The Music Business in 2009, Numbers And Thoughts

2008 was another important transitional year for the music industry. There are many ways to represent and interpret the end-of-year numbers for the industry, but there were a couple numbers in particular that were interesting to me.

• 1.07 billion digital tracks were sold in 2008, a 27 percent increase over 2007
• Digital album sales reached 65.8 million units, a 32 percent increase over 2007
• However, Total album sales, which include CD’s , cassettes, vinyl albums, and digital albums dropped 14 percent in 2008, with 428.4 million units sold.
• Nine Inch Nail’s Ghosts I-IV was Amazon’s top-selling album of the year even though it was available for free from the band’s website. NIN made more than $1.6 million in the first week from the the album.
• 1.88 million vinyl albums sold, which is an 89% increase over 2007 and the highest number since Nielsen SoundScan began tracking LP sales in 1991.

I think they are representative of an important shift that we’ll continue to see evolve as we move forward. Basically instead of the business revolving around selling albums to consumers, music businesses will continue to become both more “well-rounded” in the services and products they offer and more specific with the markets they cater to. We first saw this trend with the mass shift to 360 deals at all the major labels two or so years ago. While many saw this as further evidence of a money-hungry industry leeching on where it didn’t belong, I think it actually represents a shift towards understanding that the music experience doesn’t begin or end with the sale of an album. That is simply too shallow of a business model.

It’s not that the album itself is necessarily dead or that people are unwilling to pay for music, but that today’s music consumers want their music experience delivered and packaged in many different ways. They also want varying degrees of involvement. There are still some people that want to pick up a CD at Best Buy for a reasonable price and that’s it - that’s what they are comfortable with. Others want to download the FLAC files in a torrent, read about what the band is doing on a blog, watch some videos from the recording studio on YouTube, find out when the band is playing nearby, and figure out how the picking pattern for that one song goes.

Like a good novel, the future of the music business will be about being able to deliver varying levels of value depending on how deep a fan wants to dig. I believe those musicians who can cater best to all the different involvement levels of their fans will come out on top this year.