By Todd Martens, Los Angeles Times –
LOS ANGELES — Lady Gaga’s “Born This Way” made history last June when it blew onto U.S. pop charts with more than 1.1-million albums sold in the first week, the best debut sales figure since 2005.
In the history books, however, the record may come with an asterisk. About 440,000 copies of “Born This Way” were sold by online retailer Amazon.com for 99 cents, as a promotion for its online storage service.
After changes last month to Billboard’s album charts, those aren’t “album sales” and they don’t count.
Billboard, the 117-year-old music industry bible, has published weekly sales charts for the top-selling U.S. albums since the mid-1950s. When Billboard exclusively began incorporating sales data from Nielsen SoundScan in 1991, its premier album chart, the Billboard 200, became the sole reliable source for tracking music purchases in the United States. By relying on retail statistics rather than estimates from the labels, the Billboard 200 gave the music business an honest look at sales and offered retailers and consumers a hype-free way to determine an album’s true popularity, a way to close the gap between hype and the albums fans actually wanted to purchase.
But the music business is changing fast. Peer-to-peer file trading undermined the CD business. The popularity of Apple’s iTunes store drove music sales increasingly online, toward digital sales. Last year, physical album sales fell 5.7 percent while digital album sales rose 20 percent.
At the same time, digital streaming services such as Spotify, Rhapsody and MOG offer customers a way to enjoy music as a subscription service, not a retail experience. YouTube views and Facebook friends became the new metrics. Over time, the album lost its dominance as the arbiter of pop power.
But even as the music industry continued to fight through a tremendous upheaval, in which a band’s YouTube views and Facebook friends are touted as data, the Billboard 200 album chart continued to track what fans were actually buying — whether digital albums or real ones.
Then Amazon and Google started offering entire albums at cut-rate prices. Billboard was forced to ask itself a question: How inexpensive can an album be before it’s basically free, and not a legitimate sale?
Billboard’s answer: $3.49, or roughly half the retail cost of an album. Anything sold below that price point, Billboard determined, will no longer be counted as a sale on the Billboard 200.
The new policy is only in effect in the first four weeks of an album’s release, or, in the case of Christmas-themed albums, the entire holiday season. It’s rare to find a new album priced below $3.49, although Amazon, whose spokespeople did not return calls, will occasionally promote new albums at $2.99 or below in an effort to boost traffic to its site.
But the new math will change the way album sales are calculated, and perhaps even marketed. Had the rules been in effect all year, there would have been no million-selling debut album in 2011. Based on earlier data published by in its trade paper, Billboard estimated that sales of Lady Gaga’s “Born This Way,” would have been counted at 660,000 copies — well behind the 964,000 units of Lil Wayne’s “Tha Carter IV.”
That won’t take any real money from labels or artists, since losses on discount sales are absorbed by the retailer. But the new system could have career-changing impact on those hoping to use digital delivery and lower price points to break into prominence.
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As just one example, during the week ending Dec. 4 about 34,000 people bought copies of “A Very Special Christmas” by She & Him, the musical duo of actress Zooey Deschanel and indie musician M. Ward. But U.S. pop charts showed sales at 25,000. The missing 9,000 records were sold via Google and Amazon for $1.99. Under Billboard’s new system, they weren’t counted. The missing discs made the difference between She & Him having a top 20 album and a top 30 album.
That could mean more than just bragging rights. She & Him’s manager, Jordan Kurland, a fan of Billboard’s charts, said the acts at his Zeitgeist Management make their money on tour and merchandise revenue. But for artists actively campaigning radio stations to add a song, for example, the boost in chart position can look like evidence of a bigger fan base. “For that act,” Kurland said, “there’s a difference between being top 30 and top 20 on the Billboard charts.”
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Lady Gaga’s manager had harsh words for the venerable music publication. “The chart does not reflect music consumption in any given week,” Troy Carter said. “It doesn’t take into account what’s happening on Spotify, IHeartRadio and what’s really happening at digital music stores. Slowly but surely, they’re making themselves insignificant.”
Carter said the new accounting methods will make his job generating attention for younger artists more difficult. The manager, who also handles young R&B boy band Mindless Behavior, said, “I would love to do some sort of promotion where I can get more fans in on this band by offering the album at a deep discount. Now you’re telling artists if they want to give their fans a great deal of value, then it doesn’t count toward a recorded sale.”
The chart makers insist they’re just trying to keep pace with a changing music scene. “Billboard doesn’t want to control the marketplace,” Executive Editor Bill Werde wrote in an editorial explaining the move. “We just want to count it. But free or almost-free albums don’t represent a marketplace.”
Werde is sympathetic to changing business models, as well as the idea of deep record discounts as a marketing device. “It’s probably smart business to make sure as many people as possible have your music so you can hook them on your songs and get them to come out and buy a concert ticket or T-shirt,” he said. “That doesn’t diminish the artistic merits of the music, but the music becomes a marketing tool. That’s fine, but let’s not call that an album sale.”
Werde said Billboard may have to keep adjusting the threshold as consumer habits change.”At some point, maybe in the not-too-distant future, albums will be free. Or they will be ad-supported,” he said. “Then we’ll have … to make sure we’re creating strong, credible charts.”