Harvard Study: 1/3 Of Sales Drop Due To Digital, Creative Bundles May Be Answer
(UPDATED) A new study by Harvard Business School Associate Professor Anita Elberse looks at the loss of music industry revenue caused by single track sales and how particular forms of bundling may increase future sales. Elberse talked about her key findings with Working Knowledge. Highlights include:
- "when consumers start buying music online, they switch from buying full albums to cherry-picking their favorite songs...each album no longer bought is "traded in" for one, perhaps two, individual songs"
- "a drop of around one-third of the total weekly sales across the album and its associated songs is directly attributable to people switching to buy music online"
- "The number of songs on an album does not really matter...That is, bundles that are highly uneven in how popularity is distributed across individual components see an even greater decrease in revenues over time...it doesn't necessarily correspond with the popular belief that one or two popular songs can "make" an album."
- "A strong artist reputation helps to curb the negative impact of unbundling. Consumers are more likely to buy full albums from established bands like U2 with a strong track record of success".
- How should labels respond? "Labels should rethink the essence of a bundle...My results show that giving preference to quality over quantity and designing smaller, more consistent bundles may be beneficial.
- "Labels did themselves a disservice by granting a player like Apple such power in the channel..the company isn't even primarily in the business of selling music..."
- "This may be the most important lesson for other content producers. They should consider which intermediaries they let into the channel and under which terms, or better yet, aim to be that intermediary themselves...".