Sales data suggests that the sales of Metallica’s studio albums were negatively impacted after the band added its catalog to Spotify on Dec. 6.
The world’s leading subscription service has been a source of controversy in spite of a lack of evidence that streaming cannibalizes sales. And while services such as Spotify may not be eating into sales at the macro level, the case of Metallica’s recent sales sag suggests it may be happening in isolated cases at the micro level.
Billboard.biz looked at Nielsen SoundScan data for Metallica’s studio albums for four-week periods leading up to Christmas from 2008 to 2012. Based on the catalog’s performance in previous years, album sales were 15% below expectations the week the titles were added to Spotify and 35% below expectations the following week. Sales were in line with expectations the week before the titles were added to Spotify.
Another way to look at the drop in Metallica’s catalog sales is to track the rise in sales leading up to Christmas. Metallica sales the week before Christmas have been from 48.8% to 71.1% higher than the average of the preceding three weeks (64.8% in 2008; 71.1% in 2009; 48.8% in 2010; and 53.6% in 2011). But those same albums increased only 28.5% in 2012.
In December, Metallica sales looked much like sales of other legendary bands. A sample of 10 perennially strong catalog albums — including Bob Marley’s “Legend” and “Led Zeppelin 4” — had a 28.4% pre-Christmas week gain in 2012. Like Metallica, the 10 catalog titles used to fare much better. Their pre-Christmas week gain was 58.2% in 2008 but had dropped to 31.0% in 2011, while Metallica fans were still rushing to stores.
One could also compare the week before Christmas to the prior weeks. Metallica sales had jumped 60% to 61% in the four-week period leading up to Christmas in both 2010 and 2011. In 2012 that four-week increase was just 27.2%. Once again, Metallica’s gain nearly matches that of the sample group. The 10-album sample had four-week gains of 39.3%, 26.6% and 24.9% in 2010, 2011 and 2012, respectively.
The band probably feels little remorse for its decision to join Spotify. The publicity surrounding the announcement was augmented when drummer Lars Ulrich joined Spotify investor — and Napster co-founder — Sean Parker for a conversation webcast around the world. On the financial side, the band would be far better off even if its catalog sales tanked. Metallica added its albums to Spotify only after it gained control of the rights and licensed the catalog back to Warner Music Group for distribution. And there is no telling how sales will trend over time. The band’s catalog has only been at Spotify for two weeks.
A number of explanations exist for the drop in sales, and not all of them relate to a substitution effect due to Spotify. One possible explanation is that fans streamed Metallica’s catalog at Spotify instead of buying the albums. Another possible explanation is the SoundScan week in 2012 was further away from Christmas than in earlier years. In 2008, for example, the Sunday that marks the end of the SoundScan sales week fell on the 21st — just four days before Christmas. Years in which the sales week ended closer to Christmas were naturally more likely to reflect late holiday shopping. But this effect probably doesn’t explain the entire decrease because Metallica’s catalog pre-Christmas gain actually increased in 2011 to 53.6%, while the sample declined to 31.0%. The band’s sales could also have been negatively impacted by fewer opportunities for exposure at brick-and-mortar retail, although the same could be said for other catalog titles as well.
At this point in Metallica’s career, whether or not the band is selling more or less music may not be the most important factor in determining what digital services to embrace. It’s nearly impossible to put a value on more people — legally — listening to a band’s music.