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Bundling out in US chart rules revamp

Records bundled with physical items such as concert tickets and merchandise will no longer count towards chart placings in the United States, Billboard has announced.

The new rules – which affect all US album and song charts, including the flagship Hot 100 (singles) and Billboard 200 (albums) – are an effort “to rectify how sales are counted with respect to album bundles with merchandise and concert tickets, as well as instant digital sales attached to purchases for physical albums delivered at a later date”, says the magazine.

The practice of ‘bundling’ – or including physical music product, such as CDs and LPs, with purchased merch or tickets, often for little or no extra cost – has long been controversial for its perceived distortion of traditional metrics of success.

As IQ noted last year, Madonna, for example, debuted at No 1 with her Madame X album, released on 14 June 2019, which was bundled with 30,000 tickets for her autumn 2019 US tour – before dropping a whopping 95% in week two, selling just 3,600 (non-bundled) copies.

Music merch sales boom amid bundling controversy

In total, nearly half (18 of the 39) US No 1 albums in 2018 came as part of a merch or ticket bundle.

Billboard said at the time it planned to tighten up rules on bundling. Most other countries’ charts prohibit ‘sales’ from counting towards placement if they are “baked in” to a ticket sale, for example, for a nominal or no extra cost.

Under the new rules, which will be implemented at an unspecified future date, all albums bundled with merch or tickets “must be promoted as an add-on to those purchases in order to be counted on the charts”, the company explains.

“Those included as part of a baked-in, single-price option (along with the merchandise or ticket), with the album cost undisclosed to the consumer, will no longer be counted”

“Those included as part of a baked-in, single-price option (along with the merchandise or ticket), with the album cost undisclosed to the consumer, will no longer be counted. It is Billboard’s belief that the resulting charts will more accurately reflect consumer choice.”

The revised criteria also disqualifies the sale of physical product that has yet to be pressed: “In addition, Billboard will no longer allow sales of physical albums or singles that are bundled with digital downloads to be reported as digital sales, thereby eliminating the practice of ‘spontaneous’ non-manufactured items being used to influence first-week chart rankings.”

Billboard identifies Justin Bieber, Ariana Grande and 6ix9ine as among artists who have used this tactic in recent months to boost their chart positions.

“Under the new rules, only when the physical item – ostensibly what the consumer is buying – is shipped will it be counted in Billboard’s official tallies.”

Album sales dropped 18.7% in the US in 2019, as on-demand streaming continues to gain ground.

 


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Music merch sales boom amid bundling controversy

Sales of music merchandise were worth nearly US$3.5 billion in 2018, IQ can reveal, as controversy continues to rage over bundling and its impact on record and box-office charts.

According to the Global Licensing Survey 2019, produced by trade body Licensing International (formerly LIMA), worldwide retail sales of licensed goods based on music properties were worth $3.48bn in 2018, up from $3.33bn in 2017 and $3.08bn in 2016.

Commenting on the growth in demand for music merch, the report says the move towards streaming (“low-margin digital distribution”) of recorded music has “prompted the industry’s largest companies to generate revenue through a range of artist support services that extend beyond simply generating income from music sales”, such as merchandise.

Overall, the licensing market – of which ‘entertainment/character’ is the largest sector, accounting for $122.7bn worth of revenue – grew 3.2% from 2017 to 2018, to $280.3bn, with royalty income for rightsholders climbing almost 4% to $15bn. (Other sectors include corporate brands, fashion and sports, while the largest product categories are clothing/apparel, toys and fashion accessories.)

“The 2019 Global Licensing Survey drives home the fact that licensing continues to be a vital part of the consumer marketplace,” says Licensing International president Maura Regan, “and a versatile tool for brand owners and licensees to creatively build their businesses.”

Billboard plans to tighten up the rules on bundling

Elsewhere, several artists and music brands place in Licensing Global’s most recent Top 150 Global Licensors report, which further illustrates the value of merchandising to the international music industry.

Notable music licensors include film/entertainment conglomerate Entertainment One, which sold $1.5bn in licensed products in 2017 (eOne’s artists include the Lumineers, Snoop Dogg and Crystal Castles, though its real rock star is kiddie phenom Peppa Pig); Margaritaville Enterprises, Jimmy Buffett’s clothing, restaurant and casino business, whose sales reached an estimated $1bn; and US rock legends Kiss, whose merch deal with Dell Furano’s Epic Rights was reportedly worth $150m.

While the merchandising sector is in rude health, its growth comes amid a growing backlash against the practice of bundling merch with tickets or physical music product, such as CDs or LPs, for its perceived distortion of traditional metrics of success. Recent examples include Jack White, whose third solo album, Boarding House Reach, became a US No 1 after selling 121,000 copies bundled with concert tickets, and Metallica, whose 2016 LP Hardwired… to Self Destructshot up from No 42 to No 2 in the space of a week on the back of ticket sales, falling back to No 43 the following week.

Madonna, meanwhile, debuted at No 1 with her new Madame X album, released on 14 June, which was bundled with 30,000 tickets for her autumn US tour – before dropping a whopping 95% in week two, selling just 3,600 copies.

