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At the end of March, the IFPI released their annual end of the year summary for 2006. There are a couple of surprises this year.
The first is that the IFPI didn't get their US statistics from the RIAA this year; they also didn't consult with the CRIA for Canada's total. Instead, they went to Nielsen SoundScan, which is "the entertainment industry's data information system that tracks point-of-purchase sales of recorded music product".
The second was the information from the BPI, Britain's version of the RIAA, which seems to be pumped up about how wonderful things are. UK Artist Sales Hit 10-Year High, says the headline. Domestic UK album sales topped 150 million sales for the fourth year in a row, even though overall album sales dropped 2.5% to 155.1 million. If that's not confusing enough, UK acts only claimed 61.9% of the best selling albums in 2006. This seems mathematically impossible, but the BPI's data is now a secret.
This brings us back to the RIAA, which appears to finally have been cornered by its methodology and now prefers to rely on Nielsen, which has always reported completely different information than the RIAA.
Sales -- Nielsen reports sales that were scanned in at some retail outlets and guesses at the final total. The RIAA never reported sales. They reported how many records they shipped out, minus the returns. Tower Records only had about 80 stores in the US when it went belly-up, but the one in Hollywood is said to have contained music from more than 75,000 acts and I'm sure that they had more than one copy of each.
Every one of the CDs, cassettes, and vinyl records that were in Tower Records stores and the warehouses the day they closed the doors had already been counted as shipped by the RIAA. Then there was Sony's rootkit problem from the end of the previous year. Those returns probably didn't get shipped back until after the start of 2006. Word is that the 4.5 percent slide for 2006 that Nielsen reported really worked out to about 15 percent in real life.
Value -- The RIAA always reported the "value" of their shipments, which was the manufacturers suggested retail (list) price. This is, of course, the price that no one in their right mind would pay.
I've been watching Amazon's pricing for a while, comparing the suggested prices to the actual prices Amazon charges. While the Top 100 gives you an idea that everything is half price (a lot of $18.98 CDs are selling for $9.99), the average is 67 percent of the suggested price.
This means that if the RIAA said they had a $10 billion year, it was probably closer to $7 billion in sales at the retail level. And the actual income for the record labels is probably 2/3 of that at best. So if they say they had a $10 billion year, at the wholesale level it was less than half that.
This doesn't take into account how many sold at each price point, so it can only be conjecture. Except for singles. In 2006, they were 99 cents each and Apple sold more than the entire recording industry claims to have sold. I guess that somehow lowers the royalty bill that they have to pay to those pesky artists.
Nielsen doesn't collect pricing information. They just count how many records/CDs were sold. If they were to collect pricing information, it might yield some useful data, something the entertainment industry tries to avoid at all costs.
So if the RIAA stopped keeping statistics, it wouldn't be a big loss in the grand scheme of things. They were really only useful as an intentionally vague representation of reality anyway.
Mike (Shmoo)
CodeWarrior
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