Tag Archives: We Are Young

FUTUREHIT 2012 MIDYEAR REPORT – INDUSTRY OBSERVATIONS

After looking at what’s happening on the songwriting side of things yesterday, I wanted to examine the state of the industry overall. The numbers point to some signs of weakness in sales. We only have one million selling album for the first time in 21 years of Soundscan. Gold albums declined from 16 to 11. Even on the track sales side, we’ve declined from 52 million selling songs to 47, despite a 6% overall uptick. This suggests that there’s a marked increase in “medium-selling” tracks, which could be good news, especially for independents.

Overall, the decline in album sales continues to be a concern, or as Paul Resnikoff states, Kiss Your Album Sales Recovery Goodbye. Album sales are down 3.2% overall, despite a 13.8% increase in digital album sales. Yet dig deeper and there are more interesting trends. Catalog sales had another up year, increasing 5.4%. So the decline came at the expense of new music. I would say there are several factors contributing to this.

First, take a look at our top 3 sellers of the year. They are all new acts on their first hit. And one of those acts (important fact) doesn’t have an album. Given the YTD sales of Gotye and Fun, if Carly Rae Jepsen had released a full length album, it’s likely she would have made up as much as 10% of the differential gap between this year’s sales and last. Maroon 5 has 2 of the top selling tracks of the year, but their album was only out for one week of this comparison. Had it come out 3 weeks earlier, it too might have covered another 5% of the gap. But either way, traditional buying habits show many people purchase an album after they know more than one song. So having the top songs come from new acts would suggest a slightly down market for album sales in any case.

Now let’s take a look at those catalog sales. Those numbers have been going up for the last 2 years largely due to the return of the bins in the front of Wal-Mart and Best Buy stores selling older titles for $4.99. The prominent positioning at retail is now going to cheap, older titles thereby driving up their sales. Both Wal-Mart and Best Buy have increasingly placed their new music releases in harder to find places. My local Best Buy has the top sellers positioned down a regular aisle facing the rear of the store blocked by an aisle of hair dryers. Wal-Mart has been moving their CD racks to the mid-point of the media sections. You’d be hard pressed to get sales if it’s not in a visible place by which to sell the product.

Then, once you get to the sales racks, most of the CDs are going for $11.99. Gone are the days of discounting in order to drive people into the store. There are also many deluxe editions going for $16.99 and up. In some ways, I think this is good to drive revenues into the business. Especially to get the die hard fans to pay more for first-in-market deluxe editions. On the other hand, once the fans have the record and the album has been out a month, $11.99 is hardly an impulse price. Not having enough titles priced under $10 on a regular basis is going to harm overall sales figures. One just needs to look at the economy (and the bins in the front of the store) to know price is a contributing factor to sales declines.

I wouldn’t bank on albums for the business as a whole. Why would I start singles label if I did? But I wouldn’t give up hope on the album overall. I would just look to better pricing and release strategies to boost the numbers overall.

Billboard also noted that Pop and Rock are ruling the mid-year charts. But I guess that this is all how you determine what is rock. The two artists propelling rock to a top category are Gotye and Fun. Yet the defining element to their “rock” definition seems to be airplay on rock radio. I hear these songs and I hear well-written left-of-center pop songs. I know each act would do great at a rock festival like Coachella, but Snoop Dogg plays there as well. Overall, I think we’re in an era where many songs and artists are tough to place in a genre box. So when Billboard states Rock tracks outsold Pop tracks, this is largely because of how these acts are categorized.

Rock, in particular, has a tough identity crisis which leads me to be skeptical of any stats involving this genre. One can hear Carly Rae Jepsen and clearly say “Pop”. One can hear David Guetta and clearly say “Electronic” or “Dance”. One can hear Kanye West and say “Hip-hop” and Eric Church is clearly “Country”. Yet say Gotye, Maroon 5 or Train to different people and you’ll get different genre answers.