Deanna Brown of Billboard, whose charts are widely regarded as the music industry standard in the US, tells the New York Times it plans to tighten up the rules on bundling, noting that artists and others in the business tell the company “they want us to occasionally throw a flag on the field [ie challenge the status quo] when necessary.”

In the UK bundles are only eligible if they have a “higher sale price than the price of the ticket alone”

In total, nearly half (18 of the 39) US No 1 albums in 2018 came with as part of a merch or ticket bundle.

While the outcome of Billboard’s chart overhaul remains to be seen – just last month, Jonas Brothers’ new album, Happiness Begins, debuted at No 1 after selling 414,000 ‘equivalent album units’, the majority of them part of a bundle – the company could look at its overseas sister charts, many of which have stricter criteria for which purchases count towards an act’s chart placing, for inspiration.

In the UK, for example, bundles are only chart-eligible if they have a “higher sale price than the price of the ticket alone”, per Official Charts Company rules, which exclude “album sales that are ‘baked in’ to a ticket sale” for a nominal, or no, additional cost; the same is true in the Republic of Ireland, while France’s SNEP has done away with album ‘equivalents’ altogether.

In the meantime, brace for more Billboard controversy, as arguably the world’s biggest artist bundles digital copies of her upcoming album with tween-friendly T-shirts, hoodies and baseball caps

 


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‘Buying albums at gigs should count’: Townsend takes D2C on tour

Bruce McKenzie, sales director of leading D2C (direct-to-consumer) company Townsend Music, has said Townsend’s D2C on Tour solution has the potential to revolutionise how albums are sold, following a successful Download Festival debut this summer.

D2C on Tour launched last spring, starting with a partnership with Mike + the Mechanics, which McKenzie credits with giving the Mike Rutherford-led outfit its first top-ten album for a quarter of a century. “They played 40 dates, and we sold a couple of thousand CDs on the road,” McKenzie tells IQ, “and the Mechanics had their first top-ten album in 25 years.”

Unlike traditional album-ticket bundles – where a copy of the record (physical or digital) is bundled with a ticket at the point of purchase – D2C on Tour utilises a venue’s merch stand(s) to sell album redemption cards, frequently in the form of artist-branded laminates, for upcoming releases.

“You can sell albums at gigs,” explains McKenzie, “but if you’re touring ahead of an album release, you can’t usually take album pre-orders. We came up with the idea that – because we run the artists’ online stores – we can add a CD to the basket, generate a code, then sell a laminate containing that code at the shows.”

Crucially, the UK’s Official Charts Company (OCC) counts the sale of these laminates as an album sale – “I went to the OCC and said, ‘It isn’t a forced sale; it’s the same as preordering an album on iTunes’,” says McKenzie – leading to chart successes like Mike + the Mechanics’ aforementioned Let Me Fly, which reached no9 in the UK.

“D2C is how people will consume their [physical] music in future”

“There are a lot of people spending a lot of money on tickets for concerts and festivals, and we feel the album charts should reflect that,” continues McKenzie. “Bands can be in front of thousands of people at a festival, but if they’re unsigned and don’t have the marketing spend, it’s difficult to make an impact on the chart. We think people buying albums at gigs should count.”

Other Townsend D2C clients include Kylie Minogue, Eels, Noel Gallagher’s High Flying Birds, the Prodigy, Everything Everything, Echo and the Bunnymen, Tom Misch, Don Broco and You Me at Six.

With Primary-signed You Me at Six – who headlined the second stage at Download 2018 – Townsend sold laminates containing a code which, when redeemed on the Townsend Music website, earns buyers a signed copy of the band’s album VI (released on 5 October) and a signed setlist from their Download performance.

D2C on Tour netted You Me at Six a “couple of hundred extra” sales at Download, says McKenzie. He describes that as a “nice little start”, but says he sees a time when “we’ll be selling more albums on the road [than not]”, as awareness increases among managers, promoters and agents of the potential of Townsend-style bundling.

“If you’re a good band with a good management team, it’s a very exciting time for artists,” he explains. “You look at the high street, and the decline of retail sales, and it’s clear the future is in streaming. So, D2C – that, to me, is how people will consume their [physical] music in future.”

“If lots of rock bands are selling tickets on the road, they should be selling records, too”

The key to success in this brave new world, McKenzie suggests, is in working with a team who “realise where the industry is. If we all work together to help an artist to sell more records, they’ll sell more tickets, more merch, get more PRS [royalties]…”

McKenzie says Download promoter Live Nation was “very supportive” of Townsend’s presence at the festival, while managers are keen to work with the company owing to its demonstrable influence on the album charts. (Another recent project, he adds, was a Rick Astley pop-up shop in a venue, where the CDs sold contributed to Astley’s latest album, Beautiful Life, peaking at no6 in the UK.)

“In the live arena, people say, that’s where you make the money – fine, but let’s find a way you can market records at gigs,” he adds.

Ultimately, if it increases album sales, initiatives like D2C on Tour are a positive for all stakeholders, says McKenzie. “If artists can sell thousands of album pre-orders at shows, they’re going to have a higher charting record and more chance of getting on the radio… And promoters will realise they can sell more tickets if an album is bundled with them, and vice versa.

“If lots of rock bands are selling tickets on the road, they should be selling records, too – and the charts should be fairer and reflect that.”

 


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