Billions
Business Matters: If Big Radio Had Pandora's Royalty Rate, It Would Owe Billions

The summer of 2012 was typical in that labels saved their big releases for after Labor Day. As a result, some weeks' release schedules were predictably soft and sales followed suit.

Slow album sales gave Taylor Swift's "We Are Never Ever Getting Back Together" a chance to do something special. Not only did it set a one-week record for track sales, it also outsold the top album a few weeks earlier. In beating out an album, "We Are Never" highlighted the growing parity between tracks and albums. Total parity doesn't exist yet, but as the graph here shows, parity has gone from nearly nothing to something considerable.

The best display of parity in tracks and albums can be seen in comparing the summer's high point in track sales ("We Are Never" in the week ending August 19) and the low point in album sales (Zac Brown's Uncaged in the week ended July 29). Uncaged sold 48,000 units and was the top album in the week ended July 29, according to Nielsen SoundScan. The top track in the week ending August 19, Taylor Swift's "We Are Never Getting Back Together," sold 623,000 units. When converted into track-equivalent albums (TEA), "We Are Never" generated more sales than a bundle of tracks worth roughly ten times its value. That's red meat for the "the album is dead" crowd.

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"We Are Never" was the only track (TEA) to outsell an album this summer. In fact, it was the only track to even come close. This is a rare feat but will happen occasionally -- major labels can have only so many big first-week releases in any given week.

The gap between albums and tracks is narrowing but albums still win. The typical top 40 track sells around 40-50% of its top-40 album counterpart. In other words, the #20 track will sell about four or fives times as many units, or 40% to 50% its TEA (when multiplied by ten tracks to convert to TEA), as a #20 album.

While selling 40% to 50% of an album, and outselling an album once in a blue moon, might not sound like progress, consider what album and track sales looked like just five years ago. Album sales were comparable to top 40 track sales. But because of the ten-fold difference in the value of albums and tracks, a lot of parity can be gained after five years of declining album sales and steadily increasing track sales.

Five years ago, the difference between tracks and albums was like night and day compared to this summer. Top 40 tracks got only a tiny fraction of top 40 album sales in the summer of 2007. The week ending August 12, 2007 was a slow week for albums that summer. UGK's Underground Kingz topped the album chart with sales of 160,000 units and Plies' Real Testament was #2 with sales of 96,000 units. The week ending August 5 was the best week that month for track sales. Sean Kingston's "Beautiful Girls" sold 235,000 tracks. Kanye West's "Stronger" sold 129,000 tracks.

You may note that I cherry-picked a slow week for albums (July 29) against an especially strong week for the top track (August 19) even though other weeks during the summer fared better for albums and worse for tracks. This was done to narrow the gap between albums and tracks as much as possible. As the graph shows, the gap between albums and tracks has narrowed greatly over the last five years. I simply chose two weeks that best made my point.

The album isn't dead even in my exaggerated example, but it could be a few years away from parity with top 40 track sales. Single tracks also get massive awareness online in the form of on-demand audio and video streaming. Even though release and tour schedules are still mostly built around the release of an album, these graphs make it easier to imagine a day when release schedules and tours are built around some other format or idea.

graph

To interpret the graph: Summer 2012 sales are on the left, summer 2007 are on the right. Track sales, converted to track-equivalent albums (TEA), are shown in red columns and album sales are shown in blue columns. Sales of the top 40 tracks and albums are shown. The #1 spot clearly shows Taylor Swift's "We Are Never" outselling the #1 album of the week. For positions #2 through #40, albums clearly outsell tracks by roughly two to one. The difference between albums and tracks was much more stark in 2007. From #1 to #40, each track (after converted to TEA) sold about one-eighth the number of units as the album of the comparable rank.