A third of the U.S. population accounts for 70% of entertainment spending, according to numbers released Wednesday by Nielsen. The “high spender” group has slightly more females than males, very few teens (5%) and a higher share of Hispanics (19%) than exists in the total population. But these high spenders are hardly wealthy: their average household income is $66,000 per year.
These and other insights into the U.S. consumer’s entertainment spending are found in the Spring 2013 edition of the “The U.S. Entertainment Consumer Report: State of the Media” report. Nielsen compiled the publicly available report from previously released reports as well as its proprietary platforms. Because of this, most of the report’s data comes from 2012, not early 2013.
The “State of the Media” is helpful in the way Cliffs Notes provide a good amount of information in a short amount of space. The report recaps 2012’s music sales, music streaming statistics, social media behaviors related to music and consumer behavior for video, video games and books. It shows that over half of consumers on Facebook and Twitter read posts by artists — but only 14% retweet artists’ posts and 15% share Facebook posts by artists. But the report is most helpful when it details exactly who is spending money on music.
An outcry is being heard in the D.C. Facebook Community over Wale’s comments during a recent interview on MTV’s Rap Fix Live. Shout out to Crank Brothers for bringing this to my attention!
This is what people are saying:
“SMH!!! Thank you Wale for digging a deeper hole for GoGo. With the platform that he has and represents, he is in a position where whatever he said is a stampage. Music is never violent. Yes… the meeting place for violence is at the Go-Go but saying gogo is violent on an international TV station (MTV) is reckless and disrespectful. That’s like dialing 911 and telling the police you rob banks. Now they got you in a scope not trusting your every move. Crazy how he forgot his “first hit” was a Go-Go song and second was too. Had to share this fam…” -Crank Brothers
For the second time since SoundScan started counting downloads in 2003, track sales suffered a sales decline, something that occurred in the first three quarters of 2010. So far this year, track sales are down 1.3% as of March 31, according to Nielsen SoundScan.
This year, industry executives attribute the decline to a lack of hits. Last time in 2010, they blamed LimeWire. But after the peer-to-peer site was shutdown, track sales rallied and closed out the year with a 1.1% increase.
In 2013, only 15 songs have reached the 1 million unit milestone so far, while last year 21 songs accomplished that feat. But this year’s best selling song download, Macklemore and Ryan Lewis’ “Thrift Shop,” has scanned almost 4.2 million units. Last year’s best selling title for the first quarter was Fun.’s “We Are Young” (featuring Janelle Monae), which scanned 2.75 million units.
Against that, album sales totaled 74 million during the first quarter, down from 77.8 million units, a drop of 4.9%. Within that, CD sales were down 15.4% to 40 million from 47.4 million in the first quarter of 2012; digital album sales increased 10.4% to 32.4 million units, up from 29.4 million units.
With nearly 1.3 million in scans, Justin Timberlake’s new album, “The 20/20 Experience,” is the top selling album this year, as well as the top selling digital album with 558,000 downloads.
Overall, albums (plus track equivalent ones whereby 10 tracks equal one album) dropped 3.8% to 109.7 million units, down from 114 million units in the first quarter of 2012.
81% say same-day concert marketing is critical to drive awareness.
We recently surveyed 470 music venues around the world and their answers revealed that the majority of music venues sell most of their tickets at the door through walk-up traffic. Over eighty percent described day-of-show marketing and promotion as ‘important’ to driving that attendance.
While this may not come as a surprise to touring artists working to pack a house, these statistics suggest that consumers have a lot of choice when it comes to things to do on a Saturday night. And that many of them may be making their decisions about whether to go to the basketball game, the movies, or the concert, on the day of the event.
Even though CD revenues have fallen sharply over the last ten years, most predictions about the format have been wrong. The CD’s decline, while painful to companies, has been far more gradual than precipitous. Over the last four years, CD revenues have leveled off just as an airplane would before a soft landing.
The one thing everybody has correctly predicted is that the CD would decline. CD revenues fell 77.5% to $2.5 billion in 2012 from $11.2 billion in 2003, according to RIAA numbers released last week. The deepest losses occurred in 2007 and 2008, when CD revenues dropped over $1.9 billion each year. Total revenues suffered badly as a result in those years, falling 9.4% and 17.6% in 2007 and 2008, respectively. More recent years have not been as bad. After four straight years of deficits that exceeded 20% (from 2007 to 2010) CD revenues declined 8.5% in 2011 and 18.3% in 2012.
Management Panel - How Can I Be Down (1996)
[Chris Lighty, Steve Stoute, Dame Dash & Shakim Compere]
Over the past few weeks I’ve asked 30 extraordinary people in the music industry for their most valuable words of advice for aspiring entrepreneurs. Without further ado, here are 30 pieces of advice from 30 music industry entrepreneurs.
“We are no longer subject to what was, only to what works. We can honor what came before us, but at the same time we have to be constantly aware of how fast this new generation moves. The new does not have to be scary and it’s allot less risky than it ever was. It just looks radically different than it ever did and we have to embrace that. Yesterdays fans are not coming back and so we should simply stop trying to find them.”
- Benji Rogers, CEO, Pledge Music
“Nothing speaks louder than an amazing product. Focus on that, and “buzz” usually takes care of itself. Also try and get one marquee client on board per vertical that you’re going after. For example, after Madonna came on board in 2009, we had a much easier time selling in the music business. This was the same for sports after we began working with the Miami Dolphins.”
