That’s according to Topspin CEO Ian Rogers, who disclosed the ratio at SF MusicTech Summit.
“Physical is 75 percent of my business,” Rogers relayed as part of a broader discussion on physical sales.
But what is ‘business,’ exactly? In a follow-up email, Rogers told Digital Music News that the 75 percent figure does indeed refer to actual revenues – meaning, dollars. In terms of actual units sold, the digital-to-physical ratio moves towards 50:50. Here’s the ratio Rogers offered:
By volume: 50/50 digital/physical
By dollars: 25/75 digital/physical
Rogers further noted that this is not a sudden blip; rather, the ratios have been remarkably steady. This is what Topspin cofounder Shamal Ranasinghe presented at Midem – in 2010.
But there’s an important clarification here. The slide compares digital-only to ‘includes physical,’ which means that the physical side oftentimes means a bundle with some digital involved. On that point, Rogers noted that physical is the main attraction for these bundles, with digital the sweetener. “I think it’s accurate to say the physical good is the primary driver of the increased value, though,” Rogers continued. “The key issue here is the physical stuff costs a lot more than $0.99.”
Which brings us to some simple math: physical items (and bundles) are typically far more pricey, and far more attractive to the die-hard fans that Topspin often serves. But this seems to completely contradict the broader trend of growing digital percentages, sinking valuations on recordings, and the difficulties that many artists are having with diversification. Spotify, for example, is handing artists fractions of pennies on streams, if they see anything at all, while widespread album markups seem mostly like a thing of the past. Meanwhile, opportunities like t-shirt sales and CD sales at shows seem to be getting talked-up more than they are getting rung-up.
Of course, Topspin is not a digital distributor to places like Spotify, so this is just part of the picture. But it still feels like selling higher-end, higher-priced stuff is a rich band’s game, though it’s hard to tell what direct-to-fan bundles and physical sales will ultimately mean to the broader community over the long term.
Report by Paul Resnikoff in San Francisco.