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

Continuing a trend seen in recent years, the most popular songs grabbed a greater share of U.S. track downloads in 2012. The top 200 tracks claimed a greater share, but most of the gain went to the top five tracks of the year, according to analysis of Nielsen SoundScan data.

The top 100 grew its share of track sales to 15.04% from 14.77% in 2011. The biggest gains were found at the top tier, however. The top five tracks increased their market share to 1.97% in 2012 from 1.76% in 2011. Tracks six through 10 held steady at 1.56%. Tracks 11 through 15 increased their share to 1.19% in 2012 from 1.13% in 2011. Each percentage point represents approximately 13.4 million units and each tenth of a percentage point represents approximately 1.34 million units.

The implication is clear: get a hit and you'll get a greater share of download sales and more revenue than a hit generated in previous years. As digital sales continue to increase -- track sales were up 5% year-over-year in the first week of 2013 -- there is more spending up for grabs every year.

Over the last six years, the top tracks have consistently grabbed a bigger share of total track sales. The top 20 tracks have increased their share from 4.21% in 2007 to 5.50% in 2012. Tracks 101-120 have grown their share from 1.22% in 2007 to 1.42% in 2012. Tracks 181-200 have smaller gains that leveled off in recent years, going from 0.82% in 2007 to 0.85% in 2012.

Growing market share at the top of the charts -- the short head -- is contrary to what was predicted by the 2006 The Long Tail. That landmark book predicted sales of music, books and movies would shift toward less popular titles as the Internet provided consumers with more options. Although album sales have shifted toward less popular titles -- I'll cover albums later -- track sales have continued to become more concentrated in a small number of songs over time.

The top five tracks of 2012 were, in order: "Call Me Maybe" by Carly Rae Jepsen; "Somebody That I Used To Know" by Gotye; "We Are Young" by Fun. featuring Janelle Monae; "What Makes You Beautiful" by One Direction and "Some Nights" by Fun.

Although the Internet has given all artists a platform, major labels appear to be getting better at using the digital tools available to everyone. The results of online video marketing can be seen on the YouTube charts: "Call Me Maybe," "Somebody That I Used To Know" and "What Makes You Beautiful" all rank in YouTube's top 25 all-time most watched videos with more than 300 million views apiece.