by : Business, February 2016

Adele’s Choice

Adele’s Choice

Adele is officially the top selling artist of 2015. 25 sold more than the next three ranked albums combined in the U.S. and broke all records in the first week of its release — 3.5 million units v. ‘NSync’s 2.9 million fifteen years ago.1 Since 2001, only four top-ranking records have been able to sell over a million copies in the first week2, while in the U.K., 25 surpassed EA’s FIFA 16 game to become the entertainment product of the year.3

Adele is among a handful of artists that can surpass the million-unit mark in the first week of a release while withholding music from streaming services to maximize revenue on album collections. Indeed, she defies the sales’ paradigm of the industry when recorded music buying is increasingly migrating towards streaming. But for her it makes sense: it has been argued, for instance, that 25 alone would have needed over 16 billion paid plays to match the income that the album generated – an impossibly high standard.4

The download-to-streaming exodus in 2014 defined the year in numbers. For the first time, global digital sales and physical product brought equal amount of revenue for the labels. Both comprised 46% of total sales, with performance income collected on neighbouring rights and synchronization monies accounting for the remainder: 6% and 2%, respectively.5 Marquis digital services such as Spotify, Apple Music, Pandora, and Deezer are household names worldwide (although Pandora’s international presence is limited to just a few countries).6 Pandora has 81 million active listeners, Spotify over 75 million, Apple Music, with a short launch window, about 10 million, and Deezer about 3 million.   With the exception of Apple, which is self-financed, all of these streaming services have welcomed new big money investments.7 Most notably, Spotify, the market leader of interactive streams, was valued at over 8 billion dollars in 2015.8

Adele’s sales strategy is not unique. Coldplay is soon set to release its new album A Head Full of Dreams, and is not planning to make it available on streaming services;9 their fifth album, Mylo Zyloto, was released in 2011 and held from streaming services for over three months: an audio-only version of ‘Paradise’ was uploaded on YouTube and used, with success, to seed the album. Tom Wait’s Bad as Me was also held from streaming to boost sales: metal rock label Century Media removed its entire catalogue from Spotify, returning it nine months after reaping the benefit of strong non-streaming sales. Taylor Swift’s 1989, of course, set the tone in 2014, when she withdrew that record and her entire catalogue from Spotify U.S. — a move that seems to have drawn buyers to the album in droves.10

While acts like Coldplay, Adele and Taylor Swift can rely on their fans to spend money on the albums of their music, most other musicians are not afforded the same luxury. Smaller artists find it much harder to sell full records, and must therefore rely on alternate sources of revenue. For them, generally, streaming seeds the album. A good example is the U.K’s Ed Sheeran. Sheeran is apparently the most-streamed artist in the history of Spotify, with over 3 billion plays. At the same he has the second highest selling U.K. album of 2014, X.11 Clearly, unbundling the album for streaming has not hurt Sheeran.

For independent artists, touring money, endorsements, and merchandise sales are important sources of revenue, none of which solely depends on recorded music. Moreover, regardless on who is doing the math, mechanicals on streams are worth pennies, with one study estimating that about a million streams are worth just $1,200.12 So for independent artists to place music in Spotify is arguably a testimony to the power of that medium to promote their live music and ancillary sources of revenue. They might not make money from recorded music, but they will drive traffic to their concerts and keep themselves in the public’s eye.

That logic does not play well with the major acts discussed above. Their fan base is strong, there is a pent up demand for their recorded work. If the album is perceived as a hit, there is little need to seed it with streams. Better cash in with album downloads or physical sales.

Here is where we find The Beatles, who had probably maximized already sales of album downloads and physical product. The Beatles likely felt that the time was right to join Spotify. Late in December 2015, at about Christmas time, they made available their entire catalogue to the streaming giant. Within days, The Beatles’ ‘Come Together’ went to no. 14 on the Hot Rock Songs Chart, and no. 18 on the Rock Streaming Songs chart.13

A new format of consumption, of course, both energizes The Beatles’ fan base and attracts a younger demographic. Moreover, withholding its catalogue added a premium over time, for The Beatles really kept in check the ‘proof of concept’ that Spotify needed so badly –– the claim that it was the top vehicle for the mass consumption of music online. Because on non-disclosure agreements between the parties, it is difficult to know what the Spotify advance to The Beatles was. We know, nevertheless, that The Beatles were in the driver’s seat, and that Spotify was cash rich from its latest financial rounds in 2013.

When asked about her thoughts on streaming, Adele responded by saying that “music should be an event”.14 She was likely trying to suggest that buying music by the album and listening to it over speakers, perhaps in the company of other people in a room, was an altogether different and better experience. She was probably not being candid. The reason that she downplayed streamed music could be just a matter of simple economics. Artists that are predicted to move heavy album sales are probably worse off giving their music to Spotify at least initially. They earn more on the bundled album. This is not true of lesser-known talent, for whom streaming has much promotional value.

 

By Natasha Patel


1. “Here’s How Adele Absolutely Killed It Last Year.” Fortune Heres How Adele Absolutely Killed It Last Year Comments. 06 Jan. 2016. Web. 08 Jan. 2016.

2. Blistein, Jon. “Adele Shatters ‘NSync’s First-Week Album Sales Record.” Rolling Stone. Web.

3. “Adele’s Album More Popular than Soccer in UK.” CNBC. 06 Jan. 2016. Web. 08 Jan. 2016.

4. Corner, Lewis. “Adele’s 25 Would Need 16 Billion Streams to Match Sales.” Digital Spy. 07 Jan. 2016. Web. 10 Jan. 2016.

5. “An Industry of Growing Digital Revenues and Multiple Income Streams Internationally.” Facts & Stats. Web. 08 Jan. 2016.

6. http://www.digitalspy.com/music/news/a779131/adeles-25-would-have-to-be-streamed-16-billion-times-on-spotify-to-make-same-money-as-sales/

7. “Investment in Selected Music Companies in the U.S. 2012 | Statistic.” Statista. Web. 08 Jan. 2016.

8. “Music Streaming Company Spotify Gets Investment as It Faces Competition from Apple – The Economic Times.” The Economic Times. Web. 08 Jan. 2016.

9. Peoples, Glenn. “Coldplay Keeps New Album Off Spotify. Surprised? You Shouldn’t Be Billboard.” Billboard. Web. 08 Jan. 2016.

10. Peoples, Glenn. “Coldplay Keeps New Album Off Spotify. Surprised? You Shouldn’t Be Billboard.” Billboard. Web. 08 Jan. 2016.

11. Corner, Lewis. “Adele’s 25 Would Need 16 Billion Streams to Match Sales.” Digital Spy. 07 Jan. 2016. Web. 10 Jan. 2016.

12. Dredge, Stuart. “How Much Do Musicians Really Make from Spotify, ITunes and YouTube?” The Guardian. Web.

13. Caulfield, Keith, and Kevin Rutherford. “Beatles Surge on Charts After Streaming Debut | Billboard.”Billboard. Web. 10 Jan. 2016.

14. Corner, Lewis. “Adele’s 25 Would Need 16 Billion Streams to Match Sales.” Digital Spy. 07 Jan. 2016. Web. 10 Jan. 2016.

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Comments

  1. Lynell says:

    At last! Someone with real exeiptrse gives us the answer. Thanks!

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