Measuring Up Declining record sales mean less opportunity for self-congratulation. Will web views be any more reliable for an industry in crisis?
Published Mar 24, 2008Gold and Platinum awards for album and single sales exist both as a tool of the music industry and as a symbol of its decline in a digital age. Since it began awarding Gold records in 1958, the Recording Industry Association of America (RIAA) has used its sales awards program as the standard of success. (Other countries have their own versions of the RIAA and its standards, usually lower based on population.) Sell 500,000 or 1,000,000 albums in the U.S. and the Gold or Platinum honour could be yours. Of course, when an artist hit that plateau a lot of people want in on the self-congratulations, most of all the record-label executives, for whom it acted as a "three-dimensional résumé. But it didnt stop there says Larry LeBlanc, a veteran player in the Canadian music business whos seen the industry from both sides: as a record company employee and a journalist for Billboard.
"Quite frankly, the record industry eye gets caught by glittery objects. Artists are fascinated by trinkets; the record industry executives are fascinated by trinkets. Harsh words, perhaps. But the shiny things caught his eye, too. "I've got some, he says. "I have huge Diana Krall record 500,000 copies. I never hung it up.
On average, more than 150 framed, gold-plated discs would be manufactured for every Gold record certification; awards not only went to artists and executives, but managers, agents, journalists, broadcasters, marketers, promoters and radio hosts. Involving so many people spread the gratitude to every corner of the music industry and few people ever questioned the certifications. Doing so would show they drank the Kool-Aid without every wondering if it was contaminated. More than that, "It put the cloak of [respectability] around the artist, says LeBlanc.
Newfoundlands Rex Goudie, runner-up on the third season of Canadian Idol, wore that cloak for less than a year before he turned it back in. Invited to a season four taping to perform his single "Run, Goudie received his Platinum award from Idol host Ben Mulroney on behalf of Sony BMG. "I figured it was a great conversation piece to have, he says, noting he refuses to hang it up because that seemed too pretentious. "To know that in that era I achieved a Platinum award, which is something that's not easy to come by these days.
The Canadian Recording Industry Association (CRIA) certified his debut album, Under the Lights, Gold (50,000 in Canada) in several weeks. Less than a month after its release on Dec. 13, 2005, it was Platinum (100,000). And the positive affect of such awards? "You wouldn't see Hinder on [The Tonight Show] if it wasn't for someone creating a story about a bunch of teenagers who bought a 100,000 or a million records, or whatever it is in the States, Goudie says. "And you wouldn't see that happening without the record company going, Well these guys are marketable, so lets throw a bunch of money into the marketing program and see what we can do with them.
That worked the first time around for Goudie, who admits Canadian Idol eased people off their couches and into record stores. Most of those people stayed stuck to the couch when Idol was parading the newest talent across its stage and his sophomore disc hit stores. Look Closer, an album Goudie says exceeds his debut, sold 11,000 copies the week of Dec. 16, 2006, and was No. 19 in Canada. Sales nosedived a week later and the album slipped from the charts. "If you make [a record] sound like its the most popular thing in the world, people will buy it, Goudie says. With his Canadian Idol hype evaporating and no sales awards to drum up media coverage, Sony BMG lost interest and dropped him from their roster.
Alan Cross, program director at the Edge 102.1 and host of The Ongoing History of New Music, says that while consumers may not actively follow the sales awards, they do make consumers self-conscious. "If you haven't bought it, he says, "then you're not a part of the group. You're not a part of the herd. We say we want individual choice but we don't want to be lonely. Therefore, we are always going to wonder what the herd is doing so we don't feel left out.
Marketers count on this herd mentality. It accounts for bestseller lists, Oprahs book club, year-end music coverage and why certain artists appear on the cover of Rolling Stone. Sales equals increased exposure, which often translates into more sales. Nine-point-five percent of retail CD sales in the United States vanished last year, and 4.9 percent disappeared in 2006. Meanwhile, digital singles sales are surging 844.2 million sold last year compared to 588.2 million in 2006 and Apples iTunes recently leapfrogged Best Buy and Target, according to market researcher NPD Group, to become the second biggest American music retailer. For Canadas music industry, the situation is much worse only 1.98 million digital tracks were sold last year in this country, where file sharing is legal and digital sales have caught on slower than other countries.
