Posts filed under “Consumer Spending”

Blockbusters

Excerpt

“According to Nielsen, from data provided by managers at Nielsen SoundScan, which collects recorded-music sales information, of the eight million unique digital tracks sold in 2011 (the large majority for $0.99 or $1.29 through the iTunes Store), 94 percent – 7.5 million tracks – sold fewer than one hundred units, and an astonishing 32 percent sold only one copy. Yes, that’s right: of all the tracks that sold at least one copy, about a third sold EXACTLY one copy. (One has to wonder how many of those songs were purchased by the artists themselves, just to test the technology, or perhaps by their moms out of a sense of loyalty.) And the trend is the opposite of what Anderson (Chris Anderson, author of ‘The Long Tail’) predicted: the recorded music tail is getting thinner and thinner over time. Two years earlier, in 2009, 6.4 million unique tracks were sold; of those, 93 percent sold fewer than one hundred copies and 27 percent sold only one copy. Two years earlier still, of the 3.9 million tracks that were sold, 91 percent sold fewer than one hundred units and 24 percent sold only one copy. The trend is clear: as the market for digital tracks grow, the share of titles that sell far too few copies to be lucrative investments is growing as well. More and more tracks sell next to nothing.

Equally remarkable is what is happening in the head of industry’s demand curve. In 2011, 102 tracks sold more than a million units each, accounting for 15 percent of total sales. That is not a typo: 0.00001 percent of the eight million tracks sold that year generated almost a sixth of all sales. It is hard to overstate the importance of those few blockbusters in the head of the curve. And the trend suggests that hits are gaining in relevance. In 2007, 36 tracks each sold more than a million copies, together these tracks accounted for 7 percent of total market volume. In 2009, 79 tracks reached that milestone; together they make up 12 percent of the sales volume.

The level of concentration in these markets is so astounding, in fact, that it is nearly impossible to depict the demand curve: it disappears entirely into the axes… It is staggering to see how few titles at the top contribute to a significant portion of sales, and how many titles at the bottom fail to do the same. Those are the realities of digital markets. Assortments may become more and more expansive, but the importance of the few titles at the very top keeps growing, while average sales for the lowest sellers are going down.

The same patterns are visible in album sales. …out of a total of 870,000 albums that sold at least one copy in 2011, 13 album titles sold more than a million copies each, together accounting for 19 million copies sold. That’s 0.001 percent of all titles accounting for 7 percent of sales. The top 1,000 albums generated about half of all the sales, and the top 10,000 albums around 80 percent of sales. Deep in the tail, 513,000 titles or nearly 60 percent of the assortment, sold fewer than 10 copies each, together making up half a percent of total sales.

The numbers certainly do not come close to the trusted ’80/20 rule’ that many managers live by, which supposes that 80 percent of the sales tend to come from 20 percent of the products on offer. For music albums, it is close to an 80/1 rule – if we can speak about a rule at all. Even if we take a conservative estimate of what would be on offer in a bricks-and-mortar store at any given point in time, Anderson’s predictions that long-tail sales will rival those in the head are far off.

Of course the goods in the long tail include not just true niche content but former hits as well. Sales of a blockbuster – even one on the scale of Lady Gaga’s ‘The Fame’ or Maroon 5′s ‘Songs About Jane’ – will eventually dwindle. Such products can now live forever online, even if they have long been cleared from the physical shelves. For old hits, then, digital channels may present a real opportunity. But the large majority of products in the tail were not very successful to begin with. Most of them, in fact, never met the bar for a release through traditional distribution channels. Or, in the case of individual music tracks, they are orphans of unbundling activity: now that online consumers can cherry-pick the most popular tracks on an album, the rest shoot quickly into the long tail.”

 

Table 1:

“In the recorded-music industry in 2011, more than 8 million unique digital-track titles together sold 1.271 billion copies… For instance, nearly 6 million titles – 74 percent of all unique titles – each sold fewer than 10 copies, accounting for only 1 percent of sales.

102 titles selling 1,000,000 copies or more/189,758,000 copies sold/15%

1,412 titles selling 100,000-999,999 copies/318,473,000 sold/25%

13,492 titles selling 10,000-99,999 copies/374,827,000 copies sold/29%

74,246 titles selling 1,000-9,999 copies/212,571,000 copies sold/17%

382,720 titles selling 100-999 copies/111,117,000 copies sold/9%

1,620,959 titles selling 10-99 copies/48,687,000 copies sold/4%

5,927,729 titles selling fewer than 10 copies/15,722,000 sold/1%”

Table 2:

“In the recorded music industry in 2011, more than 800,000 unique album titles together sold more than 330 million copies (including both physical and digital copies)… For instance, 513,000 titles – 58% of all unique titles – each sold fewer than 10 copies, accounting for only 0.5 percent of sales.

