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U.S. Album Sales Hit Historic Lows

U.S. album sales have hit new historic lows over the last five weeks marking the longest consecutive stretch in the SoundScan era that the industry has gone without scanning more than 5 million…

U.S. album sales have hit new historic lows over the last five weeks marking the longest consecutive stretch in the SoundScan era that the industry has gone without scanning more than 5 million units. And, over the last two weeks, album sales hit consecutive record lows. Which begs the question, is it all due to the summer doldrums, streaming’s rise, dwindling catalog sales or all three?

For the week ending July 28, U.S. album sales totaled 4.68 million the lowest weekly total since the inception of Nielsen SoundScan in May 1991. The previous record low was only the prior week when sales were 4.71 million units.


Nielsen SoundScan Mid-Year Report: Digital Album and Single Sales Slow

The industry had been flirting with the under five million unit album sales weeks since 2010 when, for the week-ending May 30, it dipped beneath that floor for the first time with 4.98 million scans. In 2010, the industry had four weeks under 5 million units, while there were two weeks under that floor in 2011, and three weeks in 2012.

This year already, there are nine weeks under the 5 million units album sales mark, with the last five weeks marking the longest consecutive period the industry has gone without scanning more than 5 million units.

While album sales are down, streaming revenue is up, which begs the question the industry has been wrestling with for the last two years: is streaming cannibalizing album sales? An issue, until recently, industry data analysts and top executives argued wasn’t the case, and some attributed to declining catalog sales.

Others blame the album sales drop on a lousy release schedule this time of year and the general summer months’ doldrums. Sales in summer tend to decline because kids are out of school and they tend to spend more time outdoors. Consequently, the release schedule is also lighter  because artist and their managers prefer to hold album releases  for the fourth quarter, when there is more in-store traffic. The only other time of the year when sales are just as slow is in the first quarter, when releases schedules are weaker.

More recently, some industry executives began changing their tune about the possibility of streaming cannibalization after they saw digital song sales decline more in the second quarter than in the first at the same time that digital album sales slowed (see our mid-year Nielsen SoundScan report). Analysts have not yet found a way to measure cannibalization and are looking for new ways to measure whether or not it is occurring. As one analyst put it, just because he couldn’t prove cannibalization through analysis, he couldn’t definitively say it’s not happening.

While analysts continue reviewing the data, the decline in album sales this year can be attributed at least partially to physical sales’ downward trend.

“This is the year that CD sales bottom is falling out” at Newbury Comics, says the retail chain’s CEO Mike Dreese. So far this year, CD sales are down 14.1% to 88.8 million from the 103.3 million scanned in the same time period in the corresponding period last year, according to Nielsen SoundScan. But digital album sales aren’t faring too well lately either. In the first four weeks of the second quarter, the digital album growth slowed to a 1.9% increase after growing at a 10.4% pace in the first quarter.  So far in the first four weeks of the third quarter, digital album sales are actually down 0.9%.

While that decrease could be attributable to a slow release schedule, industry SoundScan analysts say the real weakness lies in catalog album sales, which year-to-date are down 8.8% to 79.7 million units. One industry label analyst said that if the bottom fell out of anything, it’s the $5 CD. Albums at that price point are no longer performing like they did in 2011 and 2012. And there are only so many titles that can generate enough volume to make the lower pricing profitable. He claimed the majors have exhausted that supply of albums and when music fans are looking for that bargain price point at Walmart, Target or Best Buy, they are not finding an new titles they want.

“We haven’t refreshed our offering in titles at that price point in months,” the source says. “While it’s still a formidable amount of units sold, sales of the $5 CD will continue to fall.”  That executive said that at its peak, $5 CDs were accounting for up to 15% of weekly catalog unit sales.

On the good news front, this executive added, at least steaming growth this year continues to be strong — all of which depends on your point of view.