- Michael Schneider, CEO, Mobile Roadie
Diddy keeps stacking that paper: The producer-rapper and Bad Boy Records founder tops Forbes’latest list of the richest hip-hop artists, which he also led last year. Diddy’s net worth is estimated at $580 million, with much of his wealth coming from business ventures, including his partnership with Ciroc vodka.
This year’s Forbes’ list looks much the same as last year’s report. Jay-Z came second, posting a net worth of $475 million with the continued growth of his Roc Nation label and management company. Dr. Dre held on to the number three spot with $350 million in net worth, thanks in large part to his Beats by Dre headphones.
Cash Money Records co-founder Birdman scored the fourth spot with $150 million in net worth, though he could have more than $200 million if it weren’t for his co-ownership of the label with his brother Slim. G-Unit honcho 50 Cent came in at number five with $125 million, amassed through his varied approach to merchandise, video games and books following Get Rich or Die Tryin’, as well as the 2007 sale of VitaminWater, in which he held a stake.
Music subscriptions services, which provide an alternative to purchasing songs on sites like iTunes, continue to gain in popularity. One example is Sweden-based Spotify, which is expanding rapidly across the globe and has now added another 1 million paid subscribers in the last three months.
According to figures reported by CNET and confirmed by Spotify, the company now has 24 million active users and 6 million paying subscribers across the world. Spotify is also growing rapidly in the United States, where it arrived in July of 2011 and is this week hosting musicians at its “Spotify House” at the SXSW festival in Austin, Texas.
Despite the hype, the underlying economics of Spotify’s business model remain uncertain. The service is beholden to musicians and studios, which request a 70 percent cut, and it must contend with a growing list of competitors that include Pandora, Rdio and SoundCloud. Meanwhile, YouTube is expected to launch a subscription service of its own in coming months and even Apple is expected to get into the streaming game too.
This competition validates the underlying premise of Spotify — that people want access to a giant catalog of music instead of buying it piecemeal through iTunes — but the arrival of deep-pocketed rivals may hurt Spotify’s ability to compete in the longterm.
ReverbNation, a digital marketing platform used by more than 2.7 million musicians, will announce on Wednesday that it is jumping into the music download business. But it’s doing so with a twist — 43.4% of what people spend will go directly to charity.
ReverbNation isn’t turning into a non-profit. Nor is the endeavor a pure marketing stunt. It’s a serious business proposition to see if the North Carolina digital company can do well for its artists by doing good. In other words, the company is betting that people will buy more music if their purchase is tied to a cause that they feel good about.
“It’s not 100% altruistic,” ReverbNation president Jed Carlson readily admitted. “Our mission is to look out for the artist. Music for Good is about putting another tool in their toolbox to help their careers.”
Under the Music For Good program, when a song is purchased for $1.29, 56 cents goes to the artist, 56 cents is sent to a charity the artist selects and 12 cents goes to PayPal to process the payment. The remainder, a nickel, goes to ReverbNation. Among the 13 charities currently in the program are Fender Music Foundation, World Vision, Oxfam America, Heifer International, Zac Brown’s Camp Southern Ground and CARE.
The company rolled out a beta version of the Music For Good program on Dec. 21 and is launching the full product to all artists Wednesday. Already, more than 51,800 artists have signed up to sell their songs on the digital platform, which will give bands and buyers the option to post purchases on Twitter and Facebook. This feature alone is more likely to resonate with people than simply posting what they just bought on iTunes, according to social marketers. Among the more viral social posts are those involving charities as a form of self-expression, according to Geoffrey Colon, a digital marketing analyst with Social@Ogilvy.
Live Nation grew revenue 8.1% to $5.8 billion and adjusted operating income rose 4.8% to $459 million in 2012. It achieved its goals of growing concert attendance, ticket sales and sponsorship and advertising revenue. Yet its financial statements, released Tuesday afternoon, showed more red ink. Live Nation’s 2012 net loss nearly doubled to $163 million from $83 million in 2011 due to a one-time charge from Irving Azoff’s December 31st departure from the company.
Shares of Live Nation closed down 1.9% to $10.12 and were down 0.7% in after-hours trading late Tuesday afternoon. The company’s 52-week high is $10.76.
Revenue in the concerts division grew 10.4% to $3.87 billion but brought in only $31.4 million in adjusted operating income. The number of North American concerts was down 3.7% to 14,962 while the number of International concerts was up 4.1% to 7,000. North American attendance was up 3% to 32 million while International attendance was up 6.4% to 16.8 million. The concert division’s festival attendance was approximately 3.5 million, a 30% increase over 2011. EDM festival attendance doubled to 1.4 million attendees.
Ticketmaster revenue grew 4.1% to $1.37 billion while adjusted operating income grew 5.6% to $294.6 million, or 64.2% of the company’s total adjusted operating income. The gross value of tickets sold by Ticketmaster increased 8.4% to $9.1 billion and the number of tickets sold increased 4.5% to 147.7 million.
The Sponsorships & Advertising division grew revenue 7.4% to $247.9 million and raised its adjusted operating income 6.4% to $175.6 million, or 38.2% of the company’s total adjusted operating income.