Did Amazon save the music business with last week’s controversial 99-cent Lady Gaga album sale? Say what you will about the pricing strategy, one thing is clear: That sale helped the U.S. music industry achieve its first year-to-date album-sales increase since January of 2006.
In fact, the Amazon Gaga sale helped that sales distinction to happen sooner than anticipated. With this week’s sales report from Nielsen SoundScan comes news that 2011’s year-to-date album-sales total of 125.86 million as of May 29, represents 0.35% increase over the 125.42 million units scanned in the corresponding period in the prior year. That translates into 445,000 more album-unit sales in 2011 than in 2010. How’s last week’s estimated Gaga Amazon sales total of approximately 450,000 copies looking right about now?
The last time U.S. album sales showed an increase was in January of 2006 when, after the first three weeks of the year, album sales showed a 1.6% increase to 30.3 million units for the week ending Jan. 22, up from 29.8 million in the corresponding period of 2005. The following week of that year, when album sales were down 4.7%, year-to-date album sales fell into the red, with sales down 0.0006%.
So from late January of 2006 until this week, year-to-date sales have been consistently down, leaving industry optimists to joke that “flat is the new up,” although at times things seemed so grim that the expression progressed to “5% down is the new up.”
“As seen through the Nielsen SoundScan numbers, music sales have been on a positive trend over the past several months, and Lady Gaga’s million-plus first week for ‘Born this Way’ has pushed album sales up year over year for the first time in over five years,” NARM President Jim Donio said in a statement. “With more strong releases on tap as we go into the summer, 2011 is shaping up to be a noteworthy year for music retail.”
It’s easy to understand how this year managed to yield its first positive year-to-date sales increase, but the why is not so simple.
The main force driving the sales increase has been robust digital growth, coupled with a slowing CD album sales decline. So far this year, digital album sales are up 19.2% to 40.6 million units, up from 34 million units in the corresponding period last year. That increase is stronger than the 14.3% increase in digital album sales posted between 2009 and 2010. Meanwhile, CD album sales, which have declined by nearly 20% in each of the last four years, have slowed to a 7.2% decrease so far this year. With CD scans totaling nearly 84 million units, physical album sales are outpacing digital album sales by 2 to 1.
Within album sales, catalog albums-those LPs that were released more than 18 months ago, or older titles that are not in the top half of the Billboard 200 or are not active at radio-have been exceptionally strong, up 6.2%, while current albums are down. Within current albums, the top-10 best-selling titles of this year have scanned nearly 8 million units, which is down 17.3% from the 9.6 million units scanned by the top 10 last year as of the corresponding date. Last year had four 1-million-unit-selling albums by the end of May; this year has seen just two, Adele’s “21” and Gaga’s “Born This Way.”
However, looking at trends, U.S. album sales have enjoyed their longest upward streak since 2004. So far this year, album sales showed weekly year-over-year increases for six straights weeks, running from Feb. 14 until March 27. In 2004, U.S. album sales experienced a nine-week streak of weekly year-over-year sales gains, lasting from June 14 through August 15, 2004.
Moreover, in 13 of the last 15 weeks, U.S. album sales have enjoyed weekly year-over-year sales gains, after beginning the year with six straight weeks of sales decline.
That accomplishment looks even more dramatic when you consider that during the four-year period of 2007-2010, the U.S. music industry wasn’t able to muster two back-to-back weekly album-sales gains.
So, to what do we owe this turnabout?
Label sales and distribution executives attribute it to any number of factors, including effective pricing at retail, a lot of high-profile music stories in the mainstream press (Gaga, Bieber, Taylor Swift, Adele), a great Grammy show and a lot of big catalog sales at big-box retailers.
Also, some industry executives remind us that as reported in Billboard on January 24, 2009, during the music industry’s darkest days, when CD sales were in the midst of 20% annual declines, some U.S. industry leaders had predicted that 2010 or 2011 would be the year that the industry would hit bottom and then might resume growth.
So did Amazon’s 99-cent Gaga sale save the recorded-music business? Sound off in the comments below …