Staying single to stay in line

The recorded music industry is in such a dire condition that more companies are opting to release digital and CD?singles rather than 12-track albums, say industry insiders. This is in order to save money and gain revenues.

Times are so bad that many best-selling artists are now given discreet single deals rather than albums. But despite album sales being on the decline, experts believe that the so-called 'Single Syndrome' is unlikely to hit the Middle Eastern market any time soon.

During the weekend's inaugural Dubai Sound City (DSC) music conference and festival, a number of key players from markets across the world congregated to discuss the current state of the business, including the recorded music sector. And one of the issues that dominated was single versus album sales.

"Sales of singles in the UK are at an all-time high," said Julian Wall, Director Independent Member Services and International Events of the UK-based BPI. "Sales are approaching £120 million (Dh732m) this year. Of course, piracy is an immense problem, so a lot of money is still lost. Last year, the industry lost an estimated £180m."

Michael Chugg, Executive Chairman of Australia's Chugg Entertainment, said that he believed that fans just were not excited by album packages anymore.

"A lot of people are buying and downloading singles, because they lost faith in record companies and the types of albums they were releasing," he said. "They were releasing albums with three or four decent songs, and the rest were average tracks, so individuals would rather just buy single tracks."

When it comes to the biggest music market in the world, the United States, the figures speak for themselves. According to data by Nielsen SoundScan, album sales decreased by 11.1 per cent in the third quarter of this year compared to the same period last year, marking it the eighth time in nine years that the industry has witnessed a decline.

Surprisingly, that figure comes even with the influx of sales of Michael Jackson records after his untimely death, as well as the release of the Beatles re-mastered catalogue. The two artists have sold a combined total of 6.3 million units so far.

Meanwhile, total sales for the year also went down – 13.9 per cent down compared to 2008, and 27.9 per cent compared to 2007. Forrester Research estimated that in 2008, total album sales across the world were 428 million, a 14 per cent drop from 2007.

In contrast, the international digital music business grew by 25 per cent to $3.7 billion (Dh13.57bn) last year with single track downloads increasing by 24 per cent in 2008 to 1.4 billion units.

While figures for total Middle Eastern album sales are not available – since there is no region-wide music charting system, and Arabic record companies seldom release their total sales figures to the public – it is believed the Arabic market will not embrace the single culture.

A music executive, who works with one of the biggest music companies in the region, and did not want to be named told Emirates Business: "Singles would never work in this market because of the pricing structure and people are simply not interested.

"To create a CD single, it would cost around Dh6 per unit, however, to create a CD album, it would cost Dh12 per unit and sold for around Dh15 to Dh30. Fans love having a whole collection of songs as opposed to just one."

Ramy Mahmoud, an Egyptian and DJ producer, who remixes songs for various radio stations said: "I think it also comes with the artists' attitude that every song on an album should be a potential single, which many artists in the West do not care about anymore. It seems that it is more important to have one hot single with a hot video to accompany it, then rely on them to sell the album.

"But over here, look at Nancy Ajram, for example. She can release six music videos from an 11-track album, because the songs are all good. The same goes for a lot of other singers. The only international artist I can think of, who has had an album released with varied styles this year, is Lady Gaga."

According to market data, Arabic sales are not suffering as much as the rest of the world. Rotana, the Middle East's leading record company, is celebrating its most successful year so far after Amr Diab's 2009 album, Wayah, sold more than 1.5 million copies in its first week of release, and went on to become Diab's biggest-selling album of his 26-year career. It also became the biggest-selling album of all time in the Middle East and Rotana's biggest-selling release.

This remarkable feat was accomplished despite the fact that the entire album leaked online weeks prior to its release. However, fans of Diab initiated a boycott of the known websites that offered illegal copies for download. Similar situations have also happened in the past with artists such as Ajram, Elissa and Majid Al Mohandes. So perhaps the passion of Arabic music fans is one of main reasons behind the album's longevity.

Chris Cooke, Founder and Publisher of CMU, said: "It is down to education. If people fully understood the consequences of piracy, things could change.

"At the moment, the key is to find a change to save the recorded business, but there is no clear answer as yet. We have got to restructure and find new business models to suit the times we are in."

Another reason why album releases work so well in this region is because the fact that artists do not receive royalties from radio play. Instead, Arabic radio stations are free to play any track they like from an album. In a way, it is actually better for an artist, as it gives fans a feel for the whole product rather than one single, which in turn, encourages consumers to buy rather than download for free.

"Artists in the West would be shocked to hear that Arab artists do not receive royalties from radio play. But they are the winners in the end, because their albums get more exposure in the region than any Western artist would dream of," Mahmoud said.

"There is no doubt our industry works in a better way than others. Yes, a lot of other areas need to be improved, but the Arab audience still has faith in albums," he said.


JAPAN: TAKING OVER THE MUSIC WORLD

It is time the Western world took note of a certain East Asian country on how to revive the music industry. Japan, with a population of 127.5 million, is currently the second biggest music market in the world – second only to the United States. But it is not the size of the population that has contributed to the industry's success, but rather its unique ideas and selling points.

One of the keynote speakers at this year's Dubai Sound City was Kimitaka Kato, Managing Director of Universal International, Japan, which is currently the sector's leading record label with the highest market share. Kato believes that the creation of a different type of market and offering unique concepts were key to Japan's success in selling music.

"It all works a bit differently in Japan," he said. "First of all, we are a market dominated by domestic artists, because not a lot of people speak English, and while international acts sell, Japanese artists are pretty established."

But particularly interesting is the fact that the digital market is cell phone driven.

"In 2008, 90 per cent of downloads were made via mobiles, while only 10 per cent were made via PCs. About 84 per cent of the population owns cell phones, and people – especially the younger generation – live for their mobile phones," he said.

"Mobile phones are such an integral part of the Japanese life that even consumers use them as access cards to get on the metro.

"While the same Japanese catalogue exists on iTunes, music lovers still prefer to download via mobile phones."

Sales of physical copies of singles and albums are apparently not on the decline despite the fact that mobile downloads are popular.

"Perhaps one of the most strangest thing the market offers is the option to rent CDs, just like you would rent a DVD, which is immensely popular, Kato said.

"The market has a system in place called Saihan, a resale price maintenance system where the copyright owner sets the price of their CD, and stores have to sell it at that price – they cannot offer it at discounted price.

"Therefore any CD of a particular artist is of the same price anywhere in Japan."

Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.

Follow Emirates 24|7 on Google News.