by : Business, Featured Articles, May 2013

Modernizing the Hot 100

Modernizing the Hot 100

In February of 2013, Billboard and Nielsen made another modification to the “Billboard Hot 100” chart, the official singles chart in the United States.  The chart now includes data from YouTube video streaming – an unprecedented event that reflects the growing importance of YouTube on society and the music industry.

Recent History

This is the third time in almost eight years that Billboard has updated the chart formula. It is a positive sign that the iconic magazine is intent on staying abreast of industry changes.

In 2005, Billboard added digital sales data to physical sales and radio airplay. Two years later, in response to the increasing popularity of music streaming, Billboard began incorporating data from streaming media and on-demand services starting with figures provided by AOL Music and Yahoo! Music.  In 2012, additional data from companies such as MOG, Rdio and Rhapsody, displayed before under the umbrella of Billboard’s “On-Demand Songs” chart, was incorporated into the Hot 100 (later, as online streaming became progressively more important, Billboard also established the “Streaming Songs” chart in January 2013, which ranked on-demand and online radio streams from services such as Spotify and MySpace).

The System

Currently, Billboard uses a point-based system incorporating data from physical and digital sales, radio airplay and streaming. “Streaming” includes on-demand streaming, online radio streaming, and YouTube views.

Billboard has never published the exact percentage weight attributed to each component in the methodology; hence there are no official percentages that can legitimize the final results. Nevertheless, there are ways to accurately predict the current weight of each component using information such as the total number of sales or YouTube views a song collects in one week.

Case Study

Let us examine the first week following the application of the new chart formula.

Billboard is on record for acknowledging that the  #1 song that week on the Hot 100, Baauer’s “Harlem Shake,” had 3.5 times the overall chart points as the #2 song, Macklemore & Ryan Lewis’ “Thrift Shop.”1

Let’s start by looking at the official numbers for the week:

“Harlem Shake”:

  • Sales: 262, 000
  • Airplay: 2,000,000
  • Online Streaming: 103,000,000

“Thrift Shop”:

  • Sales: 412,000
  • Airplay: 111,000,000
  • Online Streaming: 10,100,000

Billboard uses conversion factors for each category: 1/12 for sales, 1/7,500 for airplay, and 1/450 for online streams.2  This is equivalent to scale where 1 sale equals 625 airplays or 37.5 online streams. By dividing each row by the appropriate conversion factor and adding points, the reader should confirm that “Harlem Shake” earned 3.5 times more points than “Thrift Shop”.

Balancing The Scale

With the recent formula update, Billboard has devalued online streaming in relation to sales.  Before the change, the on-demand Songs’ chart conversion factor was 1/150 or 1 sale = 625 airplays = 12.5 online streams. More streams are now needed to match a sale in the Hot 100, a chart that historically placed more importance on buys and radio airplays.

This makes sense, because from an income point of view, watching videos on YouTube cannot be considered a comparable action to purchasing a song from iTunes: there is hardly a cost barrier to watch a YouTube video. Successful YouTube videos, moreover, draw a huge number of views, sometimes in the millions, so overloading the Top 100 with YouTube views would tip the scales.

International Charts

An international perspective is in order and it is perhaps curious that most other countries do not take online streaming into account in their national music charts.

In the United Kingdom, for example, the singles chart compiled by The Official Charts Company on behalf of the British record industry, only includes a combination of physical record sales and digital downloads. Managing Director, Martin Talbot has even gone on record saying that streaming data will not be included in the near future. Remarkably, and much unlike the Billboard Hot 100, the official UK singles chart has been entirely based on sales since its launch in 1952.3

Similarly, Japan’s “Oricon Weekly Chart” ranks the highest selling singles of the country based only on physical sales. However, Japan has another chart that registers a song’s popularity: the “Japan Hot 100.” It is a chart compiled by Billboard and Hanshin Contents Link since February 2008, and it has a somewhat similar structure as the U.S. Billboard Hot 100 chart: it includes physical sales and airplay data in its formula, but digital downloads are not tabulated despite the fact that Japan sells one of the highest amounts of digital downloads in the world.4

Another example is the ARIA (Australian Recording Industry Association) singles chart, which has been the main singles chart in Australia since 1988.  It too is based entirely on physical and digital sales and does not report online streaming.5

Counting music streams should be in the air, though. Billboard is now developing charts for other countries, including the “Brazil Hot 100” and the “Canadian Hot 100”, the  “Euro Digital Songs” chart, and the “Korea K-Pop Hot 100”. Old industry habits die hard, but progess may not be far off.

Conclusion

Online streaming, especially YouTube, is becoming increasingly relevant in today’s music industry.  The impact of YouTube prompted Billboard to add YouTube views and make it more important than other on-demand streaming categories. Revisiting earlier math for the #1 song “Harlem Shake” shows that, after conversion, 91.2 % of the total points in its Hot 100 chart placement came from online streaming, with sales representing only 8.69% and airplay a paltry 0.11%.

Detractors of the new change to the Hot 100 say that YouTube views will determine the chart’s outcome. Many videos have songs that may be counted as an online stream even when a 30-second meme made by someone else, like the “Harlem Shake” series, is picked up instead of the official video. A musical chart thus could be weighted towards social interactions and be diverted from its intended purpose.

These issues, and the conversion factors for sales, airplay, and online streams, should be reviewed periodically to determine the accuracy of the chart. However, it is undeniable that YouTube is a crucial indicator of what songs are popular among the listener. Besides, to reduce the universe of online streaming and exclude YouTube seems narrow if most of the listening public interacts with the site on an hourly basis. Measuring winners in the music charts may be harder today than it ever was–but a snippet of a complicated reality is better than a misleading portrait.

By Eduardo Loret de Mola 

 

Endnotes

1. Trust, G; “Baauer’s ‘Harlem Shake’ Debuts Atop Revamped Hot 100”, Billboard, Feb. 20, 2013 (online edition)

2. http://atrl.net/forums/showthread.php?t=346149, below.

3. http://www.musicweek.com/news/read/official-singles-chart-will-not-account-for-streaming-data/053751

4. http://www.billboard.com/charts/japan-hot-100 and http://www.oricon.co.jp/

5. http://www.ariacharts.com.au/about/faq

email

Leave a Reply