Digital audio is pitching us backwards to a time when touring and selling vinyl singles from the back of a trunk were the music business. When the album format arrived, artists continued to sell singles it got people interested in an album. But the industry saw that albums offered a better profit margin for labels than singles; singles lived on, at least for a while, but more as a way to get on the radio or TV, and drive fans to buy the full-length. Heralding this reversion to singles theory is USA Today writer Ken Barnes, who hosts a blog called Listen Up. "I could see it coming with the general dissatisfaction with the album, he says. "You buy it for a single or two that you heard and then you find ten filler tracks on it. Piracy, file sharing, and a dwindling interest in full-length CDs have pushed the limbo stick of success closer to the ground, especially for emerging artists. Fewer sales equal fewer prizes. Not even the chart-toppers are exempt from this. In 1999, the RIAA certified 871 physical albums or singles Gold, Platinum or Multi-Platinum. Last year, the total certifications for the same categories were 372. If successes, as many in the industry say, are everywhere but in the sales of CDs, these yardsticks need an adjustment. And if not that, then certainly a new measure that acknowledges the digital success an artist might enjoy. "You use what you've got in your arsenal, LeBlanc says.
"From an artists' standpoint, it's kind of disheartening, Goudie says of the lower expectations now commonplace in the music business. Just as blunt is his assessment of the industry's response. "You've got to suck it up. The record companies have to rethink how they go about selling music. Slumping sales have also carved a chunk out of Michael Goldsteins livelihood. His father David owned DeJay Products, a company that graduated from manufacturing salesman of the year plaques to making awards for KISS and Parliament in 1975. Michael later joined the family business, which saw runaway growth until 1999, the year Napster was born. "Technology brings change, he says. "[Some of] these rules were set 20, 30, 40 years ago. The rules no longer apply to the technology. To patch the hole technology has punctured, the RIAA created two awards: one for digital singles in 2004, and one for master ringtones in 2006. "It is still valid that Lil Wayne and Birdman did three or four million in downloads, says Deborah Lotz, owner of licensed RIAA award maker Jewel Box Platinum. "It's just a different way of looking at it. The [RIAA] did the appropriate thing by coming up with more categories. Standards for physical sales of albums, an industry cash cow expected to be down to two legs by 2012, have never been reduced. Alan Cross says theres no way the RIAA or CRIA can lower the standards now. "Image-wise that sends a message of defeat.
Crosss main fear is that lower standards will rob us of the ability to accurately measure Panic at the Disco versus Green Day or Justin Timberlake's FutureSex/LoveSounds versus Prince's 1984 masterpiece. "I mean how many copies of Purple Rain has he sold?" (The answer: 13 million overall, nine million in less than a year. FutureSex/LoveSounds took a year to reach four million.) "It's like putting an asterisk next to a statistic in baseball record book and saying, This guy hit more home runs, but he was juiced up. It would tarnish what came before. However, the relative achievement of selling 100,000 copies of an album today versus a million copies ten years ago might be the same given the circumstances that pervade the music industry and given the behaviour of music consumers.
Before widespread file-sharing, the only adjustments were to accommodate consumers buying more music not less Multi-Platinum and Diamond (the latter equals ten-times Platinum) were created on the eve of the markets transformation. Shifting consumer habits in 1989 forced the only major reduction in the program's 50-year existence. The standards for singles sales were dropped. "When the popularity of singles steadily declined and hence fewer singles were certified [61 Gold singles in 1978, only four in 1988] the new threshold [500,000] was a more realistic goal in the industry marketplace," says the RIAA. "Our thresholds have historically adapted to the industry marketplace and will predictably continue to do so.
