The recording industry continues to struggle with declining sales even as catalog sales from The Beatles and Michael Jackson provided a temporary boost. Overall sales were still down 11-14% from the previous year. Two important lessons are that back-catalog sales are increasingly important to industry revenue and high quality releases can drive strong sales. The vast catalogs of older music provide many opportunities for record labels to generate new profits through reissues and exploiting demand from new generations of fans.

1. Record industry woes continue
The recording industry's decade-long tale of woe and declining sales is well-publicized. An L.A.
Times blogger observed at the October 7, 2009 Digital Music Forum West that the outlook for
the music industry is "still grim.... [t]otal U.S. music revenues have fallen over the last decade
from more than $14 billion to just above $8 billion [in 2008], the lowest level since 1991," he
writes.
Even the success of the release of The Beatles' remastered catalog and posthumously soaring
sales of Michael Jackson's music didn't keep the industry in positive territory for the third
quarter. According to publisher EMI, The Beatles sold at least 2.25 million albums in North
America, Japan and the UK during the first five days of the release. Jackson dominated charts
and sales during the month after his death, selling 3 million albums and 7 million downloaded
tracks, according to USA Today.
Rolling Stone's online Rock & Roll Daily offers some perspective on the industry's recently-
concluded quarter: "Album sales are down 11.1 percent in the third quarter of 2009 compared to
the same period last year, Reuters reports based on figures provided by Nielsen SoundScan. That
decline comes even with the influx of sales after Michael Jackson’s death and the release of the
Beatles remasters, as both artists’ respective catalogs have combined for about 6.3 million in
sales this quarter. Even with the unexpected push from the catalog albums, total sales are still
down 13.9 percent from 2008, a year which itself saw its sales drop 14 percent compared to
2007."
Chart-topping sales of both Jackson's and the Beatles' music during the quarter highlight two
important lessons for music publishers: 1. Back-catalog sales, as opposed to new releases, are
increasingly important to the industry's bottom line, and
2. Quality matters.
A. Vast catalog sales opportunities
A September 20 article on The [UK] Observer's website sums it up in its title: "Back catalogues
spin a new generation of profits for record labels."
"Struggling to earn money on new artists, record labels are mining their vaults for hidden gems
and classic tracks to exploit anniversaries, new generations of fans, demand for collectable [sic]
re-releases and impetus from new formats such as downloads," it says.
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2009
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2. "Demand for the back catalogue is also rising," it continues. "EMI uses its in-house market
research of tens of thousands of music buyers worldwide to find pent-up demand it can tap with
catalogues. [Head of EMI's catalog business Ernesto] Schmitt says, for example, that one in
seven Britons say they like or love the Beatles but do not own a single album."
Sales of catalog music accounted for 65 percent of all U.S. album sales in 2008. According to a
confidential Nielsen SoundScan study titled "Measuring Music Consumption" [in the U.S.]
presented at the 2009 National Association of Recording Merchandisers' convention in June,
"35% of all album sales (149 million) were from albums released in 2008 (lowest total of new
release sales since the very beginning of SoundScan)."
The same study says there were 671,000 albums that sold at least one copy in 2008. Roughly
566,000 of these albums were released in previous years.
1. Collective size of catalogs
The precise number of songs in the collective catalogs of publishers, artists and other rights
owners is unknown.
Phone calls and emails to top publishers, and research on their respective websites tell us that the
four major labels (EMI, Warner/Chappell, Universal and Sony/ATV) collectively represent more
than 5 million individual titles. Phone calls and emails to five more publishers which have
appeared this year on Billboard's Top 10 Publisher Airplay Chart bring the total among the 10 to
more than 6.1 million.
Separately, the number of pieces of music available for licensing by American Society of
Composers, Authors and Publishers (ASCAP) exceeds 8.5 million, according to Lauren Iossa,
SVP of Marketing, reached by phone at ASCAP's NYC headquarters.
2. Reissues of catalog titles
A 2005 "Survey of Reissues of U.S. Recordings" by recording and broadcast historian Tim
Brooks gives us an idea of the prevalence of reissues of recordings released in the U.S. from
1890 to 1964, "the first 75 years of commercial recording in the United States."
