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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Mariah will be working in conjunction with Elle magazine to create a 34 page magazine-style album insert. This insert will include advertisements to help allay the cost of the album.

This is interesting in the sense that it uses a similar approach to online content. Artists, YouTube, MySpace can place advertisements next to their online content for some additional income. Now, Mariah is doing the same thing but in a physical album format.

This will in no way revive overall album sales, but it could have an impact with Mariah’s die hard fans. The magazine insert will contain exclusive content and information. When individual tracks become a commodity, offer additional content that is harder to replicate.

The album, Memoirs of an Imperfect Angel, is set to be released in August for some parts of the world, and September for the USA.

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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For all of 2009, physical album sales are down 13.4% compared to 2008.

So, why keep writing about this? I think the key thing to pull away is that album sale drops are not leveling out. This trend will likely continue. For bands, it is probably smartest to not put a high emphasis on expected income from album sales. In turn, bands will need to consider alternate income streams.

Stay tuned,
Erik
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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

- Fontana – Indie Distribution
- Vivendi – Video Distribution
- Digital – Digital Assets

This move is expected to make things more streamlined for business partners so they can move easier & quicker between physical & digital.

Stay tuned,
Erik
erikrostad.com