Business Matters: First-Week Sales Are Now One-Fourth Of An Album's First-Year Sales

First-Week Sales Are Now One-Fourth of an Album's First Year Sales
-- How important are an album's first-week sales? In the first calendar year of an album's release, first-week sales accounted for 24.5% of an album's sales in 2010, according to Nielsen. That was up from 22.8% in 2009, 22.1% in 2008, 20.4% in 2007 and 18.6% in 2005.

First-week sales ratios have been rising in recent years because digital sales are even more heavily skewed toward first-week sales.

But CD sales don't account for much more of an album's first-week sales: 22.1% in 2010 compared to 21.9% in 2008. However, while first-week CD sales remain flat, the growing first-week share of digital sales is pulling up the average.

According to Nielsen's figures, album sales (for the year's top 500 albums) had a 72.1% second-week decay in digital sales. That rate of decay has grown larger every year. It was 70.8% in 2009, 66.9% in 2008 and 59% in 2007. And back in 2004, in the first full year of iTunes Music Store, the average album's second-week digital sales decay was just 25.8%.

Thus, first-week sales are greatly impacted by digital pre-sales and the online marketing push leading up to street date. The better the label and retailer does at those two things, the bigger an album's second-week fade. And that's not necessarily a bad thing; it's just a reality of digital purchasing behaviors. Digital retailers show off a new batch of new releases each week, whereas brick-and-mortar retailers tend to run multi-week price-and-positioning deals that keep titles in their customers' eyes for a longer period of time.

TuneCore Names New President
-- TuneCore has hired Jamie Purpora as President of Music Publishing Administration. Purpora previously was Senior VP of Administration at Bug Music Inc., a company he had worked with since 1994. He was the director of royalties from 1997 to 2001 and held the senior VP of administration position for the last 10 years.

Locke Takes On China
-- Copyright advocates should be pleased with the nomination of U.S. Commerce Secretary Gary Locke as U.S. Ambassador to China. "Appropriate copyright protection internationally is of key importance to the entire copyright community, from the largest corporation to the self-employed artist and entrepreneur," Copyright Alliance Executive Director Sandra Aistairs said in a statement "Secretary Locke, who has demonstrated his deep commitment to promoting U.S. exports and understands the importance of intellectual property protection, will be a much-needed advocate on the ground for American copyright-based businesses and workers."

Locke visited with Nashville's entertainment community last August and spoke of the administration's desire to protect U.S. content creators and owners. "This isn't just an issue of right and wrong," he told an audience at Belmont University. "This is a fundamental issue of America's economic competitiveness. As the president has said before, America's 'single greatest asset is the innovation and ingenuity and creativity of the American people. It is central to our prosperity and it will only become more so in this century.'" ( NPR)

First-Week Album Sales Trend Doesn't Quite Translate to Netfilix ...
-- It's a question that gets to the heart of digital commerce in the music business: Why would consumers settle for almost-the-best cheap or free entertainment when they can pay for the newer, more premium content? Because for a lot of people, cheaper and later is good enough.

The video industry provides a good case study. In a very good article about Hollywood's trepidation toward Netflix, Greg Sandoval lists this reason why executives are fearful of the popular DVD rental and streaming service:

"There is evidence that Netflix's streaming service discourages users from purchasing newly released DVDs. The studios see indications that for even hit films, which likely won't appear on Netflix's streaming service for years, some Netflix subscribers are satisfied to wait until they do."

Choosing Netflix over more expensive options is often nothing more than a timing issue. If you put off renting for a month or two, you can often find a movie at Netflix. If you put off a lot of movies for a month of two -- maybe you went on a long vacation -- you'd always have a fresh lineup of titles at Netflix.

Music fans are asked to make the same timing choices. If they want the best music experience, from ease of use to selection, they can buy downloads or subscribe to catalogs with over ten million songs. But free services can be more than adequate. YouTube is basically the world's best source for music discovery. It has just about everything -- including out of print titles and stuff that's not even for sale in the U.S. (download stores and subscription services reflect the territorial nature of the old music business), not to mention loads of material that's not legally for sale anywhere. And personalized Internet radio services like Pandora offer good experiences, too. They may not allow on-demand listening, but it streams what people want to hear. It's not perfect, but it's close enough for most situations.

Fears about losing DVD purchases for low-value streams is a legitimate concern for Hollywood. It's an inevitable outcome, but it's still a legitimate concern. But you have to wonder when Sandoval explains that Hollywood execs single out Netflix's damaging impact on in-flight movies. Have they ever tried to stream video over in-flight WiFi? That's one revenue stream that's safe for the time being. (CNET)