Neither the RIAA nor CRIA would reveal whether they planned to adjust the album standards any time soon. This January, Italy beat them to it. On January 25, 2008, Billboard.com reported the Federation of the Italian Music Industry (FIMI) made it easier to for artists to limbo. Lowering thresholds actually raised the bar so more artists can squeeze under. "FIMI didn't announce the change to the press, but sent it out as a circular to their members, one of which let it slip, says Mark Worden, writer of the Billboard story. "When I called to check if it was true they confirmed, but declined to comment. Therefore, there is no official reason for the reduction, but it's safe to assume that it's declining record sales. Should the RIAA or CRIA follow FIMI's lead, old albums and singles could potentially become better sellers, something the RIAA accepts. "Albums and singles are always eligible for the current certification requirements as long as documents supporting those sales are still accessible and verifiable. That would level the field from past to present and solve Cross's measurement problem, except that record labels must request certification. And at $350 (U.S.) for RIAA members and $450 (U.S.) for non-members, it seems unlikely the labels would pay to upgrade albums or songs already certified. Especially since most labels are haemorrhaging staff in an effort to recover lost profits. Behind the scenes, Goldstein says, the standards have become somewhat of a sore spot with certain labels. "If you think there haven't been record labels that have been trying to lower the standards, you're wrong. Ever since the program started some major record companies wanted the standards lowered. Certify more albums and those albums might sell better due to increased exposure and marketing. Pleas to change the physical album standards have fallen on deaf ears until now, largely because the majority want to save face. Its oddly amusing since this is the same group whove hunted down teenagers, college students, and elderly old ladies, hitting their core consumer base with lawsuits for craving new music.
For his part, LeBlanc distrusts the whole awards process for one simple reason: "They can be manipulated. Working for a rackjobber the middle men who bought records and sold them to department stores he learned the most important lesson of the music industry when he was young and impressionable. Sgt. Pepper's Lonely Heart Club Band had landed the Beatles on the cover of Time magazine and LeBlanc's love of the album carried over to work, where he made the mistake of mentioning its sales figures to his boss. "He just growled, LeBlanc says. "[Called it] a piece of shit. He said [to me], Kid do you know how many [copies] I got sitting in my warehouse of that piece of shit? It doesn't matter how many copies a record sold. It matters how many were shipped, how many sold through, what you sell them for, and how many came back. The rest of it is all bullshit. To certify albums or singles, record labels pay a fee to the RIAA and an accounting firm verifies the claim based on shipments to retailers, not actual sales to consumers, minus returns. Some record labels used sleight-of-hand tricks to get more awards, LeBlanc says. Fittingly, his phrase for this is "shipped Platinum, came back Gold.
"Not so much today but a few years ago, there would be a lot of loading into retail. Let's say I wanted to get a Diamond record. Let's say I legitimately sold only six- or seven-hundred thousand in Canada, but I wanted Diamond. What I could do is go to the retailer and say, Look, buy two for the price of one, and I'll get my Diamond. Not all labels engaged in this behaviour, but it seems insincere to hear about an artist going Platinum if albums housed in a stockroom count as much as those in a fan's CD player. The RIAA denied its program was ever subject to such deception. Even Goudie questioned his own sales numbers. What was he to do, go out and verify that 100,000 people had his album? Prior to Neilsen SoundScan, created in 1991, that was impossible. Since then, whenever a CD is purchased, one sale is recorded. Asked why it doesn't use SoundScan, the RIAA cites age and range. Its program is 50 years old; SoundScan's still a teenager. Also, RIAA measurements include more retailers SoundScan can't access. USA Todays Barnes scrutinises certifications regularly on his blog. More often than not both numbers are match up, but every so often a certification outpaces actual sales. "In [American Idol winner] Taylor Hicks' case, he's stuck on 700,000, Barnes says. "But it's been certified for months and months as Platinum. So you get these gaps. Gaps aren't the only thing he's noticed. Anyone who buys a two-disc album pays one price. To the RIAA, that's two sales one for each disc, so long as the combined length is more than 100 minutes. "Because there are more discs being purchased in a multi-disc product than an album with just one disc, we wanted to reward those products appropriately, the RIAA says. Follow the logic, Barnes asks his readers. As of this January, consumers bought 2.76 million copies of the Eagles Long Road Out of Eden; the RIAA says its certified seven times Platinum. Similar pratfalls exist online, where success is measured in web hits, streams or unique visitors. Unique visitors are said to be the closest thing to a true measure of popularity. But different companies use different tools to measure visitors. Some, according to Wikipedia, count IP addresses, even though one address may account for any number of different consumers. Other internet providers allow consumers to change their IP address each time they visit a page, which results in over-counting. Web hits count the number of times a page is accessed and each image or item on the page counts as one hit.
