Spotify Increases Track Sales?

Driving With A Blindfold

According to this Billboard article Business Matters: U.S. Digital Sales Drop in Second Quarter:

Digital sales continue to lose the big year-over-year gains they posted early in 2013. Both US track and digital album sales have fallen nearly every week through May 26th, according to Billboard analysis of Nielsen SoundScan data.

How does this come as a surprise to anyone?

Spotify (which I’ll use as a stand in for all streaming services) adoption is something that was always going to take a minute. It still isn’t even close to fully caught on but when it does you can expect those digital track declines to accelerate much faster.

From that same Billboard article:

The popular sentiment within the industry is streaming services do not negatively impact purchases. 

Anyone in the music industry that agrees with this is literally driving with a blindfold on.

Any positive impact streaming has on digital track sales will only last until America has caught on with Spotify. Consider the following scenario:

• Joe Stream listens to the new Daft Punk album on Spotify
• Joe think it’s great. He tweets to his followers that the new Daft Punk album is awesome & he really likes Giorgio by Moroder, so catchy!
• Joe’s followers respect his opinion but not all of them have even heard of Spotify let alone have it. They search for it on iTunes & make a purchase.

The important point here is I highly doubt that Joe Stream himself is listening to Random Access Memories on Spotify and saying “Damn this album is good! I don’t want to just stream it, I need the mp3s!”.

Any rise in iTunes sales brought on by Spotify is unsustainable. 

Eventually more people will have Spotify than not have Spotify and the decline in digital track sales will accelerate. As smartphones saturate the country and even nearly everyone in middle america is carrying a little computer in their pocket, this is just inevitable.

But the decline in digital track sales could actually be a good thing.

In my opinion, the problem with iTunes is it doesn’t encourage people to listen to full albums. It encourages them to cherry pick their favorite songs. When you listen to one song by an artist you are not going to become as invested in the artist. If you aren’t as invested in the artist you’re less likely to buy a ticket to see them live. If they aren’t able to monetize the listeners through live events most artists are pretty much out of luck.

One of the great parts about Spotify is how it removes the barrier to the album. A casual fan no longer has to think twice about listening to a new artists full album & their whole back catalog. You might only want that hit at first so you’ll start by playing the artists top 10 most popular songs but eventually you find yourself halfway through the latest album.

This album listening behavior drives people to become more invested in the artist. The more invested people are in the artist the better chance that artist has to monetize that fan & survive. It’s not about getting rich for 99% of artists, it’s just about surviving.