Well, whaddya know? — CD sales are UP, despite file-sharing

Lovely piece by John Pazckowski in today’s edition of Good Morning, Silicon Valley.

“Few organizations are more dedicated to making sure the public cannot quite understand its sales data than The Recording Industry Association of America. So it’s welcome news whenever someone is able to make sense of that data and the rather … curious methods the RIAA uses to report it. Since the advent of peer-to-peer networks, the RIAA has consistently reported a decrease in CD sales, and just as consistently blamed that decline on file sharing. And it has always had the metrics to back that claim up. But it turns out that those metrics are a bit misleading. The RIAA reports a sale as a unit SHIPPED to record stores, not as a unit sold to consumers at those record stores. Now here’s where things get interesting: The RIAA forecast a 7 percent decline in recorded music sales for 2004, but data from market research outfit Soundscan, which measures point-of-purchase sales, shows a 10 percent increase in music sales when comparing the first quarter of 2004 to the first quarter of 2003. What does this mean? Sales of recorded music haven’t declined, shipments have. Retail outfits are moving increasingly toward a just-in-time sales model. Rather than order more music than they need and eat the overrun or pay to ship it back to the distributor, they now order only what they think they need. This doesn’t mean retailers are selling less music (a retailer can order 1000 CDs one month and sell 600 of them, 800 CDs the next and sell 700). But it does mean that the RIAA can claim a decline in sales — at least until a gust of fresh air blows the smokescreen away.”