What is the majority of sales in an industry and CNN declares it DEAD then you know what?

So for those of us that use Math, the current sales of prerecorded music by category is lead by none other than physical music and of that the CD is the majority of sales*

From the weekly Sales report of Soundscan a division of Nielson Entertainment, LLC it's pretty plain to see that despite the rumors of digital taking over the world it hasn't taking over half of the market, yet? And the CD is still very much alive.

I said "yet" because of something called  Manufacturing on Demand "MOD," and my company AltavozEntmt, under the leadership of Bobby Ekizian, pictured below,  is leading this new charge for pin pointing where a physical sale is desired; Now coupled with the ability to ingested the title into the AMPED and NARM EDI database.

The artists can now worry about generating fans that are BuyingThis(tm) and the indusrty parthers involved can use the clicks to pinpoint the bricks in Altavoz aptly named new service ClickstoBricksDistribution.com "C2BD" This capability has not been harnest to ensure that the whole supply chain from Fan to Retailers knows there is a some fan heat before they even have to make one physical copy.

This information for the fan backup the supply chain will also let the artists know that there is a potential to make 500 limited edition releases, sign them and sell them to their AltaFans for a healthy profit and everyone is happy.  The future is and I gotta wear em ....

While the Sky ain't falling Distribution isn't getting any easier either - which explains everything.

While Glenn is right that music sales are down at the start of 2014 there's a couple of things that the article and for that matter very few people are considering.   And, that's the State of Distribution and the lack of it's importance it has in the mindset of so many when they are talking about the Music business. 

Let's be clear being on a Major Label means it guaranteed distribution. The END.... 

Trust me every major selling artists knows the value that their distribution team brings to the table and that why you see so many old guys, since it's still mostly guys -- save the few executives like Jess Sarmiento; CoCEO of Altavoz Distribution and Leota Blacknor; VP at Caroline Distribution -- in so many pictures with all your favorite music stars.  -- I'll look for a video I have of Katy thanking her's at a convention two years ago. 

Nelson Jacobsen, Ron Spaulding & Jess Sarmiento #MusicBiz13la

However, back to the point... Considering that only one full service distributor has entered the marketplace since 2004 and consolidations have been going on since 2005 there was going to come a time when the chickens err CDs, BluRays, DVDs and Vinyl --yes some is coming back* come home to roost and that is nye.

So what is happening you ask?    If you've been in this business since the 90s think 1995 store returns and 1997 bankruptcy coming together at one time.  Start with if you didn't notice there where a crap load of releases in the 4th Quarter and consumers didn't consume.   Ego Hoc returns are already in trucks heading back to distributors and labels will be finding out about now.  Plus the merger of the onestops and their combining warehouses along with there other distributors moving warehouses created a cluster jam few could have predicted. 

Sure there are some great things happening and efficiencies are being reached at the very high levels; however, the trickle up that is the music business is about to trickle out.  

We need to start thinking that Distribution is the engine that STEAM runs upon and if we don't plan for it just like electronic parts, food, beer & wine and pot growers whom all know distribution is King Music just won't go any where.  While cities like Austin, Nashville Seattle and fingers crossed Washington DC are starting to understand the importance of music to it's culture and economy.   

There is a cycle that will invariably happen and just when things start reaching a boiling point in each city and the musical talent comes together to generate tangible IP and goods.  This talent has to get it's self in a bus, car or van and get to the next place; So, they can spread word of their music while  a distributor (there are only a handful of companies that do it) have to be along for the ride to make sure that every store online and physical is carrying the releases and knows that story behind it and the artists putting it out.

However before that happens planners, investors and those that are looking at the direction that we want to grow our economies from the local to the global markets nothing must start to consider, fund and promote as economy partners in the economy.    

PS  Soundscan is showing that physical music is  presently outselling digital music. 

What to know why Digital Music sales decreased in 2013. Check your kids phones.

According to Nielsen SoundScan.digital track sales fell 5.7% from 1.34 billion units to 1.26 billion units while digital album sales fell 0.1% to 117.6 million units from the previous year’s total of 117.7 million, as reported by Ed Christman in Billboard recent bulletin .

Digital Music Sales Decrease For First Time in 2013

I'll let that sink in for all of your digital only philosophers.  Ed further reported that the vinyl is now
2% of album sales in the U.S; digital albums comprise 40.6% and the CD is 57.2% and cassettes and DVDs 0.2%.

