More than a decade after the launch of the iTunes Music Store, parts of the recording industry are finally changing the way they calculate sales. Billboard changed the metrics it uses to calculate the Billboard 200. Rather than calculating only album sales, Billboard 200 will now use “track-equivalent albums” and “track-equivalent streams.” This is the biggest change in the way that Billboard calculates this chart since the implementation of SoundScan in 1991, and it already appears to be every bit as monumental.
As I discuss in iTake-Over: The recording industry in the digital era, album sales are deceiving about what people listen to. While album sales have lagged since 2001, there has been a meteoric rise of digital singles – surpassing 1 billion in the US in 2007 and approaching 2 billion globally in 2011 (according to the International Federation of Phonographic Industries). Despite the rise in digital singles, industry reports continued to focus on album sales as the primary indicator of the health of the music industry. By ignoring other revenue streams (downloads, singles, touring licensing to other media, etc.) and focusing on album sales, the recording industry painted a picture of music under duress.
And this simple change in calculating the Billboard 200 demonstrates the industry is far from the dire situation in which it claims to be. The new metrics define one track-equivalent album as equal to the sale of 10 singles, and a stream equivalent album as equal to 1500 song streams. Still these calculations represent industry interests based on the revenue obtained in comparison to an album on a CD. I am sitting here trying to imagine a song that I have listened to 1500 times – the equivalence of listening to one song every day for more than 4 years. Or if an album has 15 songs, this calculation would require that someone listen to it 100 times to count as equivalent to an album. Meanwhile, I have so many albums that I purchased, listened to once or twice, and put away forever. While the change is much needed, it still comes up short at demonstrating what people are listening to, and this is likely because it is aimed at pushing particular types of artists further up the charts.
Those recording artists that benefited the most from the new calculation in the first week were pop mainstays. Taylor Swift racked up an additional 58,000 sales because of the new accounting practices. Meanwhile, Ariana Grande jumped from No. 39 to No. 7 on the chart. Both of these significant gains point to the consumption habits of teenage and teenybopper music consumers who tend to download and stream music. Since artists have to get a high number of streams in a short period of time to get those streams to count as albums, this emphasizes pop superstars. Specifically those artists who sell more singles than albums. It could even allow top albums to stay at the number one spot longer as streams spike after album sales. This is part of a broader strategy by the recording industry to sell more music from big name acts.
In 1991, when Billboard went through an even greater change calculating album sales, no one, other than individual record labels, actually knew what music was selling. The problem was the result of two indicators of sales. First, the record labels report album shipments instead of sales, and there is no connection between shipments and sales. A shipment is the number of units shipped to stores—record labels buy back unsold albums—so there is a massive discrepancy between shipments and sales. Second, Billboard used a survey system that polled record store clerks based on their subjective feeling about what albums were selling. Record labels would contact that store clerks who would be polled and offer them promotional goods in exchange for claiming that specific artists’ were selling the most albums. This produced the most sales for the albums/artists that the labels wanted to have the most sales.
To counteract the subjective nature of the chart calculations, Billboard changed the mechanism through which the Billboard charts were calculated by implementing Nielsen’s SoundScan. SoundScan was developed to use barcodes and telecommunications networks to calculate sales at the point-of-sale. All of a sudden, the industry as a whole knew what was selling—though they still had no way to measure what was being listened to. There were two major finding from using SoundScan: hip-hop and country music sold considerably more music than previously thought.
While the change to the Billboard 200 is new, it is clear that the top albums will change and we will learn new things about music sales.