Latest stats released today by the BPI state that 90 percent of UK singles sales are now digital, but that digital sales account for just 3.5 percent of album sales. These numbers highlight one of the paradoxes that digital poses for the music industry: digital is clearly where the momentum is, and is equally clearly the channel best optimized for younger demographics and future buyers. However the iTunes dominated distribution model has created a business model which is simply not in the interests of the record labels. A la carte purchasing is heavily skewed towards single tracks. Now whilst a cynic could extend the argument that much of what is on albums isnít worth buying, the simple fact is that not enough is being done to encourage multiple track buying. This is something weíve advocated for years in our European reports at Jupiter, but still the online model is dominated by the 99 cent single.
Over the last few decades the record labels have built their businesses around the album, and the costs and margins associated with that. Clearly many of those precepts are in need of revision, but it is not in the interest of the music industry to revert right back to the singles dominated market typified by the 1950ís. The cost difference between getting an artist to market is not massively different for a single or an album, the difference is that the latter benefits from the halo / ripple effect of numerous linked campaigns.
Digital music sales need to provide heavy consumer incentives to buy multiple tracks and albums (the EMI DRM-free album pricing is a valuable step in the right direction). Maybe the album isnít the ideal format for a la carte sales, at least not yet, but that doesnít mean there isnít valuable middle ground i.e. bundles of tracks and content. Again moves are being made by labels, such as Warner, but the focus of the online stores needs pushing that way if there is to be any hope of boosting that 3.5 percent.