So the Music Biz ain't at 50/50 yet and for anyone that understand MATH physical is 60 percent of the Market.  Yet just about every new label formed since the advent of what ever that company was called thinks way too much about digital only strategy as the future while forgetting about today.  Let's be clear about the strength of CD still.  Next time you're inline at Starbucks or Whole foods, 7-11 or any service station driving down the road. Just look around.  All of them have CD within eye shot of the Cash registers.

Thus solving the riddle of why CD players are still in most Automobiles

I'll also directly respond to Ed's question is streaming taking from Digital Sales. when we look at our statements from #AltaArtists from the various services the streaming payouts are in the 10s of dollars sometimes only cents. Yet the companies are now worth billions?  Yes there is something very wrong here in Digital Denmark.  BTW why wouldn't anyone expect that to be the case.

Think of it this way. If you're not married to the idea that quality is better than rapidly you'll already jumped the sound shark and now it's about getting it NOW.  So you can log in to iTunes, what the pwd? do I have money, is my credit card working? Really I have to use my Mom's account?  Or you can steam it. Often for free, with ads, unless it's bittorrent/etc and no ones the wisers.

Now lets' be clear there was a winner in 2013 and that was the streaming services that yanked the wallet out from under iTunes. So what is the industry going to do about it.   I know at my company we're going to be making a very strong statement in 2014 about the Future of Entertainment Today and I hope that others are going to start to take a Clicks to Bricks Distribution Strategy in 2014.

BTW these same kids streaming are the ones buying Vinyl, Cassettes and yes CD's.  They're a fickle bunch and since they don't understand themselves it's gonna be harder to for us to understand them. However the one thing that remains supreme is Entertainment needs to cater to the AltaFans and they want it Digital and Physical.

Great to see innovation leading to charting sales from new artists and companies

It's great to see tangible evidence of how the use of technology and help a young artists, a new label and distributor make an impact in one of the most competitive industries in the world the US Entertainment market.    So getting on the Billboard charts is not just a symbolic achievement it's something tied to cold sales numbers. And, Quinn Sullivan's record label SuperStarRecords was able to make this happen because Altavoz their distributor, my company, recognized that offering Soundcan data collection to them on the road playing gigs would enable those sales at shows to start filter into the Digital and Physical retail sales.  The ability of small companies to offer back end services like this are a real part of why the Major Record Label/Distributor is breaking down.

Music increases US GDP and some still debating if it's a viable industry?

Gotta give a huge shout out to Glenn Peoples and  +Billboard for putting out this article about something that I've been saying for years.  Music has value. 

To me music has always been the why not the how.  Something along the lines being the medium.. well without the intent to communicate there is no need for a medium.  And! it now seems that the  U.S. Bureau of Economic Analysis (BEA) agrees with me on this and decided to give the US Gross Domestic Product a 3% boost and a HUGE win for those of us in the music world. 


Or in Glenn's words 

"TAKEAWAY: The music industry has always punched above it's weight in profile, but didn't always have the influence that matters. this GDP shift could help fix that disconnect. 

According to Bloomberg's Peter Coy   this rise of the Intangible economy is for real and a couple of quotes from his article got my attention: 

"The effect of the revision will be immediate. Measured GDP will get a one-time boost of about 2.7 percent when the government starts counting R&D and artistic creation as investments. (New Mexico and Maryland will get the biggest lifts.) The future growth rate will probably be fractionally higher, too. With R&D treated as an investment, measured economic growth from 1959 to 2007 would have been 3.39 percent annually instead of 3.32 percent, the BEA estimates." 

 "If all forms of intangible investment were officially recorded, they would exceed investment in bricks, mortar, and machines, according to estimates by economists Carol Corrado of the Conference Board and Charles Hulten of the University of Maryland."   Link 

The Rise of the Intangible Economy: U.S. GDP Counts R&D, Artistic Creation

It also seems that the Secretary Pritzker, from the Commerce Department is getting in on the act too by touring Music making facility and promoting USMADEMUSIC  on the Sec's blog.  which also points this fact out. 
"In fact, entertainment, literary and artistic originals contributed $74 billion to the U.S. economy last year, according to the Department of Commerce’s Bureau of Economic Analysis."








So will these new “intellectual property products.” ( which is a now how cost of new music and other artistic endeavors are to be categorized) bring in the investors that are seeking sustainable returns like the double digits one I' recently blogged about as well as those that want to be part of something more. IMHO music has always been more than most of us can put a handle on and this new way of our economist looking at it helps others start to see the more too.

Terrance and I Capital Hill~ Grammy On the Hill 2013