Economic blogger Long Tail pulled together a spreadsheet of the top 100 albums and the years they were released (grouped them in 5-year intervals). They were nice enough to post the raw data for downloading. The resulting chart gives a nice graphical representation of how bad things are for the music business. It’s not just new artists that are having trouble getting established but also, and possibly more damaging, there just aren’t as many blockbusters as previous periods.

A couple of things to note:

1. The raw data came from the RIAA–the organization that certifies hit albums. Data from before the late 1980s is suspect as it was based on record company supplied information. (Remember the satin jacketed record company caricature played by Bill Murray on SNL? Well that was the type of individual supplying sales data in those days. Since there was no hard data to verify claims, lying was rampant.) Once Soundscan was introduced at the end of the decade the source of information shifted to retailers–which of course was far more accurate. Even worse, in the 70s and before, gold/platinum/etc. certifications were based on “shipments” without regard to returns. It got so bad that some old timers will remember that decade as “shipping good and returning platinum.” If you know someone in the record business from those days as them about “Thank God It’s Friday” or “Wattstax.”

2. One argument against this analysis is that older albums will have longer time to creep into multi-platinum status. Looking at the data however, there were no albums in the top 100 in ‘04 and ‘05 and a quick review of the releases in those years it’s a safe bet that there are no slow-burners there who are going to creep in to the Top 100 over time.

3. The point of the exercise isn’t just that the music business is in trouble (which of course it is) but that technology has loosened the monopoly that major record companies, radio stations, MTV, etc. had on the process of marketing and distributing music to consumers. This has given buyers more choices. Instead of turning on a radio and only hearing 40 songs they go on to My Space and are exposed to thousands. Instead of walking into a record store and seeing displays of a few major acts being pushed by the music companies, they go to iTunes and see hundreds. We must separate fragmentation from stagnation. The music business may one day rebound (I doubt it but it is certainly possible) but even with increased total volume we will likely see much larger numbers of artists selling relatively small numbers versus the megasellers of past decades. One comment in Long Tails posting drew the analogy that we will never again see a television show that is able to consistently draw the ratings that an “All in the Family” was able to achieve.

4. I’m not sure the iTunes effect on this but believe that it was too small during the time periods involved to be a material factor.

5. As one commenter noted, “Data like these never speak for themselves, but lead to a variety of interesting interpretations.” So true.

More at: Asymmetric Design and A Typical Joe

h/t: Marginal Revolution which lead me to Econlog and then to the Long Tail.

Additional reading: Another reason for lackluster music sales

This entry was posted on Friday, January 6th, 2006 at 10:20 am by Insider and is filed under How Not To Succeed In Business, I knew I'd use my Econ major. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.