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Even supermarkets couldn’t get Beck to Number One

You have to grow a thick skin if you work for one of Britain's supermarkets.  After all, they are regularly pilloried for everything from encouraging food waste (through BOGOFs) and alcoholism (drinks promotions) to killing High Street stores to selling horsemeat as beef. But even hardened supermarket executives were a little surprised to discover their latest "crime" the other week - preventing critics' darling Beck from reaching Number One in the Official Albums Chart with his latest album,Morning Phase.

Beck 

A lengthy editorial in Music Week lamented the fate of "poor Beck" because the "likes of Tesco, Sainsbury's and Asda decided against giving their customers the chance to buy it". The clear implication was that these supermarkets had arbitrarily deprived "poor Beck" of the Number One he deserved.

Beck's album sold 13,819 copies in its first week to reach number four, 2,730 copies behind the Number One, Bastille's Bad Blood. Is it conceivable that the supermarket buyers got it wrong and that with their support, he would have sold an additional 2,730 copies and reached Number One?  

Unfortunately not.

To suggest otherwise, say the supermarkets, is to fundamentally misunderstand who they are and their contribution to the music market.

Beck's sales were disproportionately dominated by pre-sale and core fanbase Monday purchases which we can assume the supermarkets would never have been able to capture. Sunday and Monday sales accounted for 43% of sales. Likewise sales were disproportionately digital with a 43% share of sales going to non-physical formats. That meant the addressable physical market was necessarily smaller. With an additional 2,730 sales required to deliver him the Number One slot, it would have meant every single full-range supermarket (ie non convenience format) in the country would have had to sell at least one and maybe two copies  of the Beck album that week. As one buyer put it, "Our customers are most likely to be females aged between 25 and 45 who only buy four or five CDs a year. Beck is unlikely to be one of them."

The Music Week piece mused wistfully that "Unlike with the likes of HMV and the independents whose fates are tied to those of the record labels supplying them, supermarkets can pick and choose what kind of products they support." The point is correct, even if the sentiment is misguided. Supermarkets argue that it is their skill in selecting precisely which products are appropriate for their customers which enables them to deliver huge numbers on the right kind of product.

In the event, the performance Beck's Morning Phase has vindicated the supermarket view that it was never likely to be anything other than a specialist sell. Week two sales more than halved to 5,512. Week three sales halved again to 2,906.

Between them the nation's supermarkets sold £188m worth of albums in 2013, a quarter of the market. Recognise us for what we do well, say the supermarkets, rather than criticise us for not stocking albums our customers simply do not want.

 

 

 

Posted at 09:11

Chancellor Osborne and the exaggerated death of the 99p download

The Treasury spin machine traditionally works at full tilt at Budget time and this year was no different, but this week's breathless reports about the death of the 99p download took the biscuit.

In a range of media from The Guardian to Wired to Forbes came the news that "in a little noticed announcement" in the Budget Chancellor Osborne planned to "clamp down" on a "tax loophole" affecting music downloads, apps and ebooks.

 

briefcase

As a result, the days of the 99p download were numbered, the price of a single MP3 could go up to as much as £1.19 and the prudent Chancellor was set to net a huge windfall.

Unfortunately for the Chancellor, but fortunately for the rest of us, the stories bear little resemblance to reality.

First, the new measure has virtually nothing to do with the UK Chancellor. He is simply enacting the latest in a series of European Directives dating back to 2002 which seek to regulate the treatment for VAT purposes of digital goods and services.  The decision to levy VAT at the rate prevailing in the country of the customer's residence, rather than that of the retailer is not peculiar to the UK and will in fact apply across the European Union.

Second, the death of the actual 99p download seems unlikely. The most common location for music and video download stores operational in the UK - used by Amazon, among others - is Luxembourg where the current VAT rate of electronic downloads is 15% (apart from ebooks where the rate is 3%).

On a 99p download, that means that the retailer currently receives a fraction over 86p after VAT from which they have to pay for all costs including the music. If all costs stayed the same and 20% VAT were to be applied, that would increase the price of a download to just over £1.03, a long way away from £1.19.

Most industry watchers believe that the power of the 99p price point is such that as they have done in the past retailers and their suppliers will simply absorb the increase.

All in all, that Osborne clampdown and the supposed mortal threat to the 99p download look a little overblown.

