Hip Hop 2009: The Big Picture

Posted by Justin Boland on Aug 25, 2009 | 0 Comments

For the past 10 years, everything about the music business has been changing completely, every 3 months or so.  There has been a lot of confusion, mythology and empty hype.  I’d like to pause and take in the Big Picture, though.  I’ve been digging through piles of reports, several notebooks worth of notes, and focusing on one simple question: what do we really KNOW about the music business in 2009?

You’ve probably heard of this guy named Steve Jobs.  He represents a unique corporation, one that’s managed to brutally fuck up several consecutive industries in the space of 20 crazy years.  One of those industries is music, because Steve Jobs currently makes up 1/4th of the entire music business in 2009, if these NPD Group numbers are accurate.

Apple eating right off Bronfman‘s plate is big news, for sure, but I was just as surprised to see that compact disc sales still makes up 65% of the whole biz. 

Overall, though, when I look at these statistics laid out on this pie chart, I have to question the methods behind the numbers. It just reeks of bullshit-the music business is way more diverse than CD sales and mp3 downloads.  If the market for acoustic guitars is valued at $472 million dollars and Rock Band video games are already worth over a billion, there’s a lot more money floating around in the ecosystem than just record labels, publishers and distribution.  And what about live gigs, from corner bars to city stadiums?

We’re about to explore all this and more. But first, I know what you’re thinking…people are still buying CDs?

Who is moving CD units in 2009?

For a “dead format,” the compact disk is still a thriving product. The market is dominated by box stores, with Wal Mart and Best Buy making up over a third of the entire market.  It’s unclear how much Wal Mart’s online sales contribute-for instance, does Wal Mart’s website sell more CDs than Amazon?  I’d like to know, but that remains to be seen.

Here’s the big picture for 2008: although Billboard says that total album sales are 430 million, only 362 million of those were actual CD copies. That same year, 33.4 million of those units were from a category known as “Rap Albums”-and that’s the only category we care about here at Audible Hype. 

I would love to see a genre breakdown for this chart, but I can’t find that data anywhere.  (I’m willing to bet that Best Buy moves more hip hop than Target does, for instance…but what about Amazon?) I would also appreciate access to an international breakdown of album sales by genre (does Switzerland love the Wu more than Germany?) but it’s been about a week of research and I’ve given up hope.  There’s a lot of dead ends when I start getting too specific, so let’s move on to the next Big Question…

Who is selling digital albums in 2009?

Sure enough, Apple owns this category, with no mercy.  Their second place competitor is Amazon, with a mere 8% of the market share.  Ouch.

This kind of King Kongzilla dominance makes more sense when you consider the sheer scale of iTunes.  They’ve moved 8 billion songs already, and they’re projecting that they’ll break 10 billion by the end of 2009.

The beauty of the internets: you can sell product 24 hours a day and your customers can be pretty much anywhere in the world.  Here’s a good indication of the international market, though-it’s definitely a “Long Tail” situation because just 5 countries make up 95% of the entire market.

That 5% that’s left? That’s the future of hip hop right there. More than anything, this data tells me that the international market for digital hip hop is about to explode.  Digital market growth has been sharp in every country where it takes root. That’s definitely been true in the United States these past five years:

…And What About Live Music?

Unless the Federal Government intervenes, the live music industry will look just like everything else we have explored so far…completely dominated by a single corporation. At the moment, it’s technically two corporations: TicketMaster and Live Nation. 

Live Nation has been making big moves. In 2009, they’ve got over 22,000 events scheduled. That’s not all concerts, though: Live Nation has it’s paws in mixed martial arts, monster truck events and even tennis tournaments.  (Basically, if you can charge $10 for a bottle of water, Live Nation is there.) It’s worth noting that Live Nation is “making big moves” because they were never small time: they split off from media giant Clear Channel in 2005.  Despite seeing some downturn in revenue during summer 2009, Live Nation still sees more revenue than Sony Music or EMI does.

They’re also working on being a record label, taking the interesting approach of signing major league artists like U2, Jay-Z and Madonna, and then outsourcing the meaningless little details like “marketing, promotion and distribution of albums.” The funniest part is that they’re generally outsourcing right back to the same labels the artists used to be signed to, especially Warner Music Group.

Ticketmaster was never small, either.  In 2008, they claimed $1.4 billion in revenue and $1.7 billion in assets (which is actually down from 2007, when they claimed $2.3 billion in assets). They’ve also got the dubious distinction of having a genuine Evil Dwarf for a CEO: the legendary cut-throat Eagles manager Irving Azoff.  He also represents smaller, more obscure acts like Guns and Roses, Aerosmith, Van Halen and Christina Aguiliera. In 2008, his company Front Line Management was bought by Ticketmaster under unusual conditions: Azoff would head the entire corporation and the former Ticketmaster CEO, Sean Moriarty, would report to him. 

Educated Guesses

Yeah, I wish I could leave you with a more detailed, less depressing Big Picture.  Data is power in 2009.  The music business leverages disinformation and secrecy, and they’ve got no interest in making accurate numbers available…especially to artists. 

Think about it: what states have the highest sales of hip hop albums per capita? That’s a valuable question, and there’s no doubt that Sony, Warner Music, Def Jam and dozens of other major companies have answers.  Not The Answer, of course, since they’ve only got their own data.  It’s funny: if they would make their data public, we could combine them and everyone would benefit.  Instead, we live in a culture where’s it’s considered more sensible to hoard that incomplete data and keep everyone else in the dark, too.

However, in the next installment of Hip Hop 2009, I’m going to be working out that exact question-where are the biggest markets for hip hop?-by examining indicators like tour schedules, radio formats, promo appearances, and successful artists. 

As always, if you know anyone else working on similar projects…let me know.  I doubt I’m the only person trying to figure all this out.

Open Questions

1. Is Myspace dead yet? It’s broken, it’s ugly, but according to Forrester Research there’s still 139 million users every day.

2. How many units of “Rap Albums” moved in 2002 and 2003?  I’ve never been able to find that data and I’d like to fill that fucking gap so I can graph it.

3. Most importantly…what other questions should I be asking? What’s missing from this version of the Big Picture?  What answers do you want me to be digging for in future articles?