This post is from the Promogogo archives, originally posted in 2015 – and reposted without edits in 2017. Banner is by Chris Sansenbach.
As we all know, the music industry is undergoing some huge changes. One of them is the declination of record sales, which started in 1999. Meanwhile the live music industry has exploded. We decided to compare revenue from record sales from some of the biggest artists of our time.
The Boom of the Live Music Industry
Thanks to Statista & IFPI Annual Reports for the data.
This graph shows the drastic declination of record sales. We added concert ticket sales to put these figures into context. Note that the record sales numbers are global, whereas live ticket sales number are only from North America. This is due to difficulty in finding accurate global data. It's safe to say that global revenue from live music ticket sales are somewhat higher than the graph shows.
It's worth noting that even though the live music industry is estimated to turn over $6.2 billion dollars annually, it still hasn't reached the heights of the recorded music revenue even to this day (currently at just under $15 billion annually – after a decade and half in free fall from the annual turnover consistently over $30 billion in the 90s).
Bottom line, record sales continue to decline whereas ticket sales to live performances are rising. That is what the above graph demonstrates and is what we like to call The Boom of the Live Music Industry.
More Internet Means Less Record Sales
The IFPI (The International Federation of Phonographic Industries) documented this drastic downwards trajectory in the music recording industry. Its current annual revenue is a mere third of what it was at the turn of the century (IFPI Annual reports, 2000 and 2014). In 2000, about 7% of all people had access to the internet, but about 40% by the end of 2014 (read more about global internet usage). There's a direct relationship between more widespread access to the internet and the decrease of record sales.
On the internet, everyone can allocate, listen, download, and stream music for free. In 2001, the first iPod was available in stores. Just 2-3 years later it was pretty standard to own one. My god we loved them, remember? We put away our Discman and uploaded music to the iPod – it was easy and affordable. Not only could we upload all of our CD's but pretty much find and download or buy anything online.
The artists started feeling their pockets getting lighter, responded to this change in audience behaviour by performing live more frequently and requesting higher guarantees. This meant artists made up for loss of revenue from records with live performances, i.e. touring.
Album Sales Continue to Decrease
Even though it has been 15 years since the development started – it is still taking place. The drop in album sales means artist try to find different revenue streams. Many artists feel that they are not getting fairly compensated on the streaming services, such as Spotify, which notable artists such as Taylor Swift & Jay-Z have openly criticised.
It isn't as easy today as it was 20 years ago to have a multiplatinum-selling album
–Taylor Swift, 2014 WSJ op-ed
But recordings aren't the only way artists generate revenue. The industry is adjusting to these changes. Revenue isn't only from record sales, but as Mick Jagger famously stated "Touring is now the most lucrative part of the [Rolling Stones'] business". Tours used to be about promoting the latest album, and the artists' income was generated from the sales of those records. Now the opposite seems to be true. Artists promote their records on social media with little cost and TOURING brings home the bacon.
Let's Look at Some Numbers.
Britney
Photo by ADRIANOVIAJANTE007
Britney has maintained her reputation as a bona fide megastar since she emerged in 1999. She and the public Internet connection happened around the same time. Britney's debut album' ...Baby One More Time is one of the best selling albums of the 90s and her current Vegas residency is bringing her about $1 million a week.
Britney is a perfect example of this changing landscape in the music industry, i.e. reduced income from recordings and increased from live performances. Each album sells less than her last one.
Her touring trajectory fluctuates more, but shows a general upward trend, with her Onyx Hotel Tour being an exception to this. It was marketed to a "mature" audience which didn't work, since Britney's audience at the time was younger. This resulted in slower ticket sales, and finally the second leg was cancelled due to an injury Britney suffered. Her Circus Tour was the fifth highest grossing tour of 2009, and she's seen consistently solid numbers from her subsequent shows. Her Vegas residency has recently been extended to 2017, earning her said one million dollars per week.
Currently Britney sells 3 records for every 100 she sold in 1999. Her revenue from touring has doubled over the same time.
Madonna
photo by Ian Gampon
Madonna is the figure who defined pop. She's been consistently around for three decades now. She's the best selling female recording artist of all time, and her cultural influence goes far beyond music.
She's also a prime example of the recording versus touring phenomenon. She's pivoted completely; going from relying almost solely on recording income to her current state of affairs, one where she receives next to nothing for her albums. Touring is her current money maker.
What makes this particularly interesting, is that Madonna is not only the best selling female recording artist of all time, but she also holds the record for the highest grossing female tour of all time.
One might come to the conclusion looking at the graph that her tours in the 90s didn't do so well, but actually they're amongst the highest grossing tours of the decade. Her last three tours, The Confessions Tour, The Sticky & Sweet Tour, and The MDNA Tour all rank in the top 10 highest grossing tours of ALL time by a female artist.
We don't have figures from her Rebel Heart album and tour, since the tour doesn't start until September. This leaves Madonna's discography and touring history showing the very best of the best at any one point. In other words, the history of the music industry as a whole is reflected in her history.
Madonna has completely turned around her key revenue stream from album sales to touring.
U2
photo by The Strong Move
U2 has been around for even longer than Madonna, and have an equally consistent track record. They've sold almost as many albums as she has. They're not afraid to take risks and try new things, as they did most recently by giving their album away for free to everyone who had an iTunes account. While this was highly controversial and criticised at the time, the stunt significantly increased the sales of their back catalogue and their current tour shows no sign of them slowing down.
The U2 graph shows a very clear trend indicating reduced revenue from album sales and a significant increase in touring revenue. For a band that has been around for as long as U2, there are bound to be fluctuations in both album and ticket sales. Nonetheless, the graph paints a vivid image of a complete turnaround of key revenue drivers.
Looking at the graph above and on close examination, a tour that by U2 standards appeared less successful, The Elevation Tour, was in reality one of the biggest tours of that time period. U2 ended The Elevation Tour on a high note by putting on a phenomenal performance at Super Bowl XXXVI including a tribute to the victims of 9/11 that had the entire U.S. in tears. The following tour, Vertigo, was the highest grossing tour of 2005.
And finally, their 2009 360° Tour still holds the coveted position of being the highest grossing tour of all time. Amazingly it’s up by over 30% from the second highest grossing tour of all time, Rolling Stones' A Bigger Bang Tour, on almost all key metrics. It remains to be seen how their iNNOCENCE + eXPERIENCE Tour will land in the history books, but it’s safe to say it’s definitely on track to being one of the top grossing tours kicked off in 2015.
The remarkable success of U2 spans more than 30 years and not only includes one of the generally believed best albums of all time, 1987’s Joshua Tree, but also impressively, the highest grossing tour of all time, 2009’s 360° Tour.
If that doesn’t demonstrate a complete turnaround of the music industry we’re not sure what will!
If there are other artists you think we should look at in this context – get in touch or tell us on social media.