INTERESTING ARTICLE ON PHYSICAL CD SALES

Business Matters: Even Obscure Titles Still Selling Mostly CDs and LPs
March 02, 2011
By Glenn Peoples, Nashville

Even Obscure Titles Still Selling Mostly CDs and LPs
— The digital shares of new releases rose in 2010, according to Nielsen SoundScan, but across all sales strata the numbers show physical formats are still vital. At the top of the list, new releases that sold 500,000 or more total units had a 17.7% digital share in 2010, compared to a 12.3% share in 2009.

The trend held for nearly every other sales tier: 100,000 to 500,000 increased to 20.4% from 16.2%; 50,000 to 100,000 rose to 23.8% from 19.7%; 10,000 to 50,000 rose to 27.2% from 20.8%; 1,000 to 10,000 increased to 33.7% from 27.2%; and 100 to 1,000 rose to 48% from 45.1%.

The only sales tier that saw its digital share drop was the 1- to 100-unit tier, which dropped to 58% from 62.7%.

So what do these numbers and trends mean? Obviously it means the more popular a new release, the more the CD format accounts its sales. Which makes sense — only albums with the most mainstream potential get into the national chains that account for the bulk of CD sales. The better an album sells, the more likely a big chunk of those sales are coming from CDs.

It also means that physical product accounts for a very meaningful share of sales for titles that are selling relatively few units. It’s not as if independent artists and artists on indie labels are depending completely on digital distribution. They’re obviously manufacturing CDs and LPs. Think about it, the typical new release that sold 550 units (the midpoint of the 100 to 1,000 group) got about 286 of those unit sales from physical formats. The other 264 units came from digital.

Now, for an album between 1,000 and 10,000 — which music industry vet Tom Silverman calls the obscurity line — most of those sales are coming from digital. If one of these albums sells 5,500 units — again, the midpoint — then about 3,650 units come from physical formats and the other 1,850 units are digital. So even obscure artists, for whom digital distribution is leveling the playing field, are still selling mostly CDs and LPs.

And when you consider that many of the low-selling titles didn’t even get a physical release (many releases are digital-only to save on manufacturing expenses), the numbers reflect an even greater dependence on physical formats for album sales.
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