December 14, 2008
Single-Track Digital Downloads Death Knell To Artists?
More than half a decade after Apple's iTunes online music store revolutionized digital music sales by introducing single-track downloads, artists and music labels are beginning to question whether or not the approach is smart business.
AC/DC and Kid Rock, two of the year's biggest rock acts, insist their albums only be sold whole, something Apple rarely permits. Furthermore, despite the fact that iTunes is the largest music retailer in the country, neither allows iTunes to sell its albums in the United States.
Surprisingly, neither act appears to have suffered for this decision.
According to Nielsen SoundScan, Kid Rock's "Rock N Roll Jesus" was the third-best-selling album of the year as of the beginning of this month. It was sold only as a CD until nearly a year after its release, when Kid Rock granted Rhapsody exclusive online selling rights in the United States. The album has sold 3,000 digital copies to date. And AC/DC's new "Black Ice" album was released exclusively at Wal-Mart, and has become the fourth-best-selling album of the year with 1.6 million copies sold, despite the lack of any digital sales.
Both cases challenge prevailing wisdom that iTunes is an indispensable part of music retail. Perhaps more remarkable is the fact that neither album appeared on file-sharing networks any more often than other big releases, said Eric Garland, CEO of the file-trading monitoring firm BigChampagne.
"Check some of these artists that have hit singles versus their album sales, then compare it to what Kid Rock is doing," Ken Levitan, Kid Rock's manager, said in an interview with the Wall Street Journal, calling digital single sales the death knell of the business.
However, Kid Rock and AC/DC alone do not tell the entire story. For example, this year's best-selling album is Lil Wayne's "Tha Carter III," which sold 2.7 million copies. Digital music sales played a significant part in the success, with Lil Wayne's "Lollipop" single selling more than 3 million copies. Cold play's "Viva La Vida or Death and All His Friends," the year's second-best-selling album, sold more than half its 1.9 million units via digital services.
Digital stores also helped Leona Lewis single "Bleeding Love" become the best-selling digital single of the year, having sold 3.3 million tracks according to Nielsen SoundScan. The single is part of the album "Spirit", the eighth-best-selling album this year with 1.2 million copies sold. Of those, 140,000 were digital sales. Counting every 10 tracks as an album, Lewis' sales rise to 1.5 million without considering sales of any other singles from "Spirit" "“ a number on par with AC/CD and Kid Rock.
The results suggest it's possible to have a best-selling album with or without digital single-track sales. Indeed, the best strategy may depend on the music itself.
"If there's a body of work that the public wants, they will engage with it and purchase it," said Universal Motown's Cameo Carlson.
"It's about the consumer you're going after and what story you're trying to tell."
Carlson, senior vice president of Universal Motown's digital business development, was behind the digital promotion of Lil Wayne's "Tha Carter III." Although she had concerns that "Lollipop's" popularity might deter from Lil Wayne's album sales, she made the call to embrace iTunes rather than fight it. The label released five more tracks on iTunes, in addition to "Lollipop", ahead of the album's June 10 release to give fans the opportunity to hear other tracks.
She also harnessed iTunes' "Complete My Album" feature, which allows customers who buy a few songs from an album to purchase the remaining tracks at a prorated price.
It was one of the first times the feature was used alongside a massive prerelease campaign. The success is remarkable, with digital sales accounting for more than 10 percent of the album's sales during its first week -- a 1 percent increase over Lil Wayne's previous titles. More than half of those digital sales were purchased by fans using the Complete My Album feature. "Tha Carter III" went on to become iTunes' fourth-best-selling album for the year.
It's fair to ask whether AC/DC or Could Kid Rock could have accomplished these feats.
"They're leaving money on the table by not offering track sales," Carlson told Billboard.
"I don't think that creating an economy of scarcity works. There have been a couple of examples that have been successful ... people like to hope that part of the industry is still alive. But I personally think those two are anomalies."
Carlson and other industry executives claim the main reason Kid Rock and AC/DC succeeded so well in selling albums is that they are both well-established acts with large, loyal fan bases. It's the same reason Radio head's "In Rainbows" sold well as a CD, despite being available as a free download.
However, for new acts, the results could be markedly different. Atlantic Records pulled Estelle's album "Shine" from iTunes after it and the single "American Boy" showed high market potential. The album was on the Billboard 200 for 17 weeks, peaking at No. 38. Meanwhile "American Boy" became a top 10 iTunes download. However, sales plummeted when Atlantic removed the singles from iTunes, something the label later reversed.
Some executives think that other acts could replicate the approach of Kid Rock and AC/DC. "Kid Rock absolutely left transactions on the table by not being on iTunes," said BigChampagne's Garland.
"But did he leave money on the table? I think that's a tough case to make. Singles-driven acts must be in iTunes. For album-oriented career superstar artists, it's a strategic question worth asking. But it's not an easy call."
For the foreseeable future, iTunes' place in music sales strategies will likely remain a contentious issue.
"We're still at a stage that will require a lot of experimentation," says one major-label digital executive. "You're going to see us experiment with a bunch of different things. I don't think we've figured out exactly what approach we should take."
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