Each year—after the holiday cheer—comes the industry accounting. Time to congratulate the hot sellers of 2012, spot the trends, and balance things like “digital vs. physical,” “albums vs. tracks” and “performance by genre.” Thankfully, Nielsen SoundScan together with Billboard create a detailed year-end report that helps makes this pursuit manageable and was a key source for the following analysis.
Some writers will try to put a positive spin on the year by saying that overall music transactions were up 3.1% to 1.661 billion units sold. But that number really doesn’t tell the story. Overall album sales were off -4.4% (physical was off -13.5%) and Overall Album Sales with TEA, a key metric which includes albums (physical and digital) plus digital track sales was also down -1.8% (Track Equivalent Albums; 10 tracks=1 album).
But although overall purchases lagged, country music was up and the best performer of all the genre categories. Read on…
Digital Landscape
Consumers got more into downloading this year, driving total digital sales up 9% over 2011. Digital albums increased 14.1% and tracks were up 5.1% giving digital a majority 55.9% of the total business for 2012. In fact, 37% of all album purchases were in digital format. (In country music the online tide pushed digital albums up 38% and tracks up 12.8%. However, even with the increases, only 25.3% percent of total country album sales were digital, far lower than the 37% all-genre average.)
By Genre
Yes, overall album purchases slid in 2012, but there were still two genre winners— most noticeably Country which was up 4.2%. Rock was also in positive territory, eking out a 2% gain. Big losers included Jazz (-26.2%), Classical (-20.5%) and Latin (-17.6%).
The Country Hit Parade
Artists: Country music was well represented among 2012’s Top Selling Artists. For example, Taylor Swift (No. 2; 4.062 million), Jason Aldean (No. 6; 1.855 million), Carrie Underwood (No. 9; 1.497 million) and Luke Bryan (No. 10; 1.432 million) placed inside the year’s Top Ten Artists by total album sales. Joining them were Adele (No. 1; 5.167 million), One Direction (No. 3; 2.978 million), Mumford & Sons (No. 4; 2.149 million), Justin Bieber (No. 5; 1.897 million), Whitney Houston (No. 7; 1.789 million) and Maroon 5 (No. 8; 1.54 million).
Albums: Country also owned half of the positions on the Top 10 Selling Albums chart. Gracing the list were No. 2-Taylor Swift, Red; No. 7-Carrie Underwood, Blown Away; No. 8-Luke Bryan, Tailgates & Tanlines; No. 9-Lionel Richie, Tuskegee; and No. 10-Jason Aldean, Night Train. Filling in the gaps were No. 1-Adele, 21; No. 3-One Direction, Up All Night; No. 4-Mumford & Sons, Babel; No. 5-One Direction, Take Me Home; and No. 6-Justin Bieber, Believe. 
Holiday Cheer
Nashville’s three high profile seasonal albums failed to keep pace with frontrunners Rod Stewart (No. 1; 858k) and Michael Buble (No. 2; 622k), but followed closely. Lady Antebellum, On This Winter’s Night (No. 3; 439k); Blake Shelton, Cheers It’s Christmas (No. 4;428k); and Scotty McCreery, Christmas With Scotty (No. 5; 348k) all came close to turning gold.
And what a thrill to see Little Miss Dynamite, the legendary Brenda Lee come storming in with the Top Selling Song in the Holiday Season (11/5/12-12/30/12)—”Rockin’ Around The Christmas Tree” (No. 1; 1.775 million units). Yes, during the above mentioned period Lee’s track outsold runner ups Bruno Mars “Locked Out Of Heaven” (No. 2; 1.732 million), PSY “Gangnam Style” (No. 3; 1.462 million) and Taylor Swift “I Knew You Were Trouble” (No. 4; 1.383 million). (Note: “Rockin Around…” was written by Johnny Marks and recorded by Brenda Lee in 1958. Marks also wrote “Rudolph, The Red Nosed Reindeer”).
Access—Going With The Flow
Taylor Swift was 2012’s No. 1 Streamed Artist, and the only Nashville alum to make that Top Ten list. (The data for this list is “aggregated from Nielsen BDS streaming data sources including: Akoo, Guvera, Medianet, Rhapsody, Rdio, Slacker, Spotify, Thumbplay, Vevo, Yahoo! and others.” Note that heavyweight Pandoara is absent.)
Cocktail Chatter
• In 2012, 108 songs exceeded the one million sales mark.
• Adele’s 21 was the biggest selling album with just over 4.4 million sales, marking the first time an album has been the year’s best seller for two consecutive years. The album has now eclipsed the 10 million unit mark.
• For the second year, Katy Perry was the most played radio artist with over 1.4 million spins.
• For the first time more albums were sold in digital music stores (37%) than in any other strata. Mass merchants like Target and Walmart had been the largest.
• Physical sales and downloads no longer comprise the complete picture with respect to music sales. Revenues from streaming in the form of subscription and digital performance payments are becoming a factor that needs to be addressed. Hopefully Nielsen SoundScan is considering how to add that to its impressive data system.
• SoundScan measures units, not money. Although the unit sales show a relatively stable or slightly contracted landscape, when looking at prices, costs, margins and ultimately profits, the picture is likely to be less rosy. For example, according to SoundScan, album sales in the year 2000 were over 785 million units. This year the number was 316 million, or 450 million if we include TEA. In the year 2000 CDs cost over $16. Today they average about half that price.
• Garth Brooks remains the Top Selling SoundScan Era Artist (since 1993) racking up 68.617 million albums. Joining the Okie on that Top Ten list is George Strait (No. 6; 43.932 million), Tim McGraw (No. 8; 40.993 million) and Alan Jackson (No. 9; 39.63 million). The Beatles are No. 2 with 64.158 million units sold.