Can Record Labels Increase Album Sales In The 'A La Carte' Era?
Can Record Labels Increase Album Sales In The 'A La Carte' Era?

Can labels actually get better at selling albums as CD sales continue to slide? If the answer is yes, there should be some evidence in digital sales.

It's actually a big question. The record business needs to succeed at selling bundles of tracks in the "a la carte" era. It needs to nimbly adjust to consumer demand. It needs to work with digital services to entice customers to buy a bundle of tracks instead of individual tracks. And, for the sake of its survival, it needs consumers to purchase music--regardless of the format.

An analysis of Nielsen SoundScan data offers evidence that labels are figuring out the album format in the iTunes era. From 2008 to 2011, digital albums have represented an increasing share of all digital purchases in the U.S. From the week ending November 13, 2008 to the corresponding weeks in 2009, 2010 and 2011, digital albums have represented 5.7 percent, 6.1 percent, 6.8 percent and 7.3 percent of total digital purchases. The remainder has been purchases of individual tracks.

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In other words, over the past four years consumers have been more prone to buy albums than single tracks.

But digital album sales don't look relatively strong just because track sales are weak this year. Quite the opposite, actually. Track sales were up 10 percent through November 20 after ending 2010 up just 1 percent. Digital albums are simply performing very well. Through November 20, unit sales were up 20 percent to 87.6 million units.

There are a number of factors that explain why digital albums doing so well. One is an improvement in how digital albums are packaged and marketed. Fans are being given more content and enticed to pre-order. Labels have done a better job at keeping prices low on price-sensitive titles - typically singles-driven albums - while charging a bit more for price insensitive titles by album-oriented artists.

Another factor is iTunes' Complete My Album function, according to one person with knowledge of the numbers. Since its debut in March 2007, Complete My Album has helped turn track buyers into album buyers by letting consumers upgrade from single tracks to a full album with a single click of a button. This feature is said to be getting more popular with time, which helps explain why the digital album-to-track ratio has improved over the years.

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One needn't look far to find a music industry pundit saying the album is dead and nobody buys music anymore. Yes, overall sales are down and the download market doesn't seem to have many more tricks up its sleeve. But the growth in digital album sales, especially as a share of total digital purchases, shows neither consumers nor labels haven't given up on the album.