2007 Stats and the Future
Copyright January 2008 by Keith Holzman,
Holzman Solutions Unlimited.
Back to The
Let me begin by wishing all of you a very happy New Year, with the hope that
2008 will be a better year than 2007.
Last year, overall sales declined a
considerable amount from 2006, as delineated by Ed Christman in the January
12th issue of Billboard
Year to year CD Album Sales were off a dismal
18.8 percent -- from 553.4 million units in 2006 to 449.2 million in 2007. On
a somewhat brighter note, Digital Album Sales were up more than double --
from 32.6 million to 50 million. Individual Digital Tracks were up
45.1 percent from 582 to 844 million. If you figure an average of
10 tracks per album, Digital Track-Equivalent Albums added to CD
Albums would total 585 million, and therefore off only 9 percent from
total albums sold in 2006, still not very agreeable.
It's clear that
digital downloads are here to stay, as Apple's iTunes was up 45 percent from
the previous year. This is in spite of the fact that, according the Los
Angles Times, an estimate by Big Champagne has about 1.1 billion tracks per
month being downloaded and pirated from file-sharing networks.
majors appear to have had it a lot worse than better-managed independent
labels. In fact, some of my clients who've been in business for awhile and
have built up solid catalogs fared rather well, and many ended the year with
As to market share, Universal led
with almost 32 percent, followed by SonyBMG with almost 25 percent, then
Warner Music with
just over 20 percent. The Indie sector was fourth with 13.5 percent, and EMI
in last place with less than 10 percent.
As for stores selling
music, non-traditional retail (iTunes, Amazon.com, etc.) showed some growth while
mass-merchants (Wal-Mart, etc.)
experienced about a 15 percent decline in sales. They were followed by chains
such as Best Buy,
Borders, and Trans World which were off almost 26, and the independent store
sector which was off about 13 percent.
Catalog sales, as opposed to
current releases, were down less than the overall market, with strong sales
shown for deep catalog titles -- those that have been in release three years
Although all genres showed a decline in units, rock was off
about 15 percent, while classical was off only 7 percent, jazz off 10
percent, Christian and gospel off 14 percent, country and Latin off about
15 and 16 percent, and R&B was off about 6.5 percent. The genre
that declined the most was rap, off 30 percent.
US-based digital music
will continue to see rapid growth, according to a projection by the Yankee
Group as reported on January 9th by Digital Music News. The majors will
"ultimately become marginalized in the process, thanks to strengthening
direct-to-fan channels," while the "basic relationship between recording
artists, record labels and consumers is in major flux."
fact that The Economist in
a January 10th article says that the next few years are likely to be even
worse for the music industry, I tend to be an optimist, although a realistic
one. Yes, big-box retailers are exacerbating the downward spiral of
decreasing CD sales by further reducing shelf-space. Other factors, such
as slow-reacting senior staff and a bloated philosophy of doing
business will seriously affect the majors, I strongly believe that
there's likely to be a rosy future for independent labels who try new
and innovative methods of marketing.
Innovation will clearly be the
way to future success as evidenced by recent happenings. More and more
artists are taking greater control over their careers and their recordings.
The Eagles sold well over 264 thousand CDs on their own label in just two
months -- without being affiliated with a
artists consider the CD to be an adjunct and sometimes a promotional tool in
favor of live performance and merchandising, which is where the substantial
part of their earnings reside. For example, Bill Rusch, manager of Big Head
Todd, told Billboard's John Schoenberger (also in the January 12th
that they wanted to try something innovative. "The real source of income
and continued success is our live show. We felt that in this stage of the
band's career, we would try to use the recorded music as a marketing and
promotional tour to drive that." He went on to say "It was a way for us to
get radio onboard as a partner on a deeper level than just asking them for
What they did was to make available a quantity of their new
2008 studio recording, "All the Love You Need," and make them available
as a direct-mail promotional tool to be given away by radio stations. The
artwork was customized for each interested station, and four stations have so
far taken them up on the offer.
They even went further and offered the CD
to fans who gave them their addresses. More than 25,000 of them received it
as a "cool Christmas gift." Sure there's a risk in this, but it strikes me as
a great way of building a fan base and ensuring sold-out houses wherever the
Other methods of gaining exposure are by licensing your
music to add-supported music websites such as imeem.com.
And if you're clever you might also be able to get a small portion of their
Seeing that delivery by download is clearly the
key to the near future, another incentive to improved sales is to offer
extensive graphics along with the downloaded songs. This could include
artist photos, song lyrics, information about the songs. Consider
including a "virtual coupon" with discounts for merchandise or
I recommend you take a look at a very provocative
piece titled "Music Lessons" by marketing guru and agent of change, Seth
controversial, but loaded with excellent ideas.
It appears that new
formats are also likely to be in our future that allow more value-added
features, as evidenced in the January 5 issue of Billboard. These formats
include DVDplus, DFS (Digital Future Solution) Disc, CDVU+, and MVI (Music
I'm encouraged for indie labels by another article in
the January 12th Billboard.
This is the cover story about Ingrid Michaelson, a virtual unknown until
about four months ago. She assembled what she call her "Frankenstein"
label by gathering around her some very talented and experienced advisers and
developing clever approaches to marketing and distribution. There's no
question that she was very lucky, but getting her songs used in an Old Navy
sweater commercial and on TV's "Grey's Anatomy"
took great effort but also meant that they were good songs and deserved
attention -- sufficient to sell more than 87,000 units in a very short
Maybe the future's not so bleak after all.
Keith Holzman -- Solutions Unlimited
Helping Record Labels Manage
Copyright 2008 by Keith Holzman, Solutions Unlimited. All rights
reserved. Adapted from "Manage for Success," Newsletter #81,
Keith Holzman is the principal of Solutions Unlimited, a management
consultant specializing in the recording industry. A trusted advisor
and troubleshooter, he is a seasoned music business senior executive
with extensive experience in all aspects of running a label. He was
President of ROM Records, Managing Director of Discovery Records,
Senior Vice President of Elektra, and Director of Nonesuch Records.
He publishes "Manage for Success," a free monthly email newsletter
devoted to solving problems of the record industry. You can subscribe
at his website <http://www.holzmansolutions.com>. Keith is a member
of the Institute of Management Consultants and has served as a
panelist for the National Endowment for the Arts, and as a board
member of many arts organizations. He can be reached at
Keith is also the author of the recently published "The Complete
Guide to Starting a Record Company" available both as a 235-page,
printed spiral-bound book, as well as a downloadable E-Book.