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Music Industry Links

Welcome to MusicTank; a unique, neutral information hub for UK music business…addressing change and innovation through informed debate, objective analysis and industry engagement.

“In an increasingly fragmented industry, MusicTank is a vital and leading resource for information and networking.” KEITH HARRIS, MusicTank Chairman

Monstrous digital hits such as Daft Punk’s Get Lucky (which took just 69 days to reach 1m sales) and Robin Thicke’s Blurred Lines (currently closing in on similar figures) were cited this week by the Official Charts Company as having helped boost single sales at the half-year mark by 2.5% compared with the same period last year.

It’s heartwarming stuff for a record business that has been mired in bad news since the millennium – but against the boom in singles, the album (where the real profit margins lie for labels) is not quite in such rude health. Heavy hitters such as the Now That’s What I Call Music compilations and Emeli Sandé’sseemingly inexhaustible debut might chalk up the numbers, but the reality is that the flourishing of the singles market comes, partly, at the expense of the album.

In 2003 – before digital made an impact on legitimate sales – a total of 30.8m singles were sold in the UK, with the CD single being the dominant format. In the same year, 157.2m albums were sold. Fast forward to 2012 and the story is very different. A total of 188.5m singles were sold in the UK last year (of which 99.6% were digital) – equal to a sixfold increase in under a decade. Album sales, however, stood at just over 100m (30.4% digital), meaning they have shrunk by a third in the same period.

Singles were first to see a significant transfer of sales to digital formats in the UK. Downloads first showed up in the British Phonographic Institute’s annual sales figures for 2004 (5.7m sales, or 17.9% of the total) but albums didn’t make a digital appearance until two years later (2.8m sales – just 1.4% of the total). Digital has totally revived the singles market and brought it to dizzying new sales heights, but this is still not happening in the albums market. Digital album sales may be growing, but overall sales continue to nosedive.

The obvious reason for this is the way digital formats – or more specifically iTunes, when it arrived in the UK in 2004 – allowed for the unbundling of the album. Consumers could just buy the track (or tracks) they wanted, causing a locust effect on album sales. The single, as in the 1950s, became a key currency again.

Other forces are at play here too – namely pricing and mobile usage – helping to swell single sales but also continuing to make trading conditions for albums more perilous. To download a single today costs anything from £0.59 to £0.99, or even cheaper if there’s a promotion on, whereas a decade ago the average price of a single was £3.21. A digital album today costs just twice what a single cost in 2003, without even factoring in inflation – but singles remain the big draw for consumers.

At the same time, Smartphones have dramatically changed music buying. In a few taps and in as many seconds, you can download music straight to your device, finally making “impulse purchasing”, something the record business pinned its hopes on years ago, a reality. The Shazam app, through which users can hear a song playing, tag it on their phone and click through to buy it before even getting to the chorus, also makes purchasing a far slicker experience. It clocks up 10m tags a day globally and around 10% of those end in a purchase.

Labels can boast about their deft marketing of singles all they want, but really it’s technology and price that have conspired to turn us into frantic singles buyers.

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But that’s still only part of the story about the way music is now consumed. The UK chart is entirely sales-based, so it does not include streams on services such as Spotify (which recently made its play counts public) or YouTube. Other markets (such as Sweden and the US) have woven streams into their charts but the UK chart, for now, remains uncombined.

Therefore, any cheering about booming singles sales, to make this a truly British story, requires some concurrent moaning and doom-mongering: in the first half of the year in the US, Nielsen SoundScan reports that digital track sales dropped 2.3% year-on-year to 682.2m units. The US properly took to digital before the UK (iTunes launched there in 2003), and what happens across the pond often stands as an indicator of what will eventually happen here. Even if 2013 looks set to break all sorts of records, next year or the year after, the record business’s lifeline could soon start to fray.

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