Manage for Success: 2009 Sales Data, Newsletter #104, January 2010

"Manage for Success" is a free monthly newsletter for record label executives who want to operate their companies efficiently and successfully. It's published by Keith Holzman of Solutions Unlimited, a management consultant, troubleshooter, and trusted advisor, and is based on his many years as a senior executive in the music industry.

Copyright 2010 by Keith Holzman, Solutions Unlimited. All rights reserved.


Let me begin by wishing you all a very happy and prosperous 2010, with the hope that it will be a considerable improvement over the last couple of years. Ever an optimist, I predict that this new decade will result in the eventual return of a healthy music industry, and a robust economy.

So let me continue with the facts -- actual sales numbers for 2009 according to Nielsen SoundScan -- as reported by Billboard, The Wall Street Journal, The New York Times, and The Los Angeles Times.

Overall music purchases in 2009 totaled 1.5 billion units, a slight increase of 2.1 percent above 2008.

Album sales were 373.9 million units, a decrease of 12.7 percent from the previous year, and a drop of a whopping 52% relative to 2000, the beginning of the decade. In fact, this was the eighth decline in nine years.

Digital Track sales were up 8.3 percent to 1.16 billion units.

89 Digital Songs exceeded 1 million units, which was 18 more songs than the 71 in 2008.

Digital Album sales were 20 percent of Total Album sales in 2009 compared with 15 percent in 2008. This 5 percent growth rate has been constant since 2006.

Digital Music represented 40 percent of all music purchased in 2009, up 32 percent from 2008, but in a January 6th analysis, Billboard reports "a digital slowdown has arrived. In terms percentage and unit change, digital sales growth slowed immensely last year after three years of steady gains."

Vinyl (still a niche product) gained 33 percent to 2.5 million units in 2009.

But all sales combined indicate that the rate of growth has slowed.

As for Market Share, Universal remains at the top with just over 30 percent, followed closely by Sony with about 28.5 percent (3 percent more than in 2008,) then Warner Music with almost 20.5 percent, Indies at about 12, and EMI in last place with about 8.8 percent.

Looking at Sales by Genre it's interesting to note that they were all off a fair amount with the exception of Jazz, which was down only 0.1 percent. Rock was off 11.1 percent to 124.2 million units, R&B off 9.3 percent to 69.9 million units, Country off 3.2 percent to 46.1 million, Christian/Gospel off 6.6 percent to 27.8 million, Rap (a subset of R&B) was off 20.9 percent to 26.4 million, Latin off a whopping 34.3 percent to 16.5 million, Classical off 8.9 percent to 12.1 million, and New Age off 20 percent to 2.4 million units.

Finally, Billboard notes that although the SoundScan calendar was actually 53 weeks, it eliminated sales from the first week of 2009 (actually only four days) for a better comparison with 2008.

O.K. So what do all these numbers really mean?

I know statistics are dry and dull, but the information is quite telling. We're essentially an industry that's in rapid decline -- no real news to most of us. It's the "recording" part of the industry that's experiencing this decline, and it's due in no small part to the rampant piracy begun by the original Napster a little more than ten years ago.

It's not that people listen to music less often. In fact there are more platforms for music listening than ever before, most often without payment. Pandora and their ilk have provided platforms for listening to music online, essentially for free.

And then there's the ubiquitous iPod that enables people to listen to music whenever and wherever they please.

Finally, public performances by artists, especially the big names, have achieved top box office numbers. This is very remarkable in a declining (but hopefully soon to recover) economy and shows that people are willing to spend money to see those performers they really like.

So what does this mean to owners and managers of small independent record companies?

It means they have to be very careful and astute when making decisions about spending their limited funds. It might mean releasing fewer titles and focusing their efforts on artists who've proven themselves in the past, or who are starting to create audiences and fans by performing frequently in front of paying customers.

It means establishing well thought-through recording and marketing budgets, and following them closely, spending money where and when essential, but not chasing elusive sales.

It means looking closely at your staff to see if all are making contributions to the business and are proving to be worth their salaries.

It might mean bringing me in to review how you do business with an eye to reducing excessive expenditures, setting realistic goals and budgets, and being the experienced person to bounce ideas off. I've been doing this for a long time and have a proven track record as a label executive and as a trusted advisor to my clients.

So if you need advice on how to make your label successful, let me help you as I've helped so many others "manage for success." Email me (see below) so we can discuss how I might improve your business.

Or if you're considering creating your own label, I recommend my book "The Complete Guide To Starting A Record Company," The Second Edition can be ordered as a printed, spiral-bound volume, or as a downloadable eBook in PDF form. Read the complete Table of Contents and download the introductory chapter at <>. Updates are available online to all buyers.

Until next month,

Keith Holzman -- Solutions Unlimited

Helping Record Labels Manage for Success.



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Copyright 2010 by Keith Holzman, Solutions Unlimited. All rights reserved.