It’s also fair to say that Hip-Hop is headed in this direction as well. Is Nicki Minaj’s “Starships” an Electronic song, a Pop Song, or a Hip-Hop song? Or for that matter Flo Rida’s “Wild Ones”? The answer is all of the above making genre classifications that much harder to rely on. If anything, those songs and even the fungible rock songs are examples of multiple genres influencing songs, which I predicted would continue to be a common element of hit songs.

What does this all mean? It means we’re an industry in flux. The ground is shifting on what the prevailing sound will become. The strategies are consistently evolving on how to market and release albums and track. We haven’t even begun to discuss the ever growing percentage of revenue coming from items not here, including streaming and sync income. We have clearly not arrived on a definitive model for the business’ future, nor will we in the short term. What we do have is a business still in flux and still being redefined. Yet knowing tomorrow will not be like today just means taking risks. If people in the industry continually take those risks and find new elements to make it, we will find plenty more growth in music in the years ahead.

FUTUREHIT 2012 MIDYEAR REPORT

Another 6 months down, and time for another Futurehit 2012 Midyear report. There’s lots of stats to chew on. Single download sales are up. Album sales are down. Two songs sold over 5 million downloads in 6 months. What’s really interesting is that I see signs of an industry ready to go thru another major shift musically and financially. Where this will lead is an increased reliance on digital singles and a re-examination of passive fans and how they will contribute to a future music business.

GOTYE, FUN. & CARLY RAE JEPSEN

To start, let’s group out the Top 3 selling singles so far this year. Collectively, they have sold nearly 15 million downloads in the US alone. 2.2% of all downloads sold came from these 3 songs, which is pretty impressive. But can you find the trend in these three songs? The truth is that these songs are all radically different in texture, style, rhythm and theme. The top seller, Gotye, has an 18 second intro which runs counter to my theories of short intros. Fun. has a rhythm change in the song that hasn’t existed in a top hit in years. In other words, they broke the mold. What this suggests to me is that people are indeed may be tiring of the sameness found in many of today’s hits and they are ready for a new sound. I’m not sure the new sound is found in either of these songs, but the same sounding Euro-influenced dance pop may be waning.


Also worth noting that the top 3 sellers are also the first time any of those artists ever hit in the US. The notion of superstars ruling the charts is quickly being disproven with this trio. What’s also worth paying attention to is that while it’s their first US hit, it’s not their first release. All of them have been making music for a few years in one form or another, so it’s not that they got lucky their first go-round. They developed over several years. In fact, despite the notion that always exists of labels signing young artists, these singers are aged 32, 30 and 26 respectively. Signing that 17 year old is not necessarily the ticket to huge stardom.


These artists were largely not developed within the major label system. Two of these acts, Gotye and Carly Rae Jepsen, were created under completely independent labels that then got “upstreamed” to the majors. Fun. was signed to a major, but under the Fueled By Ramen imprint that has maintained some independence from its parent company Warner Music Group. In the top 50 selling singles, there is not one track that is 100% independent. There are only two songs out of the Top 50 that were created as an indie. And they are the #1 and #3 best sellers of the year so far. To some degree, this underscores the continued importance of major labels on big hit songs, but also that big creative hits do come from outside the system.

The sheer success of these songs (they are the only ones selling over 4 million apiece this year) leads me to feel that the public is starting to clamor for something different. They really want a unique spice in their life that is not the same repetitive rhythms. Naturally, it has to be a great song as well, so don’t be different just for the sake of being so. Make no mistake, these are also very well structured songs with universal themes as well. Yet sonically, there’s a strong argument to not emulate what you’re hearing across the board.

THE OTHER HITS ARE STILL A FORMULA
Or is there? Because once you venture outside of the Top 50, you find that there are a lot of similarities in the songs. While the Top 3 are outliers, taken as a whole there is still a general pattern and formula to what elements one needs in a successful song.