13 titles selling 1,000,000 copies or more/23,287,000 copies sold/7%

387 titles selling 100,000-999,999 copies/93,992,000 copies sold/28%

4,229 titles selling 10,000-99,999 copies/114,949,000 copies sold/35%

21,042 titles selling 1,000-9,999 copies/61,493,000 copies sold/19%

87,986 titles selling 100-999 copies/27,032,000 copies sold/8%

251,566 titles selling 10-99 copies/8,261,000 copies sold/2%

513,146 titles selling fewer than 10 copies/1,558,000 copies sold/0.5%”

 

From Harvard Business School professor Anita Elberse’s book “Blockbusters: Hit-Making, Risk-Taking, And The Big Business Of Entertainment

 

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Category: Consumer Spending, Data Analysis, Music, Think Tank

Luxury Item Investing Returns

Fruits of Passion Click for interactive chart Valuables Source: Economist     I love that classic car investing has trounced Art, Coins, Wine and Equities !    

Category: Consumer Spending

The Deleveraging American Consumer?

click for ginormous graphic Source: WSJ     I love this giant graphic from this morning’s WSJ — it gives us the 30,000 foot view of consumer debt here in the USA. Despite low rates — or is it because of them? — American consumers have seen their debt loads fall to the lowest levels…Read More

Category: Consumer Spending, Credit, Fixed Income/Interest Rates

Books Bought By Big Picture Readers (July 2013)

Click to enlarge Once again, its time to peruse the data to see which books TBP readers bought last month. Amazon’s embed code lets me track every click from these links — how many people look at the page, how many books get seen, and/or collectively purchased. Its anonymous — I don’t know who bought…Read More

Category: Books, Consumer Spending

The 1% More Savings Calculator

Interesting example of what a small bump up does to your long term savings:   Click for interactive calculator: Source: NYT

Category: Consumer Spending, Digital Media, Investing

Household Deleveraging: Almost Over?

@TBPInvictus Below I give you two related (and therefore similar) measures of household leverage: Household Debt Service Payments and Household Financial Obligations, each as a Percent of Disposable Personal Income: Each has hit a record or near-record low for the maximum observable period (regrettably only 33 or so years). The question must be asked: Is…Read More

Category: Consumer Spending, Cycles, Data Analysis, Economy

America’s Worst Charities

I have to direct your attention this morning to a monster piece in Tampa Bay Times titled: America’s Worst Charities.

Aside from the obvious Pulitzer Prize potential, the series is a fantastic look at the massive waste of money – donated in good faith by people who have reasonable expectations that the cash would actually do some good to people in need. Instead, the worst charities are simply treadmills, raising more money to apply it to the not very important business of raising more money.

The finance industry has deep ties to the world of philanthropy (aka charity industry), as wealthy clients very often engage in major “gifting.” Foundations and donations are a major part of tax and estate planning.

As the series makes clear, intelligent philanthropy is much harder than it looks. I always advise that before writing a check, you do your homework. Start with GiveWell and Charity Navigator (also check out Evaluating the Charity Evaluators). Focus on what actually helps people, rather than poorly run, self-interested shops that are borderline scams. (Also, check your ego and avoid trying to have a building with your name on the side of it).

And for heaven’s sake, stop giving money to outfits that pocket 90% of the donations, leaving little or no aid for its intended purpose.

 

 

AWC

 

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Click to enlarge
Map
Source: Tampa Bay Times

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Category: Consumer Spending, Investing, Markets

McLaren MP4-12C vs Lamborghini Aventador

Crazy cool comparison engine from TwinRev — punch any two supercars into the tool and generate a full side by side analysis. From an automotive shopping perspective, when this thing goes down market so you can compare an Honda Accord versus a Toyota Camry or an Infiniti G37 versus a BMW 335, it will be…Read More

Category: Consumer Spending, Digital Media, Weekend

Delightful Customer Service: Maui Jim

I waste a lot of time energy kvetching about bad bankers, dumb companies, rude people, foolish airlines, and most especially — terrible customer service. For a change, let me praise a company who does something right: Maui Jim. I have had several opportunities to test their customer service, and they have gone over and above…Read More

Category: Consumer Spending, Corporate Management

Average American Spending

How The Average American Spends Their Money

Source: Credit Loan
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Category: Consumer Spending