Have you spent your $12 lately??

I know that there are people out there in Duranland who absolutely LOVE to talk sales figures.

With the release of any of the more recent Duran albums, or their accompanying tours, the discussion almost always comes around to sales. How are the albums selling, and how many tickets are selling for the shows. We’ve had many a discussion on this blog as well as on Facebook as to what really accounts for success, but in this case we’re talking about dollars and cents. So what I’m about to share is likely to bolster the discussion, whether you’re arguing that no one actually makes real money on album/single sales these days, or you’re arguing that the band is like a fish trying to swim upstream. In this case – everyone is probably right.

Recently there was research published by Asymco analyst (this is a business analysis firm) Horace Dediu that shows the average iTunes user spends only $12 per year on music purchases. $12?!? That doesn’t even quite meet the cost of some CDs! In case you’re wondering – this figure was sitting at $42 a year just a few years ago (actually I believe it was two or two-and-a-half years ago that this research was last compiled).

What does that really mean? Well, to begin with, the number of iTunes users has grown significantly, with some analysts saying that the number is approaching 600 million worldwide, and the sales figures for software and books are also declining. Interestingly enough, new apps are still being developed at a near breakneck pace. The article, which you can read here makes the point that “not only is there more stuff for music fans to buy, they’re buying more of that other stuff”.

So Duran Duran is not only competing with other artists for our dollars, now they are also competing with other stuff music fans tend to buy. So what “other stuff” are we talking about here?

The article goes on to talk about Spotify, for example. Streaming music is becoming more popular. The trouble is – how does one profit from such a thing? I wonder if this is the sort of thing that was discussed back when radio first became popular, “How do we make money off of it if listening to the radio is free once you buy the radio?!?” Spotify alone has nearly 24 million subscribers worldwide, but only 6 million of those people are paying customers…and I would bet that not all of those 6 million people are paying the highest rate. (right now that sits at $10 a month), but the article uses that figure and then says that it puts the per-user spend rate at $30 a year, which is almost triple that of iTunes. Then it goes on to say that almost 70% of Spotify users are completely inactive…meaning those accounts are virtually abandoned accounts. Obviously that changes the figures…and while Mark Mulligan, an industry analyst that dared to quantify the variables into dollars and cents, came up with a registered per-user spend rate of just $9 a year, I have to say I think that’s way off as well.  I think the per-user spend rate for just a registered user is probably far, far less. Why? My guess is that the lions share of accounts that are abandoned are those that were started for free. I know that even for myself, I use my Spotify account because I pay for it monthly. If it were free, I would probably forget about it.  My opinion is that while I have a huge range of music that I can listen to, the UI is horrendous (User Interface), and it’s a pain. So I use it because I pay for it monthly.

As typical with these types of articles, the numbers are met with skeptical eyes. The comments range from those who are “simply shocked” that anyone actually pays for music these days when there is so much that can be downloaded legally and for free…to those who are certain that the originally research firm is supported by RIAA, therefore the numbers are skewed.  This particular commenter states that it’s odd that this research shows no growth in US downloaders at all, yet just recently the RIAA released figures showing that the growth in units (downloads) and revenue for 2012, and even I have to say, that seems fishy to say the least.

The reality of course is that no matter where the figures come from, there certainly seems to be an overall disconnect between the music and the audience. Nobody buys music, and as I’ve said for nearly a decade now- until someone can actually figure out WHAT the new business model for the music industry is supposed to be, and learn how to properly harness the power of social media and turn all of those “likes” into sales – we will continue to read reports such as this. I think it’s pretty obvious that all the music industry really knows how to do is point blame at illegal downloading, as though that is somehow going to magically admonish everyone back into the “legally buying” line at the sales counter. Newsflash guys, it’s been quite a while, and so far that party line just isn’t working. Probably time to find a new course of action.

So what does this all really mean for Duran Duran and bands like them? Tours. Tours matter a lot…and maybe even more than they ever did before. I know many people scoffed at the band for doing arena tours in Europe and then coming to the US and doing smaller venues (3-5,000 people, give or take). There was talk about things not selling out in Europe and even more talk about things not selling out here. I have to say, I was AT shows in the UK, and I was AT shows here in the US. They sold well. I can’t honestly say they were complete sell-outs because I didn’t go row by row counting seats, but I can tell you that they filled the venues very nicely. Those are the kinds of tours that have likely become the bread and butter for the band. Do I think they still need to make albums though?

I think there are two very different things going on here that fans should appreciate. To begin with, I don’t believe that any band truly wants to go on the road for 9-18 months and play the same songs they’ve played for the past 20 years. Those of you out there who believe the setlist is already stale – well, just imagine how stale it would be if there were absolutely NOTHING new? I don’t know that they’d continue to sell their tours very well without new music – at least not for the long haul. So, I think the albums keep the creativity flowing and the band quick on their feet. I think the albums are probably as much of a reward for the band for the hard work they’ve done on the road as they are a mechanism to create sales. I still believe the band creates new music out of love for the art form, and if that makes me naive or frivolous, so be it. Touring, on the other hand, is hard work – enjoyable hard work (I hope), but work nonetheless. They need those tours in order to pay themselves and their team.  Much discussion has been made about their touring schedule and how grueling it must be – and that the band should cut back. Only the band themselves know how much is too much, but I will say this: I truly believe there is something to be said for residencies. More bands are taking advantage of such things, and I feel this is an area that the band could also utilize in order to make the challenge of touring a little easier for not only themselves, but for fans as well. Just this past spring Def Leppard did nearly a month of shows in Las Vegas – shows that actually sold out most nights. I’m not suggesting Vegas is the only city where this could be done – it’s merely an example, and I believe that this could be done worldwide with a little strategic planning.

In the meantime, I’m going to hop over to iTunes and give my yearly $12 “donation”.

-R

3 thoughts on “Have you spent your $12 lately??”

  1. I actually purchased Japan's Tin Drum, the 1981 album featuring “Visions of China”, “Canton”…
    I purchased Nile Rodgers's biography, the ebook, during the same weekend, for a total of about Euro 20,00.=
    I agree: spending such low sums of money is a big problem for the artists if they want to get nurtured. It means there is little investmenet in the music industry and this negatively influences the quality of music.
    However, I can remember in my teens, in the 80s, albums were cheap, the prices for tickets for concerts were cheap and music business wasn't dying as it seems doing today, the quality of music was high.
    Good times gone.

  2. Fascinating article and info. I agree with 99% of what you said in relation to Duran. You've been to more shows recently than I in the US so you might have seen things differently…but I think Duran is so damn good live, and has such a solid following even among the casual fans, that a once a year tour would be profitable for them w/out new music. Obviously, I want new music and I agree with you on everything else you said–but at the end of the day, I still get the feeling that we–the people who buy albums on the first day they're out, who buy multiple versions, etc.–are still in the minority at those shows…

  3. I don't know Chris – I really think that people would eventually tire of the shows, and most certainly the band at some point…UNLESS they cycled through their back catalog extensively. Now that might prove to be enough for them to subsist on for a while. That's something I didn't even go into earlier and perhaps that would make a difference. -R

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