http://www.nytimes.com/2006/02/02/arts/ ... 2cata.html
February 2, 2006
When All the 'Greatest Hits' Are Too Many to Download
By JEFF LEEDS, NEW YORK TIMES
More than 20 years after the rock band Survivor scored a hit with "Eye of the Tiger," the song is rising up the charts again, notching brisk sales as a single online. Since the song became available on services like iTunes about a year and a half ago, it has sold more than 275,000 copies.
It is hardly alone. While current radio hits still dominate the digital music charts, classics like Lynyrd Skynyrd's "Sweet Home Alabama," Queen's "We Will Rock You" and the Eagles' "Hotel California" are regularly ranking among the 200 best-selling tracks on the Internet, a sign of their staying power even in the accelerated culture of modern pop music. Resurgent novelties like Vanilla Ice's "Ice Ice Baby" are racking up big sales, too.
Their popularity indicates that fans are flocking to online services like iTunes at least in part to pluck out celebrated oldies, not to mention the occasional 90's alternative memento (Oasis's "Wonderwall" has sold more than 251,000 copies so far) or 80's strip-club staple (Def Leppard's "Pour Some Sugar on Me" has surpassed 216,000). All of this comes at a time when fans enjoy a wealth of new choices in how to buy and listen to music.
But the popularity of such songs raises a troubling issue for the music business, which relies in part on the huge profits generated by greatest-hits collections, perennially selling classic albums and the continual repackaging of old material. The question: What if fans who might have paid for a full album of "the very best" of an established act instead choose to pay substantially less and simply buy the very, very best song?
As recording formats have evolved over the decades, the industry has profited from the marketing of previously released music — as fans replaced their vinyl LP collections with compact discs of the same albums, for example. Since the older classics are comparatively inexpensive to reproduce and market, they typically carry higher profit margins than music from new acts. But the migration of music from shiny plastic discs to online services has disrupted the industry's cycle of replacement, and record labels are only beginning to see the effects.
In the more utopian view of the shift, the breadth of songs available online and the ease of purchasing them will prompt more consumers to buy more music than ever. With the unlimited "shelf space," record companies will be able to market everything in their archives at minimal expense, breathing new life into obscure or out-of-print material and generating new profits.
But critics warn that the industry may be in for a long wait, and significant financial hardship, before realizing that dream — particularly as sales of CD's decline.
Album sales have dropped for four of the last five years, and while sales of digital singles are booming, that has not yet been enough to offset the drop. Music companies sold more than 350 million singles last year, a jump of 150 percent over the previous year's total. Sales of full digital albums increased even more, rising more than 190 percent to 16.2 million.
Sales of older releases, known in the music business as catalog, account for a huge share of the industry's fledgling online business. Executives at the major record companies say catalog material makes up somewhere between half and two-thirds of their sales of digital singles. (Catalog accounted for about 37 percent of CD sales last year, according to Nielsen SoundScan.)
The pivotal question now is whether the boom in catalog music online constitutes primarily a new market or a drain on an old one: CD sales. Most record executives think it is some of both, and say it is too early to measure the effect on their bottom lines.
What is clear is that the "unbundling" of albums — allowing each song to be sold individually — is allowing fans to determine exactly which hits are the greatest, and to distill even an iconic artist's repertory to a few songs.
"Even bands with deep catalogs have hits, and then they have superstar hits," said Eric Garland, chief executive of BigChampagne, a research firm that monitors activity on file-trading networks. "There may be 20 songs from Queen that people know, but really we're talking about two or three that are more popular by orders of magnitude. They're cultural staples. If I had the option to buy 9 songs instead of 12 songs on 'Meet the Beatles,' I might have done that."
Uncertainty about such piecemeal purchases is one reason some artists whose classic albums or hits compilations enjoy steady sales have so far either declined to sell their music online (Bob Seger) or sell it only in album form, with no single-song downloads allowed (AC/DC).
The music companies have also developed a way to hedge their bets: many executives these days are buzzing about "bundles," collections of tracks that may entice fans to return to buying more than one song at a time. Rhino Entertainment, the catalog division of the Warner Music Group, last year created the Hi-Five, a five-song pack of songs from a single artist that typically sells for $3.96 on iTunes.
"There are lots of newbies out there, people who don't know of any of these bands, and they could easily buy one song," said David Dorn, senior vice president of new-media strategy at Rhino. "What keeps me up at night is, how do I get you to see that, with the Ramones, you shouldn't just buy 'Blitzkrieg Bop' and be done with it?"
In many instances, however, record executives say online sales do not appear to be hurting their best sellers.
Consider the case of Queen, whose 1992 "Greatest Hits" CD has become an evergreen seller. The band's song "Bohemian Rhapsody" has sold more than 301,000 copies online; "We Will Rock You" has sold more than 202,000. Both routinely rank among the 200 best-selling digital singles. But even if some fans are buying both songs — suggesting that they might be interested in the complete hits collection — their online purchases do not appear to be cutting significantly into physical sales. The CD sold an estimated 435,000 copies last year, up about 9 percent from the year before even as the industry's overall album sales declined 7 percent.
Bob Cavallo, chairman of the Buena Vista Music Group, the Walt Disney Company division that markets Queen's catalog, said he had initially feared the effect of selling singles online. "But it seems like the young kids have to buy certain albums that are classic, core albums," he said.
Executives at Disney's Hollywood Records label say their research shows that about half of the consumers who bought Queen's most recent hits CD are boys under 18 — an audience that is also well represented among iTunes customers.
In a recent week on the Rhapsody online music service, a variety of older acts had four or more songs among the 1,000 best-selling tracks, including the Eagles, the Rolling Stones and Guns N' Roses. But the same bands have enjoyed strong sales of their hits CD's. The Eagles' blockbuster "Greatest Hits 1971-1975," for example, sold 117,000 copies last year, up about 20 percent from the year before.
Tim Quirk, executive editor of Rhapsody's music service, said he believed the bulk of these sales were coming from fans who would not have sprung for a hits CD. "If they can plunk down a buck for one song, they're going to do it," he said.
That sentiment is shared by artists like Jim Peterik, the former guitarist and keyboardist for Survivor and one of the writers of "Eye of the Tiger" — which, in addition to its online sales, has sold an estimated 200,000 ring tones. The song is available on at least five different albums in the marketplace; collectively they sold about 90,000 copies last year.
Mr. Peterik said he had been delighted by the song's success online. But he said such sales can "coexist" with continued sales of full albums. Those buying the song "are not fans of Survivor," he said. "They're fans of 'Eye of the Tiger.' "