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Nielsen SoundScan to Integrate Streams, Downloads into Album Sales Chart

In what the music biz sees as a long overdue move, Nielsen SoundScan and its client Billboard will soon implement radical changes in the way album sales are calculated for the weekly chart that remains a key metric of an artist’s popularity.

Beginning with the album chart that will be published Dec. 3 (covering sales for the week ending Nov. 30, which climaxes with retail’s Black Friday), music streams from services like Spotify and Beats Music will be tabulated as part of the data employed to rank the nation’s most popular albums. SoundScan will equate 1,500 song streams as the equivalent of an album sale; this measurement will be known as a “stream equivalent album.”

So-called “track equivalent albums” – in which 10 downloaded tracks equal one album – will now also count towards an album’s ranking on the chart.

The change in methodology represents a major alteration of the way in which sales are calculated on Billboard’s album chart, and it reflects the complex realities of the business today.

SoundScan senior vp of industry insights David Bakula told Variety, “We’re looking at on-demand audio streaming being up 50% year-over-year (vs. 2013). When you’ve got the metrics that we’re traditionally measuring like sales going down, with albums down 13% on the digital side and down about 17% on the physical side and tracks being down about 13% year-over-year, measuring that method of consumption that is really where consumers want to be right now is critical.”

Billboard vp of charts Silvio Pietroluongo said in a statement, “Adding streaming information makes the chart a better representation of music consumption activity.”

SoundScan uses album “scans” – point-of-sale readings of the computer bar codes on individual physical albums – to tally sales; this method was deemed far superior to the reporting of retail panels, previously employed by Billboard to tabulate sales, which were viewed as subject to manipulation. Since 1991, SoundScan’s data has been used by the music trade publication to tabulate its comprehensive album chart.

However, record companies in recent years have agitated for changes in the way the chart is tabulated, in the wake of a great sea change in domestic music consumption. The physical album format waned as digital downloading, led by the iTunes store, garnered a larger share of the marketplace; in recent years, even the market share of downloads has withered as music streams – which increased by 32% to 118.1 billion in 2013, according to SoundScan – became the primary means of consumption.

The new methodology should provide a big lift to performers who enjoy enormous streaming audiences, and could erode the chart longevity of acts that appeal to an older demographic and garner the majority of their sales strictly from physical product.

It should also ease the debate in the industry about the value of streaming activity versus physical sales.

“The industry has certainly embraced it with open arms. I think everybody is going to be really, really happy with this, and I haven’t heard anybody that has had a major criticism of this,” Bakula said. “We’ve had a lot of good, healthy debate about what should or shouldn’t be included, and at what rate things should or shouldn’t be included, but there’s never been anybody who’s come back and said, ‘No, this shouldn’t be a part of measurements.’ ”

Bakula noted that physical album sales remain the main driver of music consumption, and that under the new system it will take more than 1 million streams to equal 1,000 physical album sales.

He said of the current sales champion, “You can go back a couple of weeks, and there was no streaming artist who was going to take the place of Taylor Swift. (Swift’s album “1989”) was going to be No. 1 regardless.”

However, he added, Swift’s decision to keep her music off Spotify could impact her chart performance with the new metrics system in place.

“Now all of a sudden, that could that come back to hurt her a little bit, in that she’s not getting the same push at that (streaming) format as somebody that might be coming up the charts,” Bakula said. “We’re absolutely going to be looking at that on a weekly basis…You are going to get artists who are going to benefit from this, certainly.”

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