January 25, 2008

The longest points on the tail of music sales

As dismal data from the recording industry continues to paint a picture of looming obsolescence for the compact disc, there are still occasional glimmers of silver lining shining from beneath the plastic heap that the music biz has been trying to dig out of. For one, Nielsen SoundScan recently reported that the sale of digital downloads increased 45% between 2006 and 2007—albeit not with enough strength to compensate for the lost revenue from the decline in CD sales. However, as the internet opens up new distribution and compensation possibilities for artists, how might we account for the broader picture of music sales that exist—and perhaps even thrive—outside of the traditional music economy? Who, if anyone, is keeping track of the Radioheads of the world who would rather facilitate direct transactions with their fans?

The splintering of music distribution models was something we explored several years ago with our “Artists, Musicians and the Internet” report. At the time, we looked at how musicians and other artists were using the internet to communicate, collaborate, promote and sell their work online. But the landscape has changed dramatically since the time of our study (2004). MySpace now hosts profiles for more than one million rock bands alone, according to the latest digital music report from IFPI. And independent music distributor CD Baby currently sells music from over 200,000 artists, while musicians like Brian Eno and Jonathan Coulton sell directly to their fans through their own websites.

In the January issue of Wired David Byrne figures that there are six different distribution models now available to artists that offer varying levels of control. In a related audio clip posted alongside the article on the magazine’s website, you can also hear Brian Eno talk with Byrne about why he has embraced the self-distribution model for certain projects:

“There’s much more of a sense of connection with the people who are buying things, than there ever was when the record company stood between you and the buyer. And, of course, there’s also eight times as much income.”

Yet, as some critics have argued about Radiohead’s In Rainbows experiment, established artists who have benefited from the marketing machine of major labels shouldn’t necessarily stand as an example for emerging artists to follow.

But what if the self-distribution model allows some artists to generate just twice as much income—or merely as much income—as they might have with a more restrictive label contract? Or perhaps more significantly, what if it allows artists who have never had any option other than self-distribution to make some money doing what they love? The value of these transactions is hard to translate into annual sales figures, but it’s safe to say that it’s far from approaching zero.