How much do hit songs matter? – Billboard
For years, media and tech executives have been saying the era of the blockbuster is over. Now that online consumers can choose from the tens of millions of tracks available online, hits would inevitably become less important compared to the amount of music in what author Chris Anderson called “the long tail” in 2004. hits, Anderson wrote, would no longer be “quite the economic force they once were”.
The reality of the music streaming market is very different. Last year, Drake recorded 6.16 billion on-demand audio streams in the US, according to MRC Data – more than any other artist, and 0.7% of the 877.2 billion total.. This exceeds the 4.74 billion streams generated by the 53.69 million tracks that have been streamed less than 1,000 times each.
Despite all the changes in the music industry – now dominated by digital rather than physical and streaming rather than sales – hits remain more important than ever. In 2020, nearly half of the 877.2 billion on-demand audio streams in the United States came from just 13,521 songs streamed more than 10 million times, or 0.022% of the tracks tracked by MRC Data.
To find out if, or to what extent, hits dominate the business, Billboard used an MRC Data analysis of on-demand streaming to separate the 2020 market into five “buckets”: songs streamed more than 10 million times; between 1 million and 10 million times; between 50,000 and 1 million times; between 100 and 50,000 times; and less than 100 times. To compare the industry today with that of 25 years ago, Billboard then looked at a 1995 report from MRC Data’s predecessor company name, Nielsen SoundScan, which separated that year’s sales into albums that sold over 250,000 copies; between 25,000 and 250,000 copies; between 5,000 and 25,000 copies; and less than 5,000 copies.
Hits remain important from all points of view. Combined, the first two sets of songs streamed over a million times — which includes 96,779 tracks, or just 0.16% of the 61.2 million available — accounted for just over three-quarters of the total stream at Requirement. At the other end of the spectrum, even excluding the 68.72% of available tracks that have been streamed less than 100 times, many of which were likely downloaded by amateurs, the 18.26 million songs streamed between 100 and 50 000 times – the long tail which represents 29.8% of the tracks – represents only 6.25% of the total listening. Culturally, the ease of access to digital distribution represents a revolution. In music, however, it’s not really a big deal.
Market concentration was similar in 2018 and 2019 for the different flow buckets, with a variable swing not exceeding 0.5%. Likewise, the number of securities in each sub-fund gave similar percentages in 2018 and 2019 with a spread differential not exceeding 20 basis points, or 0.2%. However, the bottom bucket that had streams between 1 and 100 plays – the bucket containing the long tail with the most titles – as a percentage of all titles, increased by almost two percentage points between 2018 and 2020, starting at 66.9% of all titles in 2019; increasing slightly to 67.1% in 2019, then to 68.7% of total 2020 tiles.
In 1995, the 336 albums that sold over 250,000 copies – 0.2% of the nearly 147,000 releases available at the time – generated nearly 40% of sales. Combined with the second group of albums selling between 25,000 and 250,000 copies, this meant that 3,328 albums, or 2.2% of releases, accounted for 72.5% of total sales.
At least part of the reason such a small percentage of songs now make up such a large percentage of total streaming is that there is so much more music available than there was then. Whereas in 1995 consumers could choose from 146,693 albums – which, combined, probably contained between 1.5 million and 1.75 million songs – in 2020, MRC Data tracked 61,189,195 songs, the equivalent of about 5 to 6 million albums. But the unpopular music business isn’t exactly booming. In 1995, the 91.3% of releases that sold less than 5,000 copies accounted for 11% of sales, while in 2020, the 98.56% of releases that aired less than 50,000 times accounted for 6.34% of consumption streaming.
The idea that the long tail represents a significant business opportunity also doesn’t hold water, at least when it comes to music streaming. In 1995, the bottom bucket of 134,000 albums selling less than 5,000 copies each would have represented 67 million in total sales and earned labels around $536 million in revenue, assuming an average wholesale price of $8 per album. Last year, however, the 60.3 million songs in the bottom two buckets – which were streamed less than 50,000 times each and accounted for 98.6% of available tracks – accounted for a combined total of 55.64 billion streams, or 6.43% of the total, and only generated $295 million in revenue, assuming a mixed rate per stream of $0.0053. In other words, even before adjusting for inflation, the business of unpopular music is just under half of what it was a quarter century ago. Turns out the hits still have life after all.
A version of this story will appear in the December 18, 2021 issue of Billboard.