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Harvard Study: 1/3 Of Sales Drop Due To Digital, Creative Bundles May Be Answer

image from 1.bp.blogspot.com (UPDATED) A new study by Harvard Business School Associate Professor Anita Elberse looks at the loss of music industry revenue caused by single track sales and how particular forms image from www.actfind.comof bundling may increase future sales. Elberse talked about her key findings with Working Knowledge. Highlights include:

  •  "when consumers start buying music online, they switch from buying full albums to cherry-picking their favorite songs…each album no longer bought is "traded in" for one, perhaps two, individual songs"
  • "a drop of around one-third of the total weekly sales across the album and its associated songs is directly attributable to people switching to buy music online"
  • "The number of songs on an album does not really matter...That is, bundles that are highly uneven in how popularity is distributed across individual components see an even greater decrease in revenues over time…it doesn't necessarily correspond with the popular belief that one or two popular songs can "make" an album."
"Smaller, More Consistent Bundles"

  • "A strong artist reputation helps to curb the negative impact of unbundling. Consumers are more likely to buy full albums from established bands like U2 with a strong track record of success".
  • How should labels respond? "Labels should rethink the essence of a bundle…My results show that giving preference to quality over quantity and designing smaller, more consistent bundles may be beneficial.
  • "Labels did themselves a disservice by granting a player like Apple such power in the channel..the company isn't even primarily in the business of selling music…"
  • "This may be the most important lesson for other content producers. They should consider which intermediaries they let into the channel and under which terms, or better yet, aim to be that intermediary themselves…".

Bruce Houghton on 12/03/2009 in Uncategorized | Permalink | Comments (12)
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12 Comments

  1. the consumers don’t need the labels to respond with more consistent quality bundles, they already do that themselves by cherry picking across labels, artist and genres to create a bundle on their own. As usual, consumers are out front and the labels are behind left to respond.

  2. Artists need to showcase their music in easily digestible bundles. The impatience of today’s society makes 10 song albums impossible to listen to so the focus needs to be on quality over quantity.

  4. Finally some proof that unbundling is not the way to go. The album is back!

  6. Let’s bring back the EP! Five or so songs with a consistent sound and an artistic movement. Not as likely to have filler tracks as an album, not as annoying to listen to as a collection of random tracks.
    ps – this has absolutely nothing to do with my commute being ~25 minutes:)

  7. Artists need to make me want to care about their success to make me purchase their album. If they don’t make a compelling case, my album money will go to someone who does. Make me root you on, engage me on Twitter instead of just sending out mere tour dates and press releases. If you’re doing a concert, why not meet your fans following the gig and be nice? And if you’re going to bundle, make it interesting, but remember that stickers don’t make your argument convincing.
    Those are some of the reasons I buy the albums I do.
    Twitter: @Meandre

  8. I have a different perspective on this (of course).
    Many artists prefer working in the album format, and they shouldn’t stop doing that if that’s what they enjoy. If they’re making rad albums, they’ll see sales, and shouldn’t be concerned with whatever latest trend they think will sell the most. If any listeners want to cherry-pick, that’s their prerogative.
    On the other hand, for someone that’s focused on making it big with hit singles, yeah, we definitely don’t need more forced albums with those one or two songs surrounded by a bunch of filler. We probably don’t really need those hit singles either, now that you mention it. Who cares if their sales are down?

  10. Actually, let’s take this as a point-by-point reply.

    • If people could buy individual eggs, they would pick the ones that aren’t rotten
    • Egg carton sales would drop if people did this
    • The number of eggs in a carton doesn’t really matter. One or two good eggs won’t sell a carton
    • Cartons without rotten eggs will sell more
    • Companies should sell cartons without rotten eggs
    • Companies that sell cartons of rotten eggs only have themselves to blame for allowing customers to buy individual eggs
    • Companies that sell cartons of rotten eggs shouldn’t work with grocery stores that allow individual egg sales

  11. Chuck,
    Are out of your mind!??!?!? BASIC RETAIL…?
    Didn’t you know, music is exempt from basic retail principals….How dare you?
    But seriously you are dead on, and seeing as labels and managers tend not to have a fucking clue about the basic retail relationship, well, I don’t expect your words to sink in.
    AND we are ignoring what seems to be the only growth format, vinyl.
    DUH.
    much wax,
    bbb
    wheatus.com
    @wheatus

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