The RIAA regularly releases shipment and revenue reports to provide useful information about the music industry.
As the body representing music labels, many people understandably look to RIAA data as a measure of the health of those companies. But the data encompasses a whole lot more.
Most RIAA data is provided as an estimate of total “retail” dollars. This refers to the amount a consumer might pay for a download, CD, or paid subscription service such as TIDAL, AppleMusic, Rhapsody, and others. So the revenues counted are not just what goes to music creators, but also to the retailers, digital services, and other partners that deliver music to fans.
We think this is the best and broadest measure of the level of music sales generating economic activity. And until recently, this was the clearest consistent metric to use.
But as the industry has adapted to the digital marketplace with a myriad of options for consumers, the measurement of the industry has become more complex.
Significant components of the industry now come from services that have no monetary cost to the end consumer. Take a service like Vevo for example: the end user – the fan – pays nothing, while the service pays the music creators out of the ad dollars it earns.
There’s no equivalent of a “retail” value, but certainly there was economic activity and payments were made. RIAA data strives to include these kinds of transactions in as clear a way as possible. But with no retail equivalent, the best option is to count that transaction at wholesale value – in the example case what Vevo would pay the music label.
This is similarly an issue for services like Internet radio, synch royalties, and other transactions where no discrete retail purchase is made.
We recognize that this is not always a perfect science, which is why for the last few years the RIAA has added an overall wholesale market dollar measure.
That value is a better metric of the revenues that are going to music labels for sales and listening in the United States.
It’s also important to note that the year-over-year comparisons are always “apples to apples” – meaning the categorizations are the same, which enables anyone interested in the data to see changes over time.
So those of you following this are hopefully starting to better understand the complexity of the revenue reporting process in an industry with so many ways of doing business.
We’re continually cognizant of the fact that companies are sharing with us sensitive data that cannot always be shared for competitive as well as legal reasons. This is not a static process.
Like everything in a business that has dramatically reinvented itself, we continue to improve and refine our process as new business models emerge.
