“Those who share files are simply more interested in music. They use file sharing as a discovery mechanism. We have a generation of young people who don’t have any concept of music as a paid-for commodity.”

Enjoy.
Stay tuned,
Erik
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The prediction is that digital sales will overtake physical sales by 2010 as cd sales fall 15-20% and digital sales increase 15-20%.

Other interesting facts to come out of this report by the NPD group are that:

- 25% of overall music sales are done on iTunes
- 69% of digital music sales are done on iTunes
- 14% of overall music sales are done at Wal*Mart
- 20% of physical music sales are done at Wal*Mart

I have often blogged about the fact that music sales are happening at stores (online & offline) that have many different titles. I am always wary when a new site comes up online to sell one particular style or label of music. Consumers want to be able to purchase Mozart and Jay-Z in the same place.

Stay tuned,
Erik
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EMI’s CEO, Elio Leoni-Sceti, recently stated that “seventy percent of music consumption is digital and yet only about twenty percent of music company revenues are derived from digital.”

It is likely that 80% of record label sales are derived from products that are having rapid sales declines. This disconnect will not be sustainable long term.

So, what can the record labels do to capture more sales for products that people are actually buying? First of all, the labels need to be on the cutting edge of technology and know how their clients consume music. Morgan Stanley recently made headlines for an article written by a teenage intern about the non-use of Twitter by teenagers. It took the media world by storm yet I doubt it was news to teenagers.

How many teenage interns do you think the labels have working for them?

Second of all, the labels must rapidly diversify away from selling records, either digital or physical. If there is a value-ad to the artist, the label will be able to make money. So far, it seems as though the labels only value-ad is still the record.

Stay tuned,
Erik
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Universal Music Group is a major record label with artist such as Lil Wayne, Rihanna, and Mariah Carey. They have struggled to reinvent themselves in the last decade as the music world’s business model has been flipped upside down. However, they are one of the more progressive labels in determining a new business model.

This partnership will bring TuneCore’s digital distribution capability to Universal’s different label websites (ex. Interscope, Def Jam, etc.) On the flip side, Universal’s services (licensing opportunities, professional audio mastering, radio play, and tour placement.

For Universal Music Group, this provides direct access to a number of new artists and will give Universal a window into new music. The model has drastically changed in this respect – in the past, it was common for labels to find bands just at the beginning of their careers and then give them the seed money to make it big. Now, labels don’t have the money they had in the past, so they are looking for artists that are more established and have funded the entrepreneurial portion of their development in house.

Overall, smart strategic move for Universal, and great additional services for TuneCore to offer to their ‘Do-it-Yourself’ artist base.

Stay tuned,
Erik
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• By the end of 2010, 50% of music unit purchases will be in the digital format.
• Physical albums still generate more revenue than digital sales, so digital increases will not make up for physical declines until 2011 or beyond.
• In 2009, 39% of music purchases will be made in traditional brick & mortar outlets. That number was 68% in 2001.
• Sales of songs released in the same calendar year are decreasing, showing a trend towards purchases of catalog songs and not necessarily the newest hit.
• A small percentage of albums counted for the majority of album sales in 2008 – 82% of new albums were from just 950 different albums.

So, what does this mean for artists? Well, a good portion of album sales are still in the physical format. This is decreasing rapidly, but it still may be too early to go only digital. Artists must think of innovative ways to release their digital tracks to meet their fans where they are purchasing.

Stay tuned,
Erik
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The idea behind the site is that the individual user creates a storefront with particular songs that they like. They then recommend the songs, write reviews of the songs, and share with friends. For every sale, the user then obtains 10% of the price in reward points to be used to purchase new music.

This is also a tool for artists to set up their own page to sell and promote their music. Stores can also be connected with social networking sites for promotional purposes.

Stay tuned,
Erik
erikrostad.com

• Album sales in the USA for March ’09 were down 17.9% compared to the same month in ’08.
• Album sales in the USA for March ’09 were down 29.8% compared to the same month in ’07.
• 1st quarter (Jan – Mar ’09) album sales down 13.5% over last year.
• 1st quarter cd sales were down 20.3%.
• Not one single album during 1st Quarter ’09 reached platinum sales volume (1 million +).
• Digital album sales were up 23% over the 1st quarter, but not nearly enough to combat the drop in cd sales.

This isn’t shocking or new, but just shows that companies relying on album sales for revenue have a problem that is deteriorating quickly.

Stay tuned,
Erik
erikrostad.com

If Apple Corps Ltd. does pursue this option, they would be wise to make the songs as easy as possible for fans to import into their iTunes (or other) library. Since they are the company of the Beatles, they also have tremendous leeway in offering ancillary products along with the tunes. Because, let’s be honest, most people that want the Beatles tunes already have it, legally or illegally.

If Apple Corps Ltd could offer exclusive content, even retro content about the Beatles along with the digital tracks, this would be a major selling point that would likely lead to more digital track sales.

A few weeks ago, we learned that there will be a special edition of the Rock Band video game specifically for the Beatles. This is the first time that they have released part of their catalog digitally.

This more open attitude should lead to more fans. And it should lead to a better appreciation for one of the greatest musical groups of all time.

Stay tuned,
Erik
erikrostad.com

The announcement noted that:

“experience The Beatles extraordinary catalog of music through gameplay that takes players on a journey through the legacy and evolution of the band’s legendary career.”

Paul McCartney added:

“it will feature different periods of the band — you get early days, Liverpool, then psychedelic, and on from there. It’s very cool. And I like the idea that the game introduces kids to music, you know?”

There are three different price points for the game. The basic game will cost $60, the game with a special Beatles guitar will cost $100, and a limited edition game will cost $250. The game is scheduled for a late fall release for Xbox 360, Playstation 3, and Wii.

No numbers were released on the size of the deal for the Beatles estate. I just find it fascinating that the Beatles are going with an interactive experience with their music instead of just an audio experience for their first foray into the digital realm.

Stay tuned,
Erik
erikrostad.com