Downloads Make Singles a Hit Again
But Popularity of MP3s Has a Flip Side: Fewer Album Sales

By J. Freedom du Lac
Washington Post Staff Writer
Wednesday, February 8, 2006

Todd Moscowitz, the president of Asylum Records, thought he might have a nice little novelty record on his hands when he first heard "Laffy Taffy," a playful song by the Atlanta rap group D4L.

But the novelty has worn off. Now Moscowitz simply thinks of "Laffy Taffy" as a hit single. A very, very big hit single.

The song has been downloaded -- legally, and for a fee -- more than 700,000 times from iTunes, Yahoo! Music and other online music outlets since its release in late October, according to Nielsen SoundScan. And in the final week of 2005, "Laffy Taffy" (basically a lot of salty-sweet talk centered around a chant of "girl, shake that laffy taffy") shattered the one-week sales record for a digital single, with 175,000 copies sold. That's more than twice the previous mark set by Kanye West's "Gold Digger," which is up for record of the year at tonight's Grammy Awards in Los Angeles.

The song's success illustrates how commercially released singles, which were on the music industry's endangered-species list at the turn of the 21st century, have come roaring back to life in the digital age. In some ways, it's like the singles-driven 1950s and '60s all over again -- only with MP3s replacing 45s.

As iPods and other MP3 players outsell CD players, sales of downloaded singles are booming accordingly: Though sales of full-length albums were down 7.2 percent last year, the digital singles market grew by 150 percent, with 352.7 million individual songs sold online, according to Nielsen SoundScan. It was by far the highest figure for singles sales in any format since 1973, the first year for which Recording Industry Association of America shipment data are available for singles. In late December 2005, weekly singles sales topped CD sales for the first time, as American consumers -- many of them flush with holiday gift cards and loading new MP3 players -- purchased 19.9 million digital tracks but just 16.8 million albums, according to Nielsen SoundScan.

And that's to say nothing of the $600 million (and growing) ring tone business in the United States.

"Consumers, as has always been the case, love a hit single," says Charles Goldstuck, president of BMG North America, whose record labels include Arista, RCA, J and Jive, with best-selling artists from Jamie Foxx to Kelly Clarkson. "If it's a hit, people are willing to buy it now in greater numbers than they were ever before, principally due to the proliferation of distribution channels."

Says Geoff Mayfield, the director of charts for the trade magazine Billboard: "We're seeing numbers that remind us a little bit of the heyday of the single."

This rebirth is not, however, inspiring executives, artists and others in the music industry to uncork the Cristal.

The booming sales of digital singles, ring tones and digital videos offset some of the losses of an ongoing slump, in which various factors -- from CD burning and illegal downloading to competition from other entertainment categories, particularly video games -- have conspired to drive down annual album sales by more than 21 percent since 2000. But the digital singles boom isn't an industry-wide cure-all. Not with downloadable tracks selling for 99 cents on average, compared with the $18.98 suggested retail price of a full-length CD. (Downloadable albums, which generally sell for about $10, haven't caught on yet. Last year consumers bought just 16.2 million digital full-length albums, according to Nielsen SoundScan.)

Though the labels incur negligible physical costs involved in selling digital singles -- no manufacturing, packaging or distribution expenses -- labels amortize recording and marketing costs over their entire sales base, which is shrinking as a whole. Thus the hand-wringing over the 2005 sales figures, in which albums represented roughly 62 percent of all U.S. music sales and digital singles accounted for about 35 percent, according to Nielsen SoundScan. Just three years earlier, albums had accounted for well over 90 percent of all U.S. music sales.

"Digital sales aren't growing fast enough to replace the losses in our traditional business," Goldstuck says. "The challenge for the industry is to find some balance between singles sales and album sales. We want to create an artist experience, not a singles experience."

Says artist manager Jim Guerinot, whose clients include pop singer Gwen Stefani and the rock bands Nine Inch Nails and Hot Hot Heat: "While somebody might view a scene from a play as being really well done, well performed and well written, most artists would prefer to have you watch the entire play. Musicians put their music out in a long-form format, complete with artwork, and their preference would be for you to experience their work that way."

And besides, Guerinot says, there are the obvious economic considerations: Artists typically receive between 14 and 24 cents on the dollar (or, rather, the 99 cents) for the sale of a digital single, whereas they earn closer to $2 on the sale of a full-length album.

