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Don't Believe the Hype: Music Sales Aren't On the Rebound

Good news: American music sales are up 1.6 percent, the first increase since 2003. Bad news: It's an anomaly. But that isn't stopping record labels, their parent companies or their fans from hyping the news. Time to take a deep breath, folks.

Looking from January 1, 2011 to May 8, 2011, Nielsen sees:

  • Music sales up 1.6 percent
  • Digital album sales up 16.8 percent
  • Digital single sales up 9.6 percent
  • Vinyl sales up 37 percent
Critics say that digital sales may finally be making up for the loss in physical sales. This plainly isn't happening.

Problem 1: The Beatles aren't making any more albums
There is one definite reason for the sales bump: The Beatles. The Fab Four finally released the Beatles back catalog through Apple (APPL) iTunes last November. Within two months, the group sold five million digital songs and one million digital albums.

As shown in the Nielsen graph, there was nearly a 15 percent leap in digital sales when the Beatles catalog was released. The numbers drop briefly January and February, but all sales numbers drop post-holiday (aside from diet and gym memberships). The numbers roared back in March.

The issue here, of course, is that the Beatles couldn't make another album even if they wanted to. Eventually everyone who wants a (digital) Beatles album will have one. Worse, there is literally no other artist or group that sells more that hasn't gone digital (AC/DC and other iTunes hold-outs can't compare). In other words, like Harry Potter for publishing, the Beatles are done boosting the sales numbers -- and there doesn't seem to be anyone else around to take up the slack in 2011.

Problem 2: Vinyl won't be popular for long
Vinyl record sales have been on the rise since 2008 because purists want to hear music in a crisper format and, more than likely, it's cool to collect: As VentureBeat humorously puts it, "Lesson of the day, hipsters can effect change in a major industry." The 3.6 million vinyl records sales forecasted for this year are definitely helping the overall industry.

Unfortunately, it's highly unlikely that vinyl records will continue this bullish growth:

  • First, by nature, vinyl record collecting is a niche activity -- Lady Gaga's total vinyl sales will never come close to the sales of her latest digital single.
  • Second, as I know from my own vinyl collecting, purchasers are more likely to buy an album used than to pay $20 for it new. If they don't buy it new, then they aren't going to contribute to new sales.
  • Finally, purchasing vinyl is, unfortunately, a fad. As VentureBeat implied, many people are purchasing vinyl not because of sound quality, but because collecting vinyl is cool. Vinyl's 1.2 percent contribution to record sales will get even smaller once hipsters move on to the next thing -- 8-track tapes, maybe.
The Beatles and, in a smaller way, vinyl sales have created an artificial bubble for the music business. They'll both pop by year's end.

Photo courtesy of _gee_ // CC 2.0

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