Major Record Label Admits CD Sales is Not a Measure of Success

In the face of another major slump in CD sales, the major record labels say they have other streams of revenue as well.

A report from the New York Times has some interesting comments from the major record labels. Neilson Soundscan reports that CD sales have slumped this year with the top selling album selling less than 3 million albums for the first time since Soundscan reported record sales (17 years).

The news came with some interesting notes including the fact that ticket sales have been going up. The record industry has been wanting a cut of the revenues generated from live tours for about a year now in so-called “360 deals” though the Times report says that this is not the norm for contracts yet.

What could be just as interesting is the comments made by Universal Music’s executive president:

Rio Caraeff, the executive vice president of Universal Music Group’s digital division, eLabs, said other income, like the fees collected when users stream a video online, had become an essential part of the pie. Twenty percent of Rihanna’s revenue, he said, has come from the sale of ring tones.

“We don’t focus anymore on total album sales or the sale of any one particular product as the metric of revenue or success,” Mr. Caraeff said. “We look at the total consolidated revenue from dozens of revenue lines behind a given artist or project, which include digital sales, the physical business, mobile sales and licensing income.”

This could represent an interesting change in attitude since the main arguments the record industry has used for years is that record sales are down because of file-sharing. If record sales are no longer a measure of success, what becomes of the argument that file-sharing is causing a fall in CD sales (though many respected sources have disconnected any correlation between file-sharing and record sales)

All this seems to be highlighting an interesting trend with the major record labels. First, one of the major labels is pushing for campus file-sharing tax, then came word that the RIAA is interested in ending the lawsuit campaign and asking ISPs to disconnect alleged file-sharers, some that at least one ISP is saying that there should be compensation in the process and now this.

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