Music Industry Hopes Holiday Miracle Strong

With digital sales off, most major titles debuted and streaming revs hard to track, Grammy boost is key

As the music biz awaits the kudos hoopla that begins with the Dec. 6 Grammy Award nominations, the business side is once again looking to the holiday season to prop up some dispiriting 2013 sales figures in both physical and digital formats.

The surge in activity for streaming music is the lone bright spot on the tune-biz spreadsheet this year, helping to nurture a new breed of word of mouth hits such as Kiwi phenom Lorde and her ubiquitous track “Royals.”

According to Nielsen Entertainment senior VP David Bakula, chief number-cruncher of the firm’s SoundScan service, overall album sales are down about 7% to date this year (after a decline of 4.4% in 2012).

Compact disc sales have continued to plummet: The 14% drop recorded so far in 2013 matches the decline seen last year.

Most jarringly, the digital side of the business has seen depressed growth: Digital albums are up just 1% (vs. a 14% gain in 2012), while digital tracks have slipped 4% (vs. a 5% hike last year).

“Going into the negative on digital tracks is kind of making everybody pause and go, ‘Wait a minute, what is going on there?’ ” Bakula says. He adds that last year’s boost in digital albums was the bright spot coming into this year. “It was still 60%/40% physical to digital, but digital was up and coming,” he says.

On a positive note, music streaming is seeing dramatic growth, but Bakula cautions that the fiscal impact of the format — with revenues calculated in fractions of cents, rather than dollars — is still difficult to quantify.

“When we got to 1 billion on (digital) track sales in a year (in 2008), we thought that was amazing. Now we’re talking 100 billion (streams),” Bakula says. “Obviously, the revenue model is completely different behind that.”

As of the week ended Nov. 17 (the most recent data available for this story), just five 2013 releases had sold more than 1 million copies: Justin Timberlake’s “The 20/20 Experience,” Luke Bryan’s “Crash My Party,” Jay Z’s “Magna Carta Holy Grail,” Drake’s “Nothing Was the Same” and Eminem’s “The Marshall Mathers LP 2.” At 2.3 million copies, Timberlake’s album is the bestselling title of the year, and sure to be a Grammy contender.

Those releases prefaced a late-year slate that is unlikely to supply a great deal of lift for music retailers. U.K. boy band One Direction, which issued a pair of million-selling titles in 2012, will be represented in the marketplace by “Midnight Memories,” released Nov. 25 on the eve of the annual Black Friday sales rush. First-week shifting of that release is anticipated to be around 500,000 — about the same as the debut for the group’s November 2012 set “Take Me Home.”

Beyond “Midnight Memories,” the late-year schedule, which has already seen the arrival of “Marshall Mathers 2,” Arcade Fire’s “Reflektor” and Lady Gaga’s “Artpop,” is pretty threadbare for merchants. Britney Spears’ “Britney Jean,” out Dec. 3, is virtually the only high-profile title new to the racks.

In most cases, the retail legs of most releases have grown uncommonly short, with second-week sales dropoffs of up to 70% not at all rare. The long-running sales of Adele’s 2011 phenomenon “21” seem a distant memory.

“More and more, artists and labels and distributing companies and promoters and retailers are putting so much energy into awareness around that first week that, if you like (an) artist, it’s almost impossible for you not to know that there’s a new album coming out. Once you get beyond that (first week), that is where the real money is made,” Bakula notes. “That’s where Adele was so amazing. She was almost a year into her album when she had her biggest sales week,” following her six Grammys in 2012.

As the year winds down, music sales may still receive a positive jolt from the Grammy noms. While mega-sellers like Timberlake and Drake will surely be in the running, it is conceivable that Lorde, who could be a commanding presence in all four of the top categories, might become a breakthrough beneficiary of the nominations for the Jan. 26 honors.

For Bakula, it’s the manner in which fans are buying Lorde’s album, “Pure Heroine,” that holds interest for the industry.

“It’s amazing to see the different ways that something like that is being consumed,” he says, noting that the album crossed 400,000 in sales by the week ended Nov. 24. “I don’t think anybody looks at that and says, ‘That’s out of this world.’ It’s a great number, especially for an artist like that, but it’s not platinum yet; it’s not even gold yet. But you’re at 3.5 million (digital) songs (sold) on ‘Royals,’ and that song alone has streamed 81 million times. That’s the incredible part.”

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