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.

Welcome back from your holiday slumbers to the Weekly Register: Year End Edition. Hopefully, everyone enjoyed some quality time with family and friends. But let’s get back to work.
The graphs tell the top level tale. Country and All-genre album sales ended about 4 percentage points on opposite sides of flat. Country finished the year up 4.1% (44.694 million; 2011—42.923; + 1.77 million) and all-genre sales shrunk -4.5% (315.844 million).
Country also enjoyed stronger increases in digital album sales (country +38%; all genre +14.1%) and track sales (country +12.8%, all-genre +5%).
As expected, when measuring digital albums as a percentage of total albums sold the shift to digital continues. The all-genre audience has a higher preference for digital product (country 25.3%; all-genre 37.2%), but both groups added about 6 percentage points to last year’s tally (see grid).
For the past few weeks we have focused upon Taylor Swift’s incredible sales performance—a lot. Is that because we can’t spell any other artist names? Or because Ms. Swift is sending us to the Caribbean for a vacation? Unfortunately, “no.” We are highlighting her achievements because they are astronomical. Red reigns at No. 1 again on both the country and Top 200 album charts with weekly sales of over 241k, creating a 10-week total of 3.11 million units.
Swift also topped both the country and all-genre digital tracks charts—with different songs! “We Are Never Ever…” topped the country tracks chart with almost 236k downloads for the week (3 million RTD). “I Knew You Were Trouble” was No. 1 on Current Digital tracks with over 582k mouses clicking to download the track!!!! (2.04 million RTD).
Evaluating The Bigger Picture
Country album sales increased 4.1% this year, or by 1.77 million albums. Is that good?
It’s fair to conclude that it could be much better. Like every year, there were winners and losers—but a problem facing everyone is profitability. While costs are rising across the board for artist development, marketing, promotion and distribution, prices are falling and margins are shrinking. Sadly, the music industry witnessed the demise this year of once proud major label Capitol/EMI. And the worrisome all-genre showing (-4.5%) fuels speculation that more shrinkage lies ahead.
Many pundits believe the music industry is transitioning from physical product to an “access” model. Someday soon streaming will made as easily available on your auto dashboard as it already is on the desktop and mobile. Are you going to care about moving files from hard drive to hard drive once you see that all the music you ever wanted is instantly available wherever/whenever you want it? Right.
But does the industry have a model that can compensate its creators—songwriters, publishers, labels, artists and producers? Unfortunately, the answer is “Not yet.” That is a concern as we enter 2013.
According to SoundScan, country sold 77.912 million albums in 2004. Eight years later we find ourselves selling 43% less, with lower margins, prices and profits.
So yes, it’s exhilarating to watch Taylor Swift wave the country banner proudly around the world on her way to becoming the largest selling Nashville artist ever. It’s also rewarding to note that Nashville has become a creative mecca with highly distinctive artists such as Jason Aldean, Carrie Underwood, Eric Church, Brantley Gilbert, Little Big Town, Lady Antebellum, Zac Brown Band, Miranda Lambert, Blake Shelton, Jamey Johnson, Colt Ford and more. But there are challenges ahead for music professionals from all genres.
It’s time we started to prepare…
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The MusicRow TEA Index sums physical, digital and TEA (track equivalent albums; 10 tracks=1 album) then calculates the percentage of total album sales that come from TEA. The idea is to measure the TEA effect against total album sales. (Our baseline numbers are gathered by industry sources from Nielsen SoundScan.) The 2011 full year TEA Index was 25% country and 27.7% all-genre, and it has expanded to 27.2% and 29.73%, respectively.
The holiday album rush lowered the last month’s numbers which dropped about 2 percentage points for both categories. The TEA index is another way to show that despite the popularity of tracks, they still account for less than one-third of overall album/track sales.

As we prepare to delve into the mysteries behind the year’s biggest music sales week, let me begin by wishing all Weekly Register readers a happy holiday and wonderful New Year.

Week 51 was a monster (ended 12-23-12), but unfortunately unable to muster a gain over 2011. Christmas week country album sales were off a slight .73%, but all-genre for the same one-week period was down a more substantial 15.8%. Meanwhile, lo and behold my stocking was stuffed with a special gift from the good folks at Nielsen SoundScan—a shiny TEA chart which as WR readers know converts track sales into handy album equivalents (10 tracks = one album) and will undoubtedly sharpen our 2013 analysis.

The elves over at Big Machine, must have been working furiously right up ‘til the night before … since Ms. Swift’s Red (the color of Christmas) scanned another 276k units for the week, giving this project an impressive 2.866 million in 9 weeks! Oh yeah and please paste a “No. 1” sticker on it—it easily topped both the country album and Top 200 album lists. The singer-songwriter also was well represented atop the Digital Track list with “I Knew You Were Trouble” moving up to No. 1 with 221k weekly downloads and an RTD of 1.46 million.

Finally, consulting our nifty new TEA rankings, the precocious, ruby-lipped lass added to her weekly Red album sales with a total of 355k downloads from various Red tracks creating a weekly TEA albums total of 311k. The other part of our SS data surprise, “YTD TEA” shows Red with 3.535 million RTD. Tracks ‘n’ TEA added about 19% to Red’s total.

Moving on, we also saw nice jumps for this year’s offerings from Lady Antebellum (No. 2; 78k), Blake Shelton (No. 4; 72k) and Scotty McCreery (No. 9; 48k). Little Big Town (No. 3; 72k) and Jason Aldean (No. 5; 69k) filled in the Top 5. Congrats are a few days premature, but “Cheers!” to Jason as his Night Train will pass the million scans mark before the end of next week.

There’ll be lots to discuss after the end of next week as we close out the stats and shift the analyzer machine into high gear.

But for now you’ll look pretty smart at this weekend’s cocktail parties if you just smile and say, “Yeah, country is doing better than the overall industry—up 3.1%, but not by a whole lot.” Then quietly add, “Labels continued to consolidate this year (Universal and EMI) but it’s exciting to see more than a third of the Top 25 country albums peppered with new faces and fresh sounds.”

Have a safe and happy new year!