On page 7, Brooks writes, "On average, rights owners have made available 14 percent of the
historic recordings that they control from the various eras. However, the percentage varies
greatly by age. For the two post-1955 periods, the rock-and-roll era, they have reissued 33
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2009
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3. percent to 34 percent."
One assumes that commercial demand accounts for the greater proportion of reissues from 1955
to 1964. Still, that leaves 66 percent of titles during this time that have not been reissued.
Says the Observer article, "Another trend highlighting the growing importance of catalogues is a
busy secondary market of labels tussling for lucrative rights," citing Universal's August 2009
acquisition of the international rights to Frank Sinatra albums and its plans to reissue Rolling
Stones classics in 2010.
B. Quality matters
EMI's Schmitt addresses the quality issue in the Observer article: "What the Beatles remasters
shows us is when you provide an extremely high quality product that is tactile and beautiful to
hold and has the right kind of value-added content in it -- in this case video featured content as
well as the music -- and the booklets and the rest, that consumers will go out and pay the price
for it."
In the U.S., together, the 14 remastered albums retail for about $200 (the individual album prices
range from $19 to $25), and the stereo box set is priced at $260. The mono box set retails for
$300.
Beyond this evidence for a demand for improved audio quality and such "an extremely high
quality product that is tactile and beautiful" is the news that rapper and producer Dr Dre has
partnered with computer maker HP and Interscope Records Chairman Jimmy Iovine to improve
the sound quality of digital music.
"Audiophiles have long lamented the dropoff in sound quality brought on by the onset of digital
music," says a CNET article about the alliance.
Number of total new releases in 2008 jumps significantly
The Nielsen SoundScan study observes a "huge jump" in the number of new releases in the U.S.
in 2008, from 80,000 in 2007 to 105,575 in 2008, for a total rise of 31 percent. Many of these
new releases (49,370) were digital-only, however, as "physical" album releases increased just 3
percent. This suggests that the jump observed by SoundScan was largely fueled by self-
publishing musicians and other independents.
Research
for
Studio
One
Media,
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2009
judysnyder@gmail.com

4. When analyzing individual track sales, the industry standard is 10 tracks per Track Equivalent
Album, or TEA. Using this standard and SoundScan’s data, the number of individual songs
released in the U.S. in 2008 exceeds 1 million. SoundScan's data are accepted as the most
comprehensive, yet in the case of new releases they only represent the releases sent to
SoundScan by the artist or publisher.
Millions more artists and songs
There are untold millions more songs produced in the U.S. and around the world flying under
SoundScan's radar.
In a September 20 blog entry on TheWrap.com, a website covering the entertainment industry,
CEO of the Recording Industry Association of America Mitch Bainwol writes, "There are more
than 2 million hip hop artists on MySpace and more than 1.8 million rock acts. It’s a sure bet that
most of these acts are hoping that a label will pluck them from the mass of aspiring, unsigned
artists online and take their careers to the next level."
It is artists like these who use sound-recording software such as Apple's Garage Band and Avid’s
Pro Tools. The publishers of Pro Tools estimate their users produce 100,000 songs per month.
The still-changing landscape will continue to yield more catalog releases and self-publishing
artists
The growing popularity of digital music, high A&R costs for music publishers and their greater
reliance on catalog sales mean fewer opportunities for new artists.
The Observer article quotes Chrysalis CEO Jeremy Lascelles: “As the recorded music model
becomes a less and less compelling one and the cost of bringing a new artist to market is so high,
it becomes an easy fall-back for a music company which owns lots of old rights to exploit them.”
Audio mastering represents a significant expense in releasing recordings, both for the veteran
labels and for self-publishing artists. The Beatles remaster project alone was achieved over a
period of four years by six engineers at Abbey Road Studios, according to the studio’s website.
Phone calls to five of the top mastering studios suggest a price range of $150-$500 per track,
$1,500 - $2,900 per album and hourly rates for engineers of $275 - $575.
Research
for
Studio
One
Media,
Inc.,
2009
judysnyder@gmail.com