Music sales in 2010 show little if no upward movement

Throughout the last decade digital has been a friend and also an enemy to the recording industry.

A friend in that digital sales had been growing strongly in unit terms, but an enemy in that digital was also the channel that allowed music to be freely exchanged without any money changing hands.

And whilst the Internet has no doubt helped significantly build the live music economy over the last decade it hasn’t as yet translated to a sizeable revenue jump for the recording industry in the same period.

Recently released 2010 sales numbers from both the UK and US further demonstrate this.

US album sales dropped 13% in 2010 (down to 326m from 374m in 09) and overall volume sales (physical and digital, albums and singles) dropped 2.5%. Digital track sales were steady at 1.17 billion units, but this does little to offset the losses incurred from a significant drop in album sales. Albums are traditionally where labels make their money, whereas singles serve generally as a marketing tool.

2010 marks the first year in the US digital sales haven’t grown at double digital or near double digital percentages.

In the US (like Australia) digital sales increases are not offsetting physical sales decreases. In fact, the gap is widening. So, if the Internet is allowing people to listen to more music than ever before (as is the common consensus) this is not translating in revenue for the labels.

The UK numbers aren’t any better. Overall album sales dropped 7% despite a 30% increase in digital album sales. In 2010 119m albums sold, compared to 128.9m in 2009 and 154.7m in 2006.

Single sales were up, hitting 161.8m in 2010, a 5.9% increase. Overall sales volume year on year was steady. However, the figure isn’t one to celebrate. For every album format that didn’t sell, a single format did. However, you generally make 10-12x the revenue on an album than on a single … so for every $10 lost only $1 was found.

Australian 2010 numbers aren’t out yet, but the 2009 numbers were promising. Unit sales were up significantly (due to a large increase in the ‘digital other’ category which includes ringtones and other ‘one off payments’), and total revenue for the same period was up $18m to $446m.

If Australia follows in the same direction as the UK has in 2010, it will be difficult to avoid a sizeable revenue dip. A 7% album sales drop would result in a revenue decrease of approx. $23-25m. Even if single sales are up 10% this would only plug $3.5m of the gap.

The likely result – lost revenue of anywhere from $20-$22m and a 5% year on year dip for 2010.

The question the labels want answered is – can the Internet and its alternative revenue models (streaming models, all you can eat models) not only salvage any losses but steadily build revenue over time for the labels? Or is it too late and has the music market become more about live performance than recorded music?

It’s hard to say. But the live concert market in Australia (and globally) is significant in scale. The music festival market alone would be worth $150-230m in annual revenue alone in Australia, and a large tour with a marquee act in this territory can gross revenue around $12-15m. The live music industry in Australia would now be significantly larger than the recording industry.

At the same time, an album that goes double platinum in this country is lucky to generate $2.8 in total revenue.

More info …

Paid Content –

Reuters –

Pollstar –


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