INTROS
The average length of intros in the Top 50 selling songs is still around the 7 second mark. 7.7 seconds to be exact. But that’s also a bit misleading as one song, Coldplay’s “Paradise”, has a 61 second intro. Take that song out and the average intro length of a top selling song is 6.5 seconds. Once again, about 1/4 (24%) of the hits have no intro whatsoever. And only 30% of the hits have an intro of 9 seconds or more. In fact, in the top 10, only the Gotye song has an intro longer than 9 seconds.

TEMPO
There’s no mistake that overall the rhythmic thumping that you’re hearing is working. Over half the Top 50 sellers (56%) have tempos of 116 BPM or greater. Digging deeper, the generally accepted Euro-dance BPM (between 125 and 130 BPM) covers over 1/3 (36%) of the top sellers. Even Gotye doesn’t escape this, as it’s 129 BPM rhythm is certainly a reason why it’s been favored by remixers around the world.

Contrary to my expectations in Futurehit.DNA, mid-tempo songs aren’t making a comeback as 20% of the top selling songs fall between 95 and 112 BPM. My theory as to why this is happening is probably due to a couple of factors. One is that the rapid ADD attitude reinforced by an on-demand world with everything at your fingertips causes people to gravitate to songs that are working at the presumed speeds of their brains. There’s not a lot of downtime. Then, add in a growing club culture reinforcing fast songs appropriate for the environment and radio programmers reluctant to bring the energy down. All this adds up to a reinforced tempo that’s unlikely to recede anytime soon. The energy is in the air.

MAJOR/MINOR
Two of the top 3 songs of the year (Fun. and Carly Rae Jepsen) are sung in a major key certainly suggesting that people are looking for very happy tunes. In fact, when I first started to formulate what I was going to write, I thought I was going to point to Gotye as a minor key outlier. In actuality, it’s the major key songs that are the outliers. Of the Top 50 selling songs, 2/3 of them are either in a minor key or contain a relative minor. Specific to the relative minor, it appears that there’s been a noticeable spike in its usage this year with 18% of the top songs containing it. Whether the reason comes from a downbeat mood over economy or other reasons, it is clear that minor keys are desired more by audiences today.

Another overall summary I would recommend reading for the first half of the year is this analysis by Billboard.

PATIENCE PAYS FOR SPOTIFY ROYALTIES

For several months, I’ve heard a lot of complaints on how little Spotify pays indie artists. So I was kind of surprised that very few picked up the story that Spotify is actually, well, starting to pay indies more.

Evolver.FM said that a confidential report from Merlin (the indie label trade organization rights agency) is showing strong revenue growth from Spotify. The reason is an increase in subscribers and usage overall. One would also suggest that the Facebook integration is starting to show up in royalty statements in recent months as well.

As an indie label owner, I get the pain of small micro payments. But I also get the concept of patience. We all dream that our song will be released, spread like wildfire, and generate huge instant digital revenues. Lately, Bob Lefsetz has been promoting the idea that great music finds its audience no matter what, further reinforcing a false notion that great things are instant successes.

But let’s take a look at one of the biggest songs of 2012: Fun’s “We Are Young”. This is the Google search trending for the song over the last year. The song was released in September 2011. This critically acclaimed song produced…barely a ripple. In fact, it didn’t do much until the spike in December which was the result of appearing on the show Glee. Then it dropped off, though maintained a higher popularity than before the show. But it wasn’t until the use in a Super Bowl ad that everything kicked into high gear and the upward ascent began. This popular hit did not go viral out of the gate. It took traditional TV placements for people to see it.

The success occurred because everyone was patient. In fact, the band’s manager Dalton Sim said as much in a Billboard cover story in March.

From my perspective, the success comes from the hard work the band, Nettwerk Records and Fueled by Ramen have put into the band for the last three-plus years to develop a real fan base.

So when it comes to services like Spotify, it appears that patience just might pay off as well. At one point, YouTube didn’t pay anyone. Now they are a top revenue driver for many artists. Financial success at any level is not an overnight story for artists or companies for that matter. However, working towards those greater successes can yield bright futures for all.

UPDATE: As Jim Mahoney of A2IM pointed out, Merlin is not a trade organization, but a rights agency.