RIAA Loss Report Contradicts Nielsen Sales Record

DerekAtLC writes "In a not-so-surprising twist of the tables, RIAA reporting of 'losses' is a little bit off. An interesting blurb at Ars Technica referencing a Kensei News article points out that Nielsen's Soundscan (Which tracks retail point-of-sale numbers for the music industry) shows a 10% increase in sales from Q1 2003 to Q1 2004. The RIAA has recently reported drops in revenue from last year, citing online piracy as the main problem. The crux of the issue? The RIAA hasn't been talking about sales or revenue in terms of sales to consumers or money generated via those sales. The RIAA talks about losses in terms of number of units shipped to retail outlets. The article points out plenty of problems with this (and reasons why we are seeing the trend), but it is fairly obvious that the RIAA is not reporting the most 'useful' numbers to the public."

Comments

Dont forget

[Datasage]

They also tend to count every single pirated copy as a loss. Even though, if forced to buy, most of it would not be purchased.

Re:Dont forget

[Ateryx]

Wait hold the phone, you are saying there are ten people that listen to creed?

No. It was a hypothetical example, because no one listens to Creed.

Re:How Exactly is That Different

[LostCluster]

From all those companies lying about their revenue during the height of the stock market bubble/scam? Are the numbers the RIAA is reporting to us any better than the numbers Enron or Tyco reported to us?

The RIAA's numbers are at least correct counts of what they're supposed to be representing. However, consumers are paying less for music doesn't ring too when it's the wholesale transactions going down but not the number of retail transations. That just says there's less CDs sitting unsold on shelves these days...

This is nothing new

[PimpbotChris]

ARIA tried to hide their record CD sales from the Australian public Music industry way off track with song and dance about falling sales

Re:What else is new?

[jonastullus]

It's a very common practice in many industries to "tilt" the facts to their favor. Look at the hard drive industry and tell me why my 80GB drive ends up being a 74.5GB drive when I format it.

i do actually hope that the above was a rhetoric question... but just for the heck of it:

Giga is defined (in almost all of science) as 10^9; therefore 80GB = 80 * 10^9 Byte.
Computer Scientists have calculated most data sizes in exponents of "2"; therefore it is common to write KB as 2^10 Byte, MB as 2^20 Byte and GB as 2^30 Byte; this is also how your operating system will output your HDD capacity.

Recently it has been tried to introduce the units Mebibyte (MiB) and Gibibyte (GiB) for the exponents of "2", but it might still take quite a while (or may never happen) that the majority of computer scientists and the industry will switch to the new notation.

thus it is (due to ill-defined units) more or less correct to write:
80GB = 80 * 2^30 Byte = 8.59 * 10^10 Byte = 86GB

obviously it should really be written as 80GiB = 86GB, but such is our beloved computer science ;-))

yet, most likely you already knew that... well, next time better put the <irony> tags *gg*

Re:Out of business stores dont keep inventory.

[AhBeeDoi]

Less stores selling music means not only are stores keeping smaller inventories, but some store inventories fell to zero as they left the business. There's just plain less "unsold" disks sitting in the system.

This seems like a highly debateable point as to causes of lower inventory levels. Traditionally, inventory levels have been an indirect measure of confidence in the economy. However, utilization of JIT methods aided by technology enables businesses to run at lower levels than previously thought acceptable. In fact, there really isn't any contradiction to the principles of economic order quantity because both ordering costs and turn around times are much lower. This is truly a new paradign.

It's time to change sampling techniques?

[MtViewGuy]

I think the problem that is affecting groups like the RIAA, MPAA, the television networks, and so on is the fact that their techniques for measuring things like sales and viewership are being rapidly obseleted by changes in communications technology.

If you're read Alvin Toffler's book The Third Wave, Toffer some 25 years ago said that as more communications choices for consumers become available, old means to measuring "eyeballs" won't work anymore. I mean look at what has happened since The Third Wave was published in 1979:

1. Consumers now possess the technology to time shift TV programming by videocassette recorders and increasing digital Personal Video Recorders, which is making the idea of prime time meaningless.

2. The choice of TV programming has literally increased exponentially. Back in 1979, most Americans could only watch at most 5-7 channels of TV programming on over-air broadcasts; today, cable TV has expanded the available channels to over 70 and small-dish satellite TV has expanded the available channels to over 200!

3. The rise of pre-recorded videocassettes and now DVD's have drastically altered the landscape of both movies and TV programming. Indeed, many movies are only breaking even with home video sales (or doubling their profit with home video sales!) and there's now the new trend of complete TV seasons available on DVD! I'm sure HBO has enjoyed healthy sales of full seasons of The Sopranos, Sex and the City, and Six Feet Under on DVD sets.

4. The rise of the public Internet has also started to affect TV viewership, as several recent surveys have shown.

5. Current methods of measuring TV viewership don't take into account the increasing trend of large scale public viewing of TV programs at public gathering places and/or having a large group of friends watching the program at someone's residence. For example, the final episode of Friends probably got underreported by Neilsen tracking because a large portion of viewers probably saw it in a group setting either in a public place or at a private residence with a large living room.

6. Tracking sales of music will have to be revamped, especially in light of the way Wal-Mart handles sales inventories, the sheer retail power of Best Buy, the heavy use of online sales at Amazon and Barnes & Noble web sites, and individual song downloads at various legal sites such as Apple's iTunes web site.

I think if the various media companies actually bother to change their way of monitoring sales/viewership they could actually get a far more accurate measurement, something that could eliminate underreporting of actual sales/viewership.

Re:More Mega-Store Efficiencies and Other Trends

[Tiram]

As to the drop in international sales, I think that is more likely to be a shift away from the heavily-advertised American groups, and toward the less-advertised local groups in each country. Once again, Internet Radio and downloads would allow listeners in each country to discover those other groups, rather than simply being led by U.S. advertising. I assume that many, if not most of those smaller groups' sales in other countries are _not_ measured by the RIAA.

I don't know if this is a trend everywhere, but it seems to be true for Norway. First quarter this year, the sale of Norwegian CDs* was up by 46% volume (54% value) compared to the same period last year. 21% per cent of the CDs sold were Norwegian, up from 14% last year.

* Not including singles and DVDs, which probably would have pushed the numbers even higher.

Ref: Sterk økning i salg av norsk musikk (in Norwegian, I'm afraid ...:)