Manage for Success: 2010's Sales, Newsletter #115, January 2011


"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 2011 by Keith Holzman, Solutions Unlimited. All rights reserved.


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This January newsletter is going to look very much like last year's. As I wrote then: "let me begin by wishing you all a very happy and prosperous year, with the hope that it will be a considerable improvement over the last couple of years." Unfortunately my prediction and hope that "this decade will result in the eventual return of a healthy music industry, and a robust economy" has not yet been realized.


However, hope springs eternal and I'm still thinking positively about the future of our business and for the world economy.


The following numbers were derived from SoundScan, as reported by Billboard, Digital Music News, The Los Angeles Times, and Bloomberg.


For the 52 weeks ending January 2, 2011, Overall Albums sold (Physical -- CDs, LPs, and Cassettes -- plus Downloads) amounted to 326.2 million units -- down 12.7 percent from 2009. This continuing trend has me very worried since downloads have come nowhere near to replacing sales of manufactured goods.


There were 240 million Physical Albums sold (LPs, Cassettes and CDs -- which themselves were about 99 percent of the total) -- down 19 percent.


Digital Album downloads were up 13 percent to 86.3 million, and represented about 26.5 percent of all albums sold, but as I wrote above, hardly sufficient to offset the decline of CDs.


Sales of digital tracks were up a mere 1 percent to a total of 1,172 billion.


The only positive was a 14 percent increase in sales of Vinyl to a total of 2.8 million LPs. But let's take a closer look at what was sold. The seven top titles were The Beatles "Abbey Road" at 35,000 units; Arcade Fire's "The Suburbs" at 18,800; The Black Keys "Brothers" at 18,400; Vampire Weekend's "Contra" at 15,000; Michael Jackson's "Thriller" at 14,200; The National's "High Violet" at 13,600; and Beach House's "Teen Dream" at 13,000. These are hardly "stellar" numbers.


All Digital formats combined represented 46 percent of total music purchases last year. This is an increase of 40 percent over 2009. Digital albums represented 26 percent of all albums sold, an increase of 20 percent over 2009.


Five tracks sold over 4 million units, with another seven selling more than 3 million. Whereas in 2009 89 songs sold more than 1 million units, only 86 sold that many in 2010.


The decline in total sales has much to do with an increase in peer-to-peer downloading ("piracy" to be blunt!) and shrinking shelf-space at fewer brick & mortar retailers.


While in previous years "catalog" albums outsold "current" albums, 2010 showed a decline in catalog sales, thereby putting a wrench in the "Long Tail" theory.


Not much of a surprise, but Universal Music had the largest share of market at 31.4 percent, followed by Sony Music at 27.4, Warner Music at 19.8, Indies as a group at 11.6, and a still-struggling EMI at 9.6 percent.


One third of all music sales (real and virtual) were at big-box stores such as Wal-Mart and Target, while only 8 percent were at independent retailers. Interestingly, a whopping 71 percent of vinyl was sold at indies.


As for Digital sales, Apple's iTunes had more than 60 percent of the market, while Amazon.com's was a distant second.


So what does this decline of sales 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 downloadable eBook in PDF form, or as a printed, spiral-bound volume. You can read the complete Table of Contents and download the introductory chapter at <
http://www.recordcompanystartup.com/>. 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 2011 by Keith Holzman, Solutions Unlimited. All rights reserved.