CD's Downward Spiral: Declining Sales, Prices
-- The year-to-date decline in CD sales may be smaller than the sales drop of years past, but the drop is actually larger when you factor in declining sale prices. The most official information on the trend comes from the RIAA's report on 2009-2010 shipments, which says the average dollar value of a CD shipment rose to $14.89 in 2010 from $14.59 in 2009. But that's the suggested retail price.
But it's no secret that CD prices are coming down and titles are often being sold with bargain pricing. Mass merchants have driven down prices for new releases, and they offer greatest hits collections with a high track count and low sticker price. And it's catalog that is helping drive this year's 2% deficit in album sales and 9% drop in CD sales (a single-digit deficit in CD sales is a rarity these days). Through May 8, catalog sales are up 5% year to date while current album titles are down 7%, according to Nielsen SoundScan.
A good example of today's bargain CD comes from the latest issue of Billboard's Country Update:
"Tim McGraw and John Rich are primary benefactors of a new retail music program set to launch May 18 in Dollar General stores. The first four titles, which range from six to 12 tracks apiece, will sell for $5 each in Dollar General's 9,300-plus outlets. Future double-disc titles will be priced as low as $7. Rich's 'For the Kids' album went on sale through the chain May 10, one week prior to its widespread May 17 release by Warner Bros. The title is temporarily the sole focus of a website established for the program. McGraw's entry is a compilation featuring a dozen familiar titles, including 'Back When,' 'Angry All the Time' and 'If You're Reading This.'" (Incidentally, the large number of McGraw hits compilations released by Curb Records in recent years is among the reasons he's given for his unhappiness with the label - which sued him on Friday.)
One of the other initial releases is "Salute to America," a ten-song collections of U.S.-themed songs by the Beach Boys. Nashville-based IMI Music created the titles for Dollar General.
( Billboard Country Update)
Piracy Whack-A-Mole: From LimeWire to BitTorrent
-- The game of whack-a-mole continues. A report by broadband management company Sandvine indicates the drop in traffic on the Gnutella network after LimeWire shut down has coincided with an increase in BitTorrent's share of traffic. In March, 52% of all upstream traffic at peak hours in North America was attributed to BitTorrent, up from 34% at peak hours in March 2010. BitTorrent's peak time share in Europe was 60%. TorrentFreak concludes: "While keeping in mind that Sandvine might benefit from overestimating the percentage of P2P traffic because they sell traffic shaping applications, the above data shows that BitTorrent is still going strong in North America and Europe. The relative share of BitTorrent traffic increased on both regions, and since the overall Internet traffic has grown as well, the absolute increase is even greater."
Waiting for the Music Subscription Ship (or Bus) To Come In
-- When is subscription service's ship - or bus - going to come in? It's a frequently asked question that gets asked more as these services continue to tread water. In fact, the recording industry's share of digital subscription services fell 6% to $201 million, according to the RIAA's 2010 year-end shipment figures.
But consumer demand will eventually greet subscription services, says MOG founder David Hyman. And the market will be big enough for all sorts of business models and products. Hyman was talking to Andrew Keen, founder of mid-'90s startup Audio Café and now regular host on TechCrunchTV, about the market potential for digital music at last week's SF Music Tech conference. Definitely worth watching if you have the time.
Keen: "It seemed back then that we were continually debating business models. We really didn't know how we were going to make music online, but we figured eventually a business model would arrive, like if you wait long enough on the street the bus will show up. Has that bus come yet?"
Hyman: "It's a really good question. I think there's going to be more than one model. Consumers have lots of different requirements and different consumers want different things. And so I don't think there's going to be one answer for everybody.
Music is the second-biggest leisure activity in the world, I imagine, after television. And so it's a huge market. It can withstand and maintain lots and lots of types of companies in the ecosystem, from things like Topspin serving artists that want to reach out directly [to consumers], and merchandise companies, community sites as content sites like Pitchfork. I think there is a place for downloads. There's a place for subscriptions, which is the business we're in. There's a place for music videos, like Vevo, clearly. It's clearly in flux and massive transition, and so you get a lot of carnage on the side of the digital music highway. But you also get a lot of new companies."
Music is indeed a huge market, but services need broader distribution. Working with carriers will be a big part of that. Slacker CEO Jim Cady tells Billboard part of the company's mobile strategy is getting carriers to buy into three things. The first is pre-loading the application on handsets, and Cady says the company has had success there. The second is using Slacker's carrier billing system that makes upgrading easy and adds the cost to the user's mobile phone bill. And the third is getting the carriers to do marketing. "We've done deals with AT&T, Verizon, T-Mobile, Rogers, Ellis and we're in the process with two others," he says.
More distribution points within the home will help, too. Slacker is also available through many home entertainment products, such as Sony Bravia connected TV sets and Blu-ray players and Logitech devices. Cady adds that the company is in the "final stages" with Sonos as well. Internet radio leader Pandora is available through hardware by Sony, Logitech, Sonos, Roku, LG, Samsung, Livio and Chumby.