Interscope Records wasted no time telling the world that Soulja Boy had the number one artist website, or that the official YouTube video for "Crank Dat had been viewed almost 30 million times by this January. Its an impressive feat, but one the shows a level of interest and should not be confused with sales. (Soulja Boy has sold more than two million ringtones and over three million digital singles, while his album hovers near the 800,000 mark.) YouTube only shows a user how many times a video was streamed. Someone could be watching the video on repeat or, more nefariously, creating a program that makes a computer visit the video or website repeatedly. Neilsen has an answer. Its online division now tracks online videos and web traffic. It does so by getting its customers to place a tag in their content that registers with Neilsen when accessed. More accurate in its measure, their software is by no means the agreed upon standard.
"In the new digital reality we're looking for new metrics of success, Cross says. "Is it the number of times your songs are downloaded? Is it the number of times someone paid to have your songs downloaded? Is it the number of times your MySpace page has been viewed? Is it the number of times people have traded your song on a peer-to-peer network, which we can monitor with services like BigChampagne? I mean, who knows? There is no one chart that takes all these different metrics and weighs them and combines and ranks them. Actually, BigChampagne does just that. Founder and CEO Eric Garland attended Canadian Music Week in Toronto and South By Southwest music festival in Austin, Texas, to participate in panel discussions. The topics: the evolution of peer-to-peer networks, from enemy to business partner, and how to best distribute and monetise music in the online environment. Garland's company was born just after the arrival of file-sharing networks. "It became apparent that someone would have to provide the Neilsen metrics that you would have in traditional sales channels, he says. When no one stepped forward, BigChampagne started measuring the songs trafficked on Napster. As companies recognised the change, legitimate retailers such as America Online, iTunes, Yahoo and Clear Channel got involved and BigChampagne's measuring group grew. "But people continue to pass MP3s around and so we look at that, too," Garland says.
"Record labels use our service to discover bands, marketing and radio promotion people use it as evidence that an artist is gaining popularity. Just looking at CDs sales is no longer an indicator of what's popular or what people really want and are interested in. And even when it was, it didn't tell us very much about whom these people were. All you knew is that the record scanned X number of copies. Digital technology, simultaneously a burden and boon for the music industry, allows Garland to combine market research with sales figures into one potent tool of business. "Our products and services are used to get a much more intimate look at the marketplace. It's a broader measure of success, but its purpose is no different than that of Neilsen and the RIAA: to relay popularity to the major labels. If you experience music online, BigChampagne is watching you. An example of this new measure: "The audience for this artist is defined in this way: their age range is this, there other favourite artists are these, the other songs that are most viewed or listened or most downloaded by fans of Fall Out Boy include Panic At The Disco and Armor For Sleep and Gym Class Heroes. In fact there is a 75 percent overlap between Panic At The Disco and Fallout Boy. Now the record labels know what you bought (the new Nine Inch Nails box set) and what you stole (Britney Spears "Piece Of Me).
Garland has no desire to replace the RIAA or its awards program. At most, he says, "We would become a data provider and maybe even assist in determining the weights and measures that go into Gold and Platinum and Diamonds awards. Do I expect that milestones and achievements will be measured using a variety of indicators that are not necessarily related to sales of that shiny plastic disc? Yes, absolutely. Very soon. For its part, the RIAA wants no part of BigChampagne, and in a statement, said "Since most [peer to peer] use is illicit, BigChampagnes numbers may not be very relevant to our awards program. The RIAA may have its head in the sand on this one, because the time of revolution is already here and two things are clear. Technology pushed us online, where success should be measured. More importantly, any awards based on digital measurements are themselves subject to manipulation. It's the same old song, but with a more complex arrangement since the internet came along.