The music album has been written off as dead – but not for Taylor Swift.
Swift’s new “1989″ album
is the first to go platinum this year, with 1.287 million copies sold
in its first week, the most successful record debut since 2002.
And, more than half of the sales have been physical copies versus
digital, according to Nielsen.
Swift and a
handful of other musicians are trying to turn back the clock to a time
when albums were both major cultural symbols and big business. They’re keeping their music off
popular streaming services such as Spotify and using their massive
reach with fans to sell old-fashioned CDs with copious liner notes and
extra tracks.
The
future of how consumers listen to music is at a critical juncture. On
one side, the big music labels envision a future in which people rely
mostly on music subscriptions for their tunes, exploring and grazing,
rather than purchasing tracks and owning them outright.
On the other are musicians like the 24-year-old Swift, who wrote an op-ed in the Wall Street Journal in July declaring that the album was not dead.
“There are many (many) people
who predict the downfall of music sales and the irrelevancy of the
album as an economic entity,” she wrote. “I am not one of them.”
For
an industry that was nearly destroyed by piracy and then saved by
Apple’s iTunes, the economics of music are changing once again.
The
recording labels aren’t making as much money as they used to. As
streaming replaces digital downloads and the sale of CDs, total revenue
for the music industry has plummeted by 50 percent in the past decade,
from $15 billion in 2003 to $7 billion in 2013.
Sales of albums have dropped off so severely
that until Swift came along, this year was on track to be the first in
decades in which no artist’s album would be certified as platinum.
But
as labels embrace streaming as the future, artists from Swift on down
to obscure independent musicians argue that they are getting squeezed
harder than ever. Services such as Spotify, endorsed by the country’s
biggest music labels, pay artists seven-tenths of a penny each time a
song is played.
Swift’s strategy for
releasing her new album has turned into a testament of her faith in
music sales and the album format. She recently removed all of her music
from Spotify. And she struck an exclusive partnership with Target for
CDs of “1989″ that include extra songs and photos tucked into the box
jacket.
Of course, there are only a few
artists in the world who have Swift’s reach. Beyoncé and Radiohead’s
lead singer Thom Yorke have kept their music off Spotify, too. Beyoncé
is also releasing two new songs and videos in a box set of CDs and DVDs
to be released for the holidays.
But
those musicians are popular enough that analysts say that by keeping
their music off Spotify, fans may think twice about subscribing.
Spotify,
which declined to comment, says it has 40 million subscribers,
10 million of whom pay $10 per month for ad-free streaming. The service
was started in Sweden and launched in the United States three years ago.
It’s backed by major record labels, including Sony and Warner Music
Group.
The company responded on its blog this week to Swift’s decision to remove her music from its service.
“We hope she’ll change her mind and join us
in building a new music economy that works for everyone,” it read. “We
believe fans should be able to listen to music wherever and whenever
they want, and that artists have an absolute right to be paid for their
work and protected from piracy. That’s why we pay nearly 70 percent of
our revenue back to the music community.”
The
company says it has paid back $1 billion in royalties. But analysts say
much of that has been paid to music labels and managers.
The
industry’s defenders warn that if popular artists keep their music from
services such as Spotify, it will make things tougher for all musicians
if the streaming model doesn’t survive.
But musicians argue that only the big record companies are benefiting from the current setup.
“You
have some saying you don’t have to kill the goose laying the golden
egg, and then people like Taylor Swift are saying, where is the gold?”
said Ted Kalo, executive director of MusicFirst, a coalition that
lobbies on behalf of music labels, artists and unions.
The
Recording Industry Association of America, which represents hundreds of
music labels, declined to comment specifically on Swift’s decision to
remove her work from Spotify.
But an
industry source familiar with discussions between Spotify and Swift’s
record label, Big Machine, said the artist’s decision was more about
delaying access to her work in the United States so it could be promoted
more widely abroad. The person, who spoke on the condition of anonymity
because the negotiations were private, said Big Machine feared that the
availability of “1989″?in the United States on Spotify would hurt album
sales.
Swift was also able to walk away from Spotify
because Big Machine, an independent label, doesn’t have investments in
Spotify. Before removing her music, Spotify said 16 million of its
40 million users had listened to a Taylor Swift album in the past 30
days.
But Swift’s marathon promotion of
“1989″ before its release illustrates just how much work is involved in
selling an album these days.
Swift has
cultivated a huge following on social media, where she offers constant
musings, glimpses of new music and details of her planned world tour to
46.2 million Twitter followers, 13 million Instagram followers and 70
million Facebook fans.
On Wednesday, she
posted a video on Instagram celebrating the success of “1989″ and
nudging back at naysayers: “Industry experts predicted 1989 would sell
650k first week. You went and bought 1.287 million albums.”
But
even with her ubiquity on social media, her sales strategy is decidedly
old-fashioned. And she is going against the habits of even her biggest
fans. Consumers – particularly young listeners – are buying fewer iTunes
downloads and CDs and turning to streaming, prompting Apple, Google’s
YouTube and Amazon to introduce their own online services to match
Spotify and Pandora.
Several artists have
complained that they can’t pull their music off Pandora, a service that
curates music but doesn’t offer on-demand listening for specific songs.
Its model is protected by a compulsory license and its payment rate for
royalties is low, similar to Spotify.
David Lowery, co-founder of the band Cracker, wrote in a blog that his song “Low” was listened to 1 million times on Pandora. His total in royalties? $17.
“That’s less than a concert T-shirt,” he said in an interview.
Jimmy
Buffett has also criticized Spotify’s meager payments to artists and
asked an executive last year for a raise. He and other artists have
grown impatient with Spotify’s promise to share the wealth in the
future.
“Why is it up to the artist to subsidize their growth?” said Lowery,
who is also a professor of music economics at the University of
Georgia. “I’m not an investor in your company, so why do I have to
subsidize your service?”
Artists like
Swift also argue it’s still worth offering albums loaded with special
features that fans will want to hold in their hands. Her label Big
Machine said that for the first week of sales, Swift sold 647,000
physical copies of “1989,” compared to 640,000 digital versions.
“There has to be an incentive to go to a store, buy a CD,” Swift said in an interview last
week with NPR. “So it’s very much an experience that’s different than
downloading the music itself. It’s almost like this kind of collector’s
edition, the physical copy.”
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