"I'd rather sell a pack of gum than a stick of gum," he says. "I mean, you don't see Marlboro wheeling out single cigarettes in racks. They'd rather sell you the carton."

Stefani's "Hollaback Girl," which is up for record of the year at the Grammys, has sold 1.24 million copies, while "Love. Angel. Music. Baby," a contender for album of the year, has sold 3.6 million copies.

But, harking back to the '50s and '60s -- before 45s began to give way to LPs, as the Beatles, Bob Dylan and the Beach Boys helped to pull popular music into the album era -- many popular acts are now selling more singles than albums.

Lifehouse, a Southern California rock band, has sold 887,000 digital copies of its hit single "You and Me" -- and just 770,000 copies of the album that includes the single.

"There's really not that much money to be made on 99 cents," says Jason Wade, Lifehouse's singer, guitarist and songwriter. "It's better than nothing. It's better than people getting your song for free. But it's not big money. . . . You even wind up losing some album sales, because if you have a hit single now, a lot of people will just download the one song instead of buying the album."

That may be what's happening with D4L, whose album "Down for Life" has sold 304,000 copies -- a paltry number compared with the strong sales of "Laffy Taffy."

But, says label chief Moscowitz: "I don't look at the album sales as a disappointment at all." He notes that weekly sales of "Down for Life" increased by roughly 50 percent between the second week of November, when the album was released, and Christmas -- a rarity in rap, where sales typically peak during the first week of an album's availability. "To me," he says, "that's a sign that people are converting over and buying into the group. And that singles sales didn't necessarily erode the album sales."

For decades, singles have been a concern to record executives, who worry that an individual hit will cannibalize album sales. Singles have long been a challenge for record companies to monetize, too -- particularly during the 1990s, when widespread discounting drove the retail price of CD singles below the break-even point and labels cut back on the practice of releasing individual songs commercially. Consumers who liked a hit they'd heard on the radio or seen on a music-video program often faced a choice: Buy the full-length CD that spawned the hit, or don't own the song at all.

"Record companies would tell me, 'We're not going to put a single out, because it's really the only great song on the album,' " says Billboard's Mayfield.

It wasn't until the late '90s that music fans discovered a new method to get their favorite songs: Download them illegally and (potentially) face the wrath of the RIAA legal team. (It's still a popular option: Big Champagne Online Media Measurement estimates that more than 250 million tracks are downloaded worldwide each week from file-swapping services.)

By 2002, so few individual hits were being released commercially that the National Association of Recording Merchandisers launched a "Save the Single" campaign. But it didn't help -- at least not that year: In 2002, singles accounted for less than 7 percent of music sales, with only 12.2 million singles sold, according to Nielsen SoundScan. Billboard reported that it was "believed to be the lowest number since the single was in its infancy in the early 1950s."

The emergence of Apple's iPod as a mass-market phenomenon -- and the opening of Apple's online iTunes Music Store in 2003 -- reversed the trend, as music fans were suddenly empowered to buy individual songs, whether hit singles or not.

That's how three songs from the soundtrack to the Disney Channel movie "High School Musical" wound up in the iTunes Top 10 last week.

"The huge difference between the digital marketplace and the heyday of the retail-available single is that you never had this many a la carte choices," says Billboard's Mayfield. "There weren't nearly as many songs to choose from. Now, when an album comes to the market, you can buy any of the songs individually."

Says Adam Klein, executive vice president of strategy and business development for EMI Music: "Putting control back in the hands of the consumers is always a good marketing proposition."

In this Wild West of a marketplace, artists need to work harder on producing quality music, says talent manager Michael "Blue" Williams.

"I have to ask my artists to make better records," he says. "I need at least four singles. We lost a lot of fans over the years because we gave people average albums, with one or two singles and the rest of the album was trash."

Williams is not, however, having that conversation with his top act, OutKast. The hip-hop duo's 2003 album, "Speakerboxxx/The Love Below," sold 5.6 million copies, won the Grammy for album of the year and spawned two best-selling digital singles in "Hey Ya!" and "The Way You Move."

Williams is confident that the next OutKast album, expected this spring, will do similarly well. "They take pride in putting together a complete project, a great album," Williams says. "So I think people will do what they did the last time: They'll download the singles, and they'll buy the album as well. I don't have a problem with people paying $13.99 for the album after downloading three or four songs for 99 cents each."

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