I recently read some information from a leading digital distributor based in the United States, regarding predictions for sales over the next few months in light of the economic downturn. It makes for interesting reading...
"This time of year is usually one we all look forward to – and it’s not just the fattening food and gifts. We all eagerly await the holiday “bump” in sales as consumers unwrap their MP3 players and gift cards and download music. But this year may be different...
It is no secret that the U.S. and much of the world is in an economic recession. Markets are down across the globe and consumer spending has significantly slowed. What effect does this have on the digital music industry? Some have speculated that it could actually HELP propel sales as consumers spend more time at home on their computer or mobile phones and look to spend money on music. A download certainly looks more economical than a CD at the moment – in fact there are rumblings that this could spell the end of the CD altogether as retailers shutter their doors. Others speculate that no industry is safe from this downturn; that consumers will seek to save at every opportunity and would rather spend time on the P2P networks or simply not buy music all together. Because the digital media industry has never been in a recession, it is difficult to look at history as a guide. So we have to look at current data as it comes in and give you guidance based on these trends.
Please understand that the insight provided below is based on an overall view of the recent performance of our catalogue and discussions with our retail partners (there continues to be pockets of outperforming releases). This problem is impacting all retailers and labels.
While it could be a temporary blip, things definitely appear to be slowing. In general, we expect sales to be 20- to 30% below expectations in the next 6 months (though April 2009). While there will be a holiday bump in sales, we believe it will be less than it has been historically. If you previously saw your Dec/Jan/Feb sales increase 50- to 75% in the past few years, you may now only experience a 20- to 30% increase, or less. The holiday sales period may simply bring your digital earnings back to levels of this summer. But remember, economies and markets move cyclically and this cycle will end. Most economists believe it will turn around next summer, perhaps by June or July. Until then we need to be smart, proactive and resourceful. Obviously if sales are in fact going to be lower than expected, you probably need to review: (i) How you market your releases more efficiently and effectively, and (ii) How you leverage your existing catalogue to generate more sales?"
"This time of year is usually one we all look forward to – and it’s not just the fattening food and gifts. We all eagerly await the holiday “bump” in sales as consumers unwrap their MP3 players and gift cards and download music. But this year may be different...
It is no secret that the U.S. and much of the world is in an economic recession. Markets are down across the globe and consumer spending has significantly slowed. What effect does this have on the digital music industry? Some have speculated that it could actually HELP propel sales as consumers spend more time at home on their computer or mobile phones and look to spend money on music. A download certainly looks more economical than a CD at the moment – in fact there are rumblings that this could spell the end of the CD altogether as retailers shutter their doors. Others speculate that no industry is safe from this downturn; that consumers will seek to save at every opportunity and would rather spend time on the P2P networks or simply not buy music all together. Because the digital media industry has never been in a recession, it is difficult to look at history as a guide. So we have to look at current data as it comes in and give you guidance based on these trends.
Please understand that the insight provided below is based on an overall view of the recent performance of our catalogue and discussions with our retail partners (there continues to be pockets of outperforming releases). This problem is impacting all retailers and labels.
While it could be a temporary blip, things definitely appear to be slowing. In general, we expect sales to be 20- to 30% below expectations in the next 6 months (though April 2009). While there will be a holiday bump in sales, we believe it will be less than it has been historically. If you previously saw your Dec/Jan/Feb sales increase 50- to 75% in the past few years, you may now only experience a 20- to 30% increase, or less. The holiday sales period may simply bring your digital earnings back to levels of this summer. But remember, economies and markets move cyclically and this cycle will end. Most economists believe it will turn around next summer, perhaps by June or July. Until then we need to be smart, proactive and resourceful. Obviously if sales are in fact going to be lower than expected, you probably need to review: (i) How you market your releases more efficiently and effectively, and (ii) How you leverage your existing catalogue to generate more sales?"
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2 comments:
Interesting! I would be interested to see sales figures for digital after Christmas. I would guess that MP3 sales suffer in the lead up to Christmas because people are using their money buying hardware CDs to wrap up under the Christmas Tree.
People will be given money/iTunes gift vouchers from friends/family over Christmas andI would bet on an increase in spending from Christmas Day afternoon, with the beginning of January being key once the cash and cheques have cleared!
Yes, I think there's a lot of truth in that, although thinking back to when we had our record shop open we found that people would come in and spend more on themselves during December. Possibly to do with the fact they're in the mindset of spending money anyway. I'm not sure how closely online retail mirrors phusycal retail in that respect.
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