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Curious Numbers:
2006-07 CD Sales

Copyright May 2007 by Keith Holzman,
Keith Holzman
Solutions Unlimited.
All rights reserved.

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I was astounded by the huge quantity of new titles released last year as reported by Ed Christman in the May 12 issue of Billboard. By the way, the online version has much more information than was published
in the print edition.

A startling 75,774 new titles were released in 2006, almost 26 percent more than in the previous year, and more than double the 33,443 released five years earlier. In fact there's been a steady upsurge of new titles during the last five years. Whereas there was an increase of only five percent from 2001 to 2002 the numbers have gone up markedly. The greatest increase was between 2004 and 2005 when almost 36 percent more titles were issued.

A close look reveals more surprises and some curiosities. Whereas lots more titles were released last year, actual sales of these new items were off 23 million units, a drop of almost ten percent. Further, almost 25 thousand new titles were digital-only releases, and these resulted in a mere 1.22 million units sold -- an abysmal average of not quite 50 units per title.

Another perspective. 85 percent (64,554) of all titles released were from independent labels. The remaining 11,230 were from the majors. This is rather consistent in that the ratio of indie to total titles has remained between 78 to 85 percent for the last six years.

But an even closer look at the numbers is quite alarming.

Only 364 titles last year sold 100,000 or more units -- essentially the same as in the previous year. These titles scanned a total of 149.4 million units. Looked at another way, this means that half of one percent of all titles released last year accounted for almost 68 percent of all new-release sales. Indie labels represented 28 of those titles, six of which sold more than 250,000 units.

A scarier fact is that 55,516 (more than 73 percent) of new releases sold 100 or fewer units! 4364 of those titles were from the majors, the remaining 51,152 were from independent labels.

Overall, new major label titles averaged 26,895 units sold, while indie titles averaged 2603. Adding to the gloom, CD sales are off 17 percent so far this year.

On a slightly brighter note, classical (traditional and crossover) sales rose more than 22 percent between 2005 and 2006. This is quite surprising considering that overall sales declined and that there were fewer retail outlets in which classical CDs are typically sold. In part the improvement is due to a significant gain  of digital downloads which in 2006 were almost 109 percent greater than in 2005.

And while there were fewer bricks and mortar retailers from which to buy CDs, part of the slack was taken up by a big increase of classical music sales at Amazon.com, which recently launched a classical "Blowout" section at reduced prices for certain items.

Meanwhile, despite the CD decline, there remains a significant audience who prefer to buy their music in this "collector's" form. It's particularly true for classical and jazz because there isn't the "single" mentality that's perhaps more  meaningful to a younger audience looking for the one hit song in a new release by their favorite artist. The classical and jazz buyer likes to read extensive liner notes and lyrics (when they exist,) and look at artist photos and exciting graphics.

Paul Resnikoff, wrote an excellent piece about the survival of the CD
in the May 10th edition of  Digital Music News.

    "The CD still has a place in a larger ecosystem. Few cars lack in-dash CD players, computers universally support their playback, and many fans still buy discs despite harboring immense digital collections. Somehow, a coexistence makes sense for many music fans.

    "But what doesn't make sense anymore are the strings attached to the CD. These are aspects that are not necessarily inherent to the CD format, though they are intricately part of the consumer buying decision.

    "Another example lies in product packaging. Why don't CDs carry lyrics files, images, and videos? And why do they carry a relatively limited number of tracks? The typical CD seems a bit bare bones, but the technology itself can support all of these extras and more.

    "But toss that baggage aside and place a CD in the hands of the consumer, and everything works perfectly. Interoperability is guaranteed, and buyers can easily shift between different environments. One executive astutely pointed out that the CD, for all of its outmoded and old-fashioned criticisms, actually offers far better universality than most paid download services. The point is, there's nothing horribly wrong with this format, and large sections of the consumer population are incredibly comfortable with the experience."

To keep this collector audience, it's important that labels produce
the best albums that they can afford to print and manufacture,
filling them with music that consumers will be inspired to purchase
and adding as much value-added content as possible. And if wanting
more to experience makes me old fashioned, so be it.

Until next month,
Keith Holzman -- Solutions Unlimited
Helping Record Labels Manage for Success

Copyright 2007 by Keith Holzman, Solutions Unlimited. All rights reserved. Adapted from "Manage for Success," Newsletter #73, May 2007. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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 mailto:keith@holzmansolutions.com. 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.

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