2014: Year in Review
Records and live performances define the state of the music market. 2014 was special for two things: a consumer preference for accessing a recording with a subscription or a free stream and the surge of live ticket sales and music festivals. The reader is encouraged to check the sources at the end for more information.
Recorded Music
The decline of the album, now a long time feature of the recorded music market, seemed to reach new lows in 2014. It had been customary for Nielsen to pad album sale numbers by adding one album for every ten digital tracks sold. Last year, the concept was extended to streams, making an album the equivalent of 1,500 streams (a $12 value for a Spotify payment to artist of $0.008 per stream).
Even then, album sales dropped 32 million units, from 289 million to 257 million, or 11% between 2013-2014.1 Nielsen, of course, cannot be faulted for its accounting, for the business it serves still yearns for the golden years when albums reigned supreme before iTunes made tracks the norm. It must be realized too that 2014 only saw four albums receive a platinum certification, compared to thirteen last year.2
Better perhaps to recognize that albums are a passé concept for a market largely focused on cultivating personal playlists. No longer is a single song the gateway to discovering an album, eventually introducing the listener to an artist’s discography. Instead, a single song opens the door to many other songs like it, likely by a multitude of different artists, allowing consumers to construct perfectly curated playlists that cater to their exact tastes.
This, of course, is largely why on-demand streaming is the most promising growth area for recorded music. It has become the dominant consumption platform, up 54% to 164 billion streams in 2014. Spotify’s $5 billion valuation is testimony to the power of these numbers.
2014 was special too for more idiosyncratic album placements. With the proliferation of alternative music services in the marketplace, some of them free, major artists began to experiment with alternative release models, freedom from the shackles of the old ways of doing business.
Beyoncé broke her self-titled surprise album in December 2013 without any promotion, and that became the storyline. As a result, the album became the fastest-selling release iTunes had ever had.3 Then, in September 2014, with little warning, U2 released Songs of Innocence, as Apple paraded its iPhone 6 to the world (the free album immediately showed up on any Apple device with a cloud connection). Later, Thom Yorke of Radiohead released Tomorrow’s Modern Boxes as a free download on BitTorrent.
Taylor Swift’s 1989 was, instead, old fashioned in its success, selling more than 3 million units in a much shorter span of time than Disney’s Frozen. 1989 sold 3.7 million copies, and was the highest selling U.S. album in 2014 after Frozen, with 3.5 million.4 Frozen received some Grammy awards this year, including Best Compilation Soundtrack for Visual Media, and Best Song Written for Visual Media for the hit “Let It Go”. The Disney Company has always been a powerful music industry protagonist, and it added to its laurels again in 2014.
The top artists, as listed in Billboard’s year-end charts, were One Direction (Top Artist), Katy Perry (Top Female Artist), Justin Timberlake (Top Male Artist), Luke Bryan (Top Country Artist), Lorde (Top Rock Artist), Beyonce (Top R&B/Hip Hop Artist), and Romeo Santos (Top Latin Artist).5 And at the 57th Grammy Awards, Taylor Swift, Iggy Azalea, Beyonce, Sia, and Meghan Trainor were all nominated for some of the night’s big awards.
Yet it was Sam Smith, a British soul singer signed to Capitol Records, who conquered the Grammys this year, taking home four Grammys, including Best New Artist, Song of the Year, and Record of the Year for his debut album, In The Lonely Hour, and the hit single, “Stay With Me”. The major hit song of 2014 was Pharrell William’s “Happy”, which topped Billboard’s Top 100 for 10 weeks straight, and sold 6.45 million digital copies. It was originally written for the soundtrack album of Despicable Me 2, and was included in Pharrell’s album Girl. “Happy” earned Pharrell the Grammy awards for Best Pop Solo Performance and Best Music Video for its international projection.
One of the year’s biggest comebacks has to be the Rock and Roll genre. Even with a market dominated by Pop, R&B, Hip Hop, and EDM music, Nielsen’s 2014 industry report puts Rock at the top, accounting for 29% of all U.S. music consumption; R&B/hip-hop is second with 17% and Pop third with 15% . Rock also leads in U.S. album shipments with a 33% share.Three-fourths of all vinyl sales come from rock, and for Billboard, Lorde, Imagine Dragons, Bastille, Coldplay, and Album of the Year Grammy winner Beck, are the leaders of this pack.
Live Music
With its increase in revenue to 6.2 billion in 2014 from 5.1 billion in 2013, live music now accounts for 35% of total music spending. This is the fourth consecutive year of growth in ticket sales for live shows. According to Live Nation, the number of shows is also increasing from 11,200 in 2013 to 11,400 in 2014.
Music festivals are quickly becoming a major portal for music discovery. More than 30 million U.S. consumers attended at least one festival last year, which is a 34% increase in attendance from the last festival season.6 Some of the top festivals in the US include South by Southwest, iHeartRadio, Lollapalooza, Coachella, Bonnaroo, and Mysteryland. South by Southwest, in 2014, had nearly 2,400 music showcasing acts and 600 international acts from 57 countries all within 111 festival stages.7 Roughly 75% of people attending these events, and blogging about them, are between the ages of 17 to 34.
2015
2014 may be quickly fading in the rear view mirror. In 2015, music consumption will continue to move from sales to streaming, and a higher role for the album in the future of streaming may be less important to the business if music subscriptions continue to pick up. Deezer is finally making its way to the U.S., while YouTube will be releasing their Music Key streaming service. All of this will make for a crowded streaming space and will challenge the dominance of Spotify. Further, in the wake of the Copyright Office’s report on the current state of music licensing, called “Copyright and the Music Marketplace”, it seems possible that 2015 could be a watershed year for American copyright law, with far reaching implications for the business.
By Andre Corea and Harrison Price
1. Billboard Staff. “Billboard 200 Makeover: Album Chart to incorporate Streams & Track Sales.” Billboard. 19 November 2014.
2. 2014 Nielsen Report. “Nielsen Music 2014 Year-End Highlights and Analysis.”
3. Caulfield, Keith. “’Beyoncé’s Fastest-Selling Album Ever In iTunes Store. ”Billboard. 16 December 2013.
4. Nielsen Soundscan Annual Report 2014
5. Billboard Year End Charts, Billboard
6. Eventbrite Music Festival Study, 2014. http://eventbrite-s3.s3.amazonaws.com/marketing/MusicFestivalResearch/EventbriteStudyMusicFestivals8_25_14.pdf
7. South By Southwest Music Film Interactive SXSW Statistics. http://sxsw.com/sites/default/files/attachments/STATISTICS%20FOR%20SXSW%20%202014%20(1).pdf
