Research Paper

In 1995, global music sales reached $41.5 billion dollars. In 2018, that number was a mere $19.1 billion. This vast decrease in sales can be attributed to the digitalization of the music industry. I question if the industry can ever return to level of output it once attained, but first we must understand how it got to this nadir.

Before the beginning of the new millennium, music was primarily distributed through physical albums, predominantly in the form of compact discs (CDs), cassette tapes, and vinyl records. During this era, music distribution was handled by major record labels, particularly by the ‘Big Five’. The ‘Big Five’ consisted of BMG Entertainment, Sony, AOL Time Warner, EMI, and Vivendi Universal Group, and together, they sold 80% of popular music. These major labels were responsible for selling music directly to retailers and consumers, leaving musicians with very limited control over their music. The distribution powers these major labels obtained “formed a major barrier [into] the music industry” for independent artists. In order to have music in stores to be sold, and to generate money, one needed the connections provided by a record label.

During this time, album sales were reaching their peak. 1998 had 76 platinum albums (1,000,000 copies sold) released that year. 1999 had 83 platinum albums released that year. 2000 had 90 platinum albums released that year. 1998, 1999, and 2000 each individually witnessed albums that were released and went diamond (sold >10 millions copies) in the same calendar year, in Double Live by Garth Brooks, Millennium by the Backstreet Boys, and No Strings Attached by N*SYNC.

The 21st century brought about a major change to the industry. We saw an increase in access to computers and mobile devices, as well as faster internet speeds. This enabled albums to be produced and placed on digital platforms, in their compressed mp3 formats, at a mass rate. This led to media player and media library applications becoming popular, thus laying the foundation for digital purchasing. Instead of albums being sold in their traditional manner (CD, cassette tape, vinyl), they were uploaded to be purchased and then downloaded.

The price of a digital album was the same as the price of a physical album. On paper, they should have led to similar sales numbers. However, that was not the case, as digital purchasing created file sharing.

Digital purchasing and downloading sparked file sharing, or as I like to call it, the “file sharing frenzy”. Once an mp3 was purchased and downloaded onto a hard drive, that file could be shared with others for download, without a purchase. One just needed to manually download all wanted songs and albums onto their hard drives. The company that first introduced file sharing was Napster in 1999. Napster was successful in introducing file sharing to the world, but it was unsuccessful as a business. It was limited because it came about in the early stages of media players, when few songs were available for download.

Napster Logo

Napster’s success was restricted and hampered by legal issues. The entire file sharing concept was viewed as theft and was very illegal. Napster was instantly sued. In 2001, Napster was virtually killed, but that was before it succeeded in spreading its concept. File sharing and its ease was now known, and as Napster was shut down, multiple new file sharing platforms arose. This process continued for years. Major labels, and coveted companies within the industry, such as Billboard and the Recording Industry Association of America (RIAA), sued file sharing platforms, but after long legal battles, more platforms rose up.

A major change came again in 2003, when Apple officially launched its media library application in iTunes, and it immediately soared in popularity. Millions of songs were available on the platform for a small fee. Users were able to enjoy and access these songs after purchasing and downloading them directly onto their hard drives. This granted the file sharing platforms popular at the time, in FrostWire or PirateBay, access to those millions of songs. Once there was more product available to steal, the file sharing platforms took off, and the damage was immediately obvious. iTunes’ success consequently tainted the album sale numbers.

Following the launch of iTunes in 2003, the number of platinum albums (1,000,000 copies sold) per year decreased steadily, from 2004 until 2013. In 2004, the number of platinum albums released that year was 83. In 2013, the number of platinum albums released was 15. 1998 saw the best-selling album of the year sell 12,000,000 (diamond certification) copies alone. 2013’s best-selling album only sold 2,430,000 copies.

The decline in sales was apparent, and people understood that something needed to be done. It was very easy to bypass purchasing music, when illegally downloading it with no consequences, was an option. This is when paid-subscription based streaming was born. Instead of users paying a high price for downloading rights for an album or for a song, users could pay a small monthly fee and have access to every song in a platform’s media library. They could download the songs through the platforms themselves and be able to stream them anywhere. Spotify launched their coveted subscription-based service in 2008 to immediate success. In 2015, Apple launched their version, in Apple Music. Users paid a small monthly fee and could access the millions of songs iTunes has available.

My Apple Music Library

Subscription-based streaming became the face of the industry. File sharing was a thing of the past, since going on your computer to download individual tracks and albums was not worth saving a small monthly fee. Streaming also granted artists control of their music. Anybody can upload music onto streaming platforms, so a major label is no longer needed.

There was still one major problem with streaming. This solution towards file sharing did nothing to combat poor sales. When a user downloaded and streamed a song, the only thing that increased was an artist’s stream totals. In addition, few artists have labels handling and distributing their music, leading to even fewer sales.

In 2018, Billboard created a new equation that attempts to accurately convert streams to sales. Billboard and RIAA believe every “1500 streams [equates] one album unit” or sale. Using this, a song or album has to be streamed over a billion times to reach platinum status. This mark seems extremely far-fetched. Since the introduction, there are still major deficiencies compared to the late 90s and early 2000s.

 Since Apple Music’s introduction in 2015, there has been a steady increase in platinum albums per year, from 2015 to 2018. 2015 had 8 platinum records while 2018 had 18. This small increase is on the right track, but it is not close to the numbers artists were turning out in the 90s. 1999 had 99 platinum albums in one year. That’s more in 1999 than in the last 7 years combined.

So will total sales ever get back to where they were?  Does anyone even care about this like I do? Well, remember the whole Travis Scott, Nicki Minaj debacle. At least some artists are trying. Nicki was upset at Travis because his album debut at number 1 over hers when he used the “bundling” tactic. Travis sold exclusive merchandise for his upcoming “Astroworld” tour. Each purchase came with “pre-sale access to concert tickets and a redeemable download of Astroworld”, Travis’ newest album. This strategy is brilliant, but there is a catch. An album sale is only counted, if the download is redeemed. Either way, Travis was catapulted to number 1 on the charts, moving 537,000 equivalent album units during his first week. Travis and his team were not the inventors of this fine marketing strategy, as it has been popularized in recent years. Artists like Prince, Madonna, Bon Jovi, Kanye West, Ariana Grande, and Taylor Swift all adopted the idea.

Bundling Example

That being said, there has been a recent boost in album sales, and increased success for major artists, but nothing has really changed. Few albums remain at platinum status in recent years. There has also only been two albums to be certified diamond (>10,000,000 album sales) from the 2010s, in Adele’s 21, and Adele’s 25 and by the looks of things there is not going to be another one anytime soon. I count Adele as an anomaly because her fans are all middle-aged mothers, willing to purchase music. From 2000-2009, there were 16 diamond albums released.

Since a majority of music consumers are younger, I do not think a massive change in sales is possible. It is clear that the music consumer is obsessed with convenience, efficiency, and saving money. Streaming provides the newest and best form of that, and most artists are now catering towards it. They make and market their music for the most streams, and they then sell the most that they can in one effort, through a tour. The consumer can spend money in as fewest places as possible, and when they do spend a considerable amount, it is seeing an artist live, getting a t-shirt, and a digital copy of the album.

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