Any impact of the European Directive looks set to be restricted to ebooks, which opens another can of worms entirely: why should ebooks be taxed at all when printed books remain VAT-free, a status of which the music and video industries can only dream?

But that's another story…

Posted at 15:39

Steve Redmond on how Beyonce’s success is a testament to power of bundling

Internet entrepreneur David Pakman was among the first to identify the fact that unbundling the album - ie the ability to cherry-pick individual tracks - was perhaps the most disruptive thing about the digital revolution.

The biggest culprit in the collapse of music industry revenues to less than half of their 1999 peak, he wrote in a 2011 blog,  "is not piracy, it is the fact that consumers, when they buy music, are buying 10% of what they used to, because they only need to buy the single, not the album".

Which makes the enormous success of Beyonce's fifth album released on Friday all the more phenomenal.

The self-titled album sold 828,773 copies worldwide in just three days, according to iTunes, who have been selling it exclusively. In the UK it debuted at number five in the Official Albums Chart with sales of 68,000 copies in just 48 hours.

Most of the coverage of the album has focused on its "stealth" release - no singles, no pre-promotion - but at least as significant is the fact that the only way to enjoy its 14 new songs and 17 videos has been to buy the entire £12.99 album.

Beyonce has effectively "re-bundled" the album. And, as she says herself, that was part of the creative impulse behind the release. "I miss that immersive experience," she says. "Now people only listen to a few seconds of a song on their iPods and they don't really invest in the whole experience."

Commentators such as Mark Mulligan are already suggesting that the success of Beyonce's tactic may well lead to a series of other artists following suit.

The irony, of course, is that this rediscovery of the power of bundling has taken place exclusively on iTunes, the biggest single player in the download market, and if David Pakman is right, therefore, the biggest single "culprit" in the collapse of music sales.

Posted at 16:03

Steve Redmond on how Christmas gift-buying is putting the digital download back in its box

High Street retailers have long remarked on the deficiencies of digital content when it comes to Christmas present-buying - "You can't gift-wrap a download," they point out.

This week's albums market brings a ringing endorsement of that view with physical's market share soaring as mums, dads, brothers, sisters hit the stores to buy their gifts.

Year-to-date sales of Top 40 albums are of course overwhelmingly dominated by physical with a 69.7% share of sales, according to Official Charts Company Data, compared with digital's 30.3%.

But in the past week (Week 50), physical's share of Top 40 sales has jumped to 88.5%, meaning downloads accounted for less than an eighth of the market.

Were it not for the surprise release of Beyonce's currently digital-only new album, physical's share would have been even higher at 92.1%.

It is a long-standing fear of physical retailers that the three major record companies would like to be shot of the CD entirely, a suspicion that their suppliers could certainly do more to quell.

For the moment at least, however, even the most resolutely pro-digital record company executive would be hard-pressed to justify axing a format generating nine out of 10 of Christmas chart sales.

 

Posted at 13:03

Steve Redmond on the BPI’s well-timed response to the piracy debate – and a screenshot to celebrate

Siteblocked

There's no doubt there's a rising tide of questioning of the content industry's traditional response to piracy and the balance between licensing, education and enforcement.

Only this week games industry trade body TIGA put the cat among the pigeons with a survey of its members which found 87% agreeing that new business models were the best way to combat piracy, with only 10% saying that stricter enforcement of their intellectual property rights was the best option.

It was an interesting follow-on to my own blog reflecting on the contrast between the retail focus on licensing and content owners' focus on enforcement.

But just as it looked like a new consensus was emerging, the BPI pulled off a masterstroke, a court order to ISPs forcing them to block 21 pirate sites.

Among them is mp3skull.com, one of the most egregious offenders.

 Jamesblake

The result of this latest action is that while .mp3skull continues to appear as the top result when you search for last night's Mercury Prize winner James Blake, ahead of Amazon, click on the link and it's blocked.

This is a significant victory for which the BPI should be congratulated on its dogged determination to crack down on one of piracy's worst offenders.

So where does it leave us in the debate of the relative importance of enforcement versus licensing? It is certainly a welcome reminder that enforcement can and does work. No retailer or digital service would argue with that.

The continuing challenge is to ensure that the same determination goes into the far less dramatic, but just as vital work to make licensing easier.

 
Posted at 16:46

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