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Nielsen Ratings: RIAA full of S$%!.

Posted By Barry Ritholtz On May 14, 2004 @ 11:35 am In Finance,Music | Comments Disabled

kensei

Here’s a shocker: It turns out that the RIAA is full of crap. Who ever would have guessed?

According to Moses Avalon of Kensei News [1], Soundscan has some very different readings on Album sales than the RIAA.

While the 5 major US labels claims “a significant reduction in sales over the past three years,” it turns out the RIAA has been greatly exaggerating the loss:

- For the first quarter of 2003 Soundscan registered 147,000,000 records sold.

- For the 1st quarter of 2004 Soundscan will report 160,000,000 records sold.

“That’s 13,000,000 more units, almost a 10% increase in sales since last year. First quarter “album sales” (as opposed to overall sales) had increased 9.4% since 2003.”

What’s the source of the different reporting of sales? According to Kensei, its “SHIPMENTS” = “SALES”

That’s the secret decoder formula. Go back to the RIAA and International Federation of the Phonographic Industry (IFPI) Web sites, and you will learn that:

“every time the RIAA complains of large drops in “unit sales” it includes international sales, not strictly domestic.”

Every time it speaks to domestic “losses” it is speaking ONLY of “units shipped in the US” to record stores. It seemed obvious that if the RIAA confined their revenue statistics to the US market alone they may not be able to publish ANY losses in REVENUE at all. . . “Even though actual point-of-purchase sales are up by about 9% in the US – and the industry sold over 13,000,000 more units in 2004 (1st quarter) than in 2003 (1st quarter) – the Industry is still claiming a loss of 7% because RIAA members shipped 7% fewer records than in 2003.

Isn’t presenting false testimony under oath to Congress a felony? I hereby demand a special investigation into the RIAA’s Enron like accounting, followed by a swift trial and summary execution.

Pathetic.

UPDATE: May 14, 2004 3:14PM
John Paczkowski over at Good Morning Silicon Valley notes that “RIAA accounting practices a leading cause of declining music sales [2].”

UPDATE May 17, 2004 8:45am
I recieved the following from a person who follows the industry:

“I talked to a very high ranking big 5 label exec who conceded that Napster et. al. exposed some fundamental flaws with their business model.

They still insist file-sharing cost them sales — I’ve come to a similar conclusion myself — and while filesharing losses may be overstated, they certainly don’t help a badly designed business model (but they are not imaginary).”

Source:
Nielsen Rating System At Odds With RIAA’s Claim Of “Lost Sales [1]
Source: Music Dish – Moses Avalon
May 5, 2004, 08:49

http://www.kensei-news.com/bizdev/publish/factoids_us/article_23374.shtml


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URL to article: http://www.ritholtz.com/blog/2004/05/nielsen-ratings-riaa-full-of-s/

URLs in this post:

[1] Kensei News: http://www.kensei-news.com/bizdev/publish/factoids_us/article_23374.shtml

[2] RIAA accounting practices a leading cause of declining music sales: http://www.siliconvalley.com/mld/siliconvalley/business/columnists/gmsv/8667970.htm

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