Business Matters: How Extensive Pre-Sales Can Help Indie Albums to Top 40 Debuts
Business Matters: How Extensive Pre-Sales Can Help Indie Albums to Top 40 Debuts

Extensive Pre-Sales Can Help Indie Albums Chart Higher Than Major Releases
Fan-funding platforms can now put independent albums high up the U.K. album chart. Whether or not that's a good thing is up for debate.

Take the example of Ginger Wildheart's 100 Percent. Wildheart funded the triple-album through crowdfunding platform PledgeMusic. Along with Kickstarter and Indiegogo, PledgeMusic is at the forefront of a change in how artists raise money and bring their fans into the creative process.

PledgeMusic allows artists to sell music -- as well as other items and experiences -- by taking pledges to support a particular project. American artists such as Ben Folds and Rhett Miller have used PledgeMusic for album projects. While PledgeMusic is certainly a funding mechanism, the company emphasizes its ability to market an album during its production phase and bring fans into the creation process.

Crowdsourcing platforms also create a new way for an album can get onto a chart. Wildheart's PledgeMusic campaign launched August 2, 2011 and concluded June 30, 2012. For reporting purposes, 100 Percent had over 47 weeks of sales crammed into one week. 100 Percent debuted at #27 on the current U.K. album chart.

You could interpret this story in a few different ways. One could marvel at the fact that an independently released 100 Percent managed to outsell major label stars Coldplay and Rihanna. That's certainly a fair way to look at the matter, and it's an attractive story for journalists in search of the next great disruptor of legacy businesses.

But a better interpretation takes into account the 11 months of preorders that lead to Wildheart's chart entry. Chart position matters in the music business -- don't let anybody tell you differently. Charts compare titles by a standard metric such as weekly sales. What goes into a title's first-week sales has changed over the years. The rise of online pre-ordering in recent years has led to more preorders and, as a result, front-loaded sales that taper off quickly in the week following an album's release.

Crowdsourcing platforms effectively extend the preorder period and shove more of an album's sales into its first week of official release. PledgeMusic tells via email that most campaigns start two to three months before the album's release. But a preorder campaign can last as long as a year.

The question is obvious: What good is a chart position derived from nearly a year's worth of preorders? Or five months of preorders? Or even three months of preorders?

Take a look at what a similar debut would do in the U.S. That's My Jam debuted at #25 on the Billboard album chart after selling 14,000 units in the most recent week, according to Nielsen SoundScan. ( That's My Jam did not generate sales of 14,000 units through a lengthy preorder period. It is being used here only for example.) In getting to #25, That's My Jam outsold Nicki Minaj's Pink Friday…Roman Reloaded, Katy Perry's Teenage Dream, Rihanna's Talk That Talk, Jason Aldean's My Kind of Party, Jack White's Blunderbuss and Drake's Take Care, among others.

A #27 debut might outsell some superstars in a debut week but cannot compare to their total sales. My Kind of Party sold nearly 11,000 units its 86th week of release and had sold 2.65 million albums and 8.16 million tracks. A 14,000-unit debut would also beat Perry's Teenage Dream, although Teenage Dream had been out 96 weeks and has sold 2.26 albums and 18.7 million tracks. Records could be set if either title built up preorders for 47 weeks.

PledgeMusic says its albums are "delivered according to OCC and SoundScan rules" and are no different than albums that were available for preorder on Amazon or iTunes. It does impose a time limitation on its projects, however. Campaigns are limited to 365 days by PledgeMusic's payment processor (a limit imposed to be able to process refunds). Kickstarter limits its campaigns to 60 days. Indiegogo allows its campaigns to run for 120 days.

Folds' next album looks sure to get a decent chart position when it is eventually released. His PledgeMusic campaign launched May 7th. The nearly 6,700 pledges made through July 2nd each get a digital download of the album. Even if only half of those sales are in the U.S., current preorders alone will put his album near the top 100 of Billboard's album chart -- only there won't be an asterisk to give people the whole story.

Swedish Labels Make More Off Streaming Services, But That Doesn't Impact U.S.
You may have read that Swedish label Hybris is making nearly 80% of its revenues from Spotify. A post at the company's blog makes for good reading and shows the subscription model is working in select places. But it also demands a few notes for readers in the U.S. and elsewhere.

First, you have to understand that Sweden is not like most markets. Subscription services accounted for 82% of digital revenues in Sweden in 2011, according to the IFPI, compared to 6% in the U.S and 8% in the U.K. Second, Swedes never really took to digital downloads. Sweden purchased about $10.3 million in 2011, or $1.08 per capita. That's far lower than the $6.15 spent per capita on digital downloads in the U.K. and the $5.87 per capita spending on downloads in the U.S. If you're the type of person to worry that subscription services will cannibalize download sales, you have less to worry about in Sweden than in the U.S. or U.K.

The bottom line is a Swedish label's revenue mix means very little to a label in the U.S or U.K. Consumers may flock to subscription services in a small Northern European country, but adoption is happening at a different rate in most other markets. A Swedish success story -- and Hybris definitely shows subscriptions are a success -- doesn't translate. ( Media Evolution)