Thursday, June 4, 2009

Chart Attack: Who’s “Indie” When it Comes to Sales?

Digital Music News recently ran an article called “The Gray Art of Counting Indie Sales,” which underlined the confusion of tallying purchases of downloads or CDs based on the music’s “independent” classification. According to the American Association of Independent Music (A2IM), 32 percent of album sales in 2008 came from independent artists, but Nielsen Soundscan puts that number at 12.8 percent. Part of the difficulty in differentiating between an indie and a major the fact that many indie labels enter deals with distribution companies owned by the majors, such as ADA (95% owned by Warner) or Fontana (owned by Universal). As a result, major labels have a tendency “count the sales of their distributed partners, while indies like to downplay those partnerships,” according to DMN publisher Paul Resnikoff.

According to the American Association of Independent Music (A2IM), everything is tallied according to IP ownership — in other words, who owns the masters. "What makes a label an “indie'” is that its master recordings are not owned by one of the major labels," the group stated.

A2IM president Rich Bengloff tipped Digital Music News to that distinction earlier this year. "I think if you asked the man on the street they would go with the ownership criteria because it's permanent," Bengloff said.

FMC has had its own experience with trying to figure out what constitutes an indie or a major label. Over the last year, FMC has conducted research on radio playlists, released last month in the report “Same Old Song.” Since the research was designed to measure the difference in “airplay share” for songs released by major labels versus non-major labels, the backbone of the work was coding all of the labels that received any airplay between 2005 and 2008. When we extracted that list, there were over 6,000 unique record labels that received some airplay.

We ended up having 5 different codes:

• Major: the four majors and any of their many-owned subsidiaries and imprints

• Indie: Following A2IM’s lead, we considered an indie label as one independently owned/that controls its own masters and seems to be responsible for its own radio promotion. Even if the indie label had a distribution deal, we classified them as “indies” since distro deals usually focus on getting songs into retail as opposed to getting airplay on radio.

• Disney: including its imprints Lyric Street, Fearless and Hollywood Records. After completing some early data analysis we discovered it was important to give Disney its own code since, in some formats, this one label or its subsidiaries was garnering 2-3% of total airplay. In essence, Disney has the strength of a major label, but was not part of the payola proceedings and thus needed its own category to isolate its level of influence.

• Legacy: A small set of labels or well-known artists for which their relationships to the major labels has either changed over time, or for which a major label association with radio is likely, but cannot be confirmed. Example: recent releases by The Eagles, Jimmy Buffett, Cheap Trick or Motley Crue: artists who are now putting out their own music, but who have a well-documented history of significant radio airplay while on a major label in the past. There are also some current labels in this pool, such as Tooth and Nail, that started as an indie in the 1990s, but has allegedly created a number of upstreaming deals with major labels. This is also where we put companies like Mountain Dew’s Green Label Sound, which has been releasing singles to promote the soft drink. Clearly, this is a company with a significant promotional budget, but it’s not a major label. Without additional information it was difficult to categorize them as an indie or a major.

• No label/TBD: in the cases where there was insufficient data

Even with these five categories, we had to make many judgment calls. There were cases where a label’s relationship to various major labels had changed over the years. For example, Roadrunner started as an independent but as of January 2007 is now 74 percent owned by Warner Brothers. There are other labels that have a documented upstreaming deal with the majors – such as Fall Out Boy’s label Decaydance, which has a relationship with Island – where the independent label finds a band, puts out their first record and then the major label partner can come in and sign them to a bigger deal. On the charts, if the song had a listing Decayadance, we’d code it as an indie. If it said Decaydance/Island, we classified it as a major. In cases where we could not determine with certainty, we erred on the side of independence. Needless to say, defining “indie market share” is an inexact science, and an ever-evolving landscape.

But what about unaffiliated artists who aren’t on a label – indie or otherwise? We’ve talked recently about services like TuneCore, CD Baby and ReverbNation, which, for a nominal fee, get unsigned artists “stocked” at digital retailers like iTunes, eMusic, Amazon MP3, Rhapsody, Napster and so forth. If an unaffiliated act starts “moving serious units,” to use Music Industry 1.0 lingo, how do they demonstrate this success to the wider world? For this, you probably need some kind of ranking system that the industry (and fans) perceive as legitimate.

TuneCore currently has a chart in Billboard showcasing the 25 top-selling artists who use their service. (This chart displays two types of data: top selling full albums by total earnings for the period and top selling individual songs by earnings for the period.) Appearing in Billboard would do more than make your mom proud — it actually means something to the industry. But since established mainstream artists also use TuneCore, the top spots are often already filled. For instance, Jay Z, David Byrne, Joan Jett and t.A.T.u are all currently featured on TuneCore’s March 2009 album list (as reported in May 2009). That’s some stiff competition. (Click here for a look at the most recent charts.)

Digital distributor/marketing tool ReverbNation also has charts to show which of its artists are selling the most. But unlike TuneCore’s Billboard chart, which lumps all musicians irrespective of genre into a single top 25 listing, ReverbNation breaks its lists down by not only style of music, but also by location. You can find the top selling albums/songs from musicians from US or even the world,, including your own backyard. (Similarly, TuneCore’s iPhone app uses a geolocator that tells you the 25 best selling TuneCore songs based on your exact zip code.)

Keep in mind that all of this is based on downloads. While digital sales might currently be a better indicator of “success” than MySpace plays, there isn’t (to our knowledge) a chart that measures on-demand listens where you don’t keep the digital file. As people grow more accustomed to “accessing” music as opposed to owning it, accounting for online plays could become increasingly important.

As more artists go direct to fans and label roles evolve, all of this gets a bit fuzzier. Will everyone eventually be wading in the same digital pool? Do standard chart measurements even apply in a world of limited-edition physical items, on-demand streams and (potentially) legal filesharing?

For a lot of musicians, having people at your shows and moving some merch is achievement enough. But we’re curious: what do you think counts as success with recorded music? Feel free to let us know in the comments.


Peter said...

Thanks for the mention, FMC folks. Yes, we have a chart on BillBoard, and we've lobbied the industry tirelessly to notice that they're NOT COUNTING MILLIONS of sales. Our Sales Certification Awards are doing the same thing.

All aspects of the industry are going to have to grow, including charting, tracking and awards. We'll keep pushing!

Thanks again.


Jed Carlson said...

Hey FMC, I just have a quick correction:

ReverbNation charts are not based on download sales. They are based on a proprietary metric called Band Equity Score.

This score compares fan relationships and engagement across the 375,000 Artists that use our system. It takes into account a myriad of factors, including things like:

• Reach (how many people see/hear their content online)
• # of Song streams
• Song engagement (how long to people listen before they turn it off)
•  Repeat visits from the same fans
• Free downloads taken
• # of "Fans" or "Friends" on social networks like Facebook, MySpace, etc
• Page impressions on social networks
•  Dwell time on social networks
• Mailing list size
•  Mailing list open rate
• Click through rate on emails
•  etc, etc.

That's less than half of what it actually measures, but you get the picture.

We know from extensive surveys that for the majority of Artists, online retail sales only comprise a small fraction of the revenue 'pie'. Our goal, therefore, is to measure as many other meaningful elements as we can that go into determining the success of an Artist now and in the future.

For more info on Band Equity, go here:

Jed Carlson

FMC said...

Thanks so much for the clarification, Jed.