The New Normal: Recalibrating The Sales Compass

Country’s half year sales were punctuated by a strong selling sophomore album from Lady Antebellum, but little else emerged to boost industry coffers according to Nielsen SoundScan. One week into the second half of 2010 finds country tallies down 9.5% YTD and drooping like a wilted sunflower. Some optimism is starting to appear however, as the year-end release schedule begins to swell with upcoming superstar entries from artists such as Zac Brown Band, Taylor Swift, Sugarland, Kenny Chesney, Toby Keith and more. The sales story for 2010 is clearly far from over. But with prices dropping and margins shrinking how do we really determine where we are? What about revenue? To help calibrate our compass we contacted Show Dog-Universal veteran and VP Marketing Sales and New Media, Bill Kennedy.

“There are a lot of different revenue sources these days,” says Kennedy. “Physical sales plus the digital album—which in my opinion still has a lot of growth in it for our format. Single downloads may have leveled off in terms of volume, but on the revenue side we have a modestly higher price point that does add up over time. We also have revenue coming in from streaming that we really didn’t have before, and revenue from video downloads which show modest increases. Maybe instead of going for the three run homer you have to play ‘little ball’ and do it a bit differently.”

Kennedy sees single sales at least mitigating some of the losses from album unit sales for some artists. “This revenue model has been changing for the past five years,” Kennedy continues, “so it’s hard to compare just on a per unit CD cost. We have certain tracks and artists in our format that can sell 2 million downloads, and that adds up. It may be invisible revenue to some, but not for the labels, especially when you sell 500k singles or more.”

Kennedy is realistic, but sees some upside on the horizon. “There may actually be a slight increase in overall units sold this year due to all the big titles scheduled to appear, so we’ll see,” he says. “We are operating under a new normal since October 2008 when the market started to implode. It will continue to be a struggle and you will have to grind it out and hope your artist can hit one out of the park and get a career song. Bottom line you have to work a lot smarter and extract the unnecessary costs.”

One reassuring new development is seeing single sales jump ahead of country radio. “With Joe Nichols’ ‘Gimme That Girl’ we had single sales topping 20-25k per week while the single was hovering in the 20s at country radio,” Kennedy recalls. “We are also seeing it with some of the newer acts like Jerrod Neimann and Jaron And The Long Road to Love. Our fans are engaging the viral world where you can spread the word, network and get to the fans directly long before the song happens via radio. You still need country radio in our format to put it over the top, but you have the opportunity to get there a lot quicker than ever before.”