Glenn Peoples, Senior Editorial Analyst, Billboard
For most people, Chris Anderson’s 2006 book The Long Tail marked a new way of thinking about selling goods on the Internet. Being free of the physical limits of shelf space, he predicted, would alter what people bought. For music, this would mean the most popular music titles would become less popular as consumers were able to tap into vast online catalogs. In most corners of the business world, and especially in the music industry, The Long Tail was controversial. Would consumers actually start to ignore the hits?
A Billboard analysis of Nielsen SoundScan data going back to 2004 shows Anderson wasn’t correct on all points. Hit digital albums have lost market share to far less popular titles. But hit digital tracks have gained market share over the years. The top 200 tracks accounted for 14.5% of sales in 2004 and rose to 15.8% in 2005, 17.1% in 2006 and 2007 and 17.2% in 2008. Through October 25, 2009, the top 200 tracks’ share stood at 18.7%.
The top 200 digital albums have shown an opposite trend in market share, steadily dropping to 21.9% in 2008 from 28.7% in 2004. At 22.1%, digital albums’ market share through October, 2009 is slightly better than 2008’s figure.
These two trends imply album and track purchase decisions may be driven by different factors. The most popular tracks may be benefitting from a herd effect due to the viral nature of the Internet. The awareness generated by that small number of songs could drown out less popular songs. Album buyers show they have more diverse tastes and take advantage of the vast catalogs at online retailers. So consumers may prefer to sample the depths of long tail through albums, not by individual songs.
Any discussion of Anderson’s book and theories should include how the record label’s role has changed. A popular sentiment of The Long Tail is that artists have all the tools they need to self-release digital music. That is true. Barriers to entry have been lowered to the point where the costs of recording and commercially releasing music are negligible. As Anderson explained in The Long Tail, cheaper tools of production and distribution have greatly increased the supply of music found online.
But acquiring distribution and getting a sale are two different things. People tend to underestimate the amount of competition faced in digital music. Over 100,000 albums were released in 2008 alone – and about half of those were digital-only releases. Not only does a title have to compete against other new releases, it has to compete against the tens of thousands of well known catalog titles that are available online. It takes resources – both money and expertise – to rise above the competition and achieve sales commensurate to what career-oriented artists need. Such resources are the domain of record labels, who can still find success in the digital world.
While The Long Tail was less explicit about record labels’ role in a changing digital marketplace, in July Anderson told The Times that record labels “are now the least important part” of the music industry. That is true for those with very low sales goals. These days a more established artist, or a mere hobbyist, can circumvent a contract with a record label by using inexpensive digital tools and outsourcing some record label functions. For the more ambitious and the less established, a record label is still by far the best way out of obscurity.
Summary of Billboard’s analysis:
An expanded version of this story first appeared at billboard.biz.