OOPs ! :A Second Look At Reuters’ Sales Report

Glenn Peoples  Billboard 10/01/10
— If you read a Reuters article on Monday about flat U.S. digital sales, keep reading to get the full picture. The article had a number of problems that merit clarification.

The least of the problems is the fact that Reuters was using Nielsen sales data from the first half of 2010. We’re almost to the end of the third quarter, so sales data from January to June is well outdated. Reuters lucked out here. Track sales are down 1% compared to being flat at the end of June. So not a lot of change in the last three months.
In seeking an explanation for flat track sales, a Nielsen executive explained the trend could be explained by weak consumer confidence, low appeal of new music and confusion over a multitude of sources for legal downloads. But left out was this: Variable pricing was introduced at iTunes in early April of 2009. Thus, the door was opened for labels to raise track prices to $1.29 from $0.99 as they saw fit. That one factor is definitely responsible for lower track sales and cannot be overlooked.

Reuters’ biggest error was completely forgetting about digital album sales. As noted in Billboard’s July 7 post on mid-year SoundScan figures, digital albums were up 12.7%. As of September 19, digital album sales were up about 13%.

So if track sales are flat – or down a percent – and digital albums are up 13%, what’s the net impact? What happens when you add a la carte downloads and tracks acquired in album purchases? Using the sales data in Billboard’s July 7 post, and assuming 11 tracks per album, total tracks sold increased 5.4% in the first half of 2010.

After the original story ran, Reuters fixed the story by adding a sentence about digital albums: “When combined with the growth in digital album sales, overall digital music sales were up over 5 percent in the U.S.” It also changed the headline. But from TechWeek to Portfolio, websites that picked up the original Reuters story failed to catch its update. Their readers have been left with an inaccurate view of digital sales in the U.S. (Reuters, Billboard.biz)

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