Resnikoff’s Parting Shot: The Worst Week Ever

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It was so bad, maybe everyone just looked away.

But the last week of May was the worst week for album sales in decades.  It was definitely the worst week in the Soundscan era, which started in the early 90s.  But then, Billboard did some back-of-the-envelope math showing that it may have been the worst since the early 70s.

How low?  For the week ending May 31st, physical and digital albums in the US tallied 4,978,000 units.  Sounds great for a small Scandinavian country, or a handful of chart-toppers.  But not for the largest global market (by extreme comparison, the highest weekly total in history was 45.4 million in late 2000).

And so what?  Isn’t this just another boring stat on the way down?  And isn’t this just a problem for the majors?  The same ones trying to bankrupt LimeWire founder Mark Gorton and CPR the CD?

Not exactly.  Sure, majors are bleeding, and this CD downturn is making companies like EMI Music toxic.  But it’s also making life very hard for indie and unsigned acts, not to mention publishers large and small.

Imogen Heap had the honesty to admit that touring revenues were just not cutting it.  And despite the hype surrounding live, plenty of artists are struggling to make the road profitable.  And one reason is that artists are simply less able to sell their own CDs at merch tables.

Sure, die-hard fans will load up on lots of things – shirts, CDs, vinyl, even instant live recordings.  But the bundled, marked-up disc is no longer a core, important part of the listening experience, especially among the younger demographic.  Instead of a functional way to listen to music, it is now a mere carrying case for digital songs, and at best a souvenir.  And, most fans already have the music before they walk into the venue.

Most successful consumer-facing companies have the ability to bundle effectively.  Honda doesn’t sell you a tire at a time.  Budweiser gets you drunk off of a case.  That we know.

But the second wave of disruption involves the album as programming.  A 50-something fan, for example, grew up with the mentality that albums are the opus, a discrete artistic statement.  But today’s teenager was never reared on this experience.  Instead, the playlist and one-off song are more critical, because that’s the way it’s been for over a decade!

But this goes far beyond the recording.  Executives at EMI Music Publishing like to distance themselves from the carnage of their recorded sibling.  But CDs are dragging mechanicals with them, and a flattening digital is making the situation worse.  Talk to a publishing executive, and you’ll realize that this once-stable business is also under serious pressure, especially given the time-delays involved (not to mention downward pressure on performance and sync royalties).

Looking back, one argument is that the recording industry was only booming on a format-fueled replacement binge.  It had to crash back to earth, and piracy was simply part of the fireball.  But the CD represented a reliable sales vehicle, a repeatable best practice that labels (and artists) large and small could profit from.  What helped Public Enemy in the early 90s also helped an unknown rapper named Jay-Z.

But what is that sales engine for the 2010s, recording or otherwise?  After years of disruption, DIY hype, and VC-fueled zeal, this is a question still staring the industry in the face.  Sure, Trent Reznor can snap his fingers and make $750,000 on superfan box sets.  Radiohead can shock the world with a name-your-price experiment.  But those are not scalable ideas for a next generation of artists, rather, they represent interesting sales concepts for a limited group of established names.

And so this industry keeps searching, though great ideas and success stories are popping from every corner.  Grizzly Bear can score a Super Bowl spot, Phish can still easily fill a venue, Apple can blow Feist into the stratosphere, T-Pain can create a killer iPhone app, Justin Bieber can create a spark on YouTube, Susan Boyle can turn a television appearance into millions of CD sales.

These are all great successes, but they are mostly one-off, highly unique case studies.  More importantly, they are not easily-repeatable sales paths, at least beyond a tiny sliver of acts.

The last vehicle was invented in the 80s, and is finally heading into the sunset.  Where’s the next one?

Paul Resnikoff, Publisher.