The Business Science of Charts

In this past Monday’s New York Times (August 30, 2010), music columnist Joseph Plambeck reported on the shifting trends in how companies in the music industry track and report revenue. The article, Platinum Is So Passé. In iTunes Era, the Singles Count, explains how distributing labels are moving further and further away from concerning themselves with Billboard’s number-one selling album chart, as it is not an accurate depiction of which artists are earning the most money or are considered to be the most popular.

His introductory example is as follows: British hip-hop artist Taio Cruz is currently number 54 on the Billboard Top 200 Chart. This means he has sold relatively few albums compared to other artists. However, Cruz has sold 4.9 million copies of two singles off the album and his videos have been viewed over 49 million times. Not to mention all the online streaming and P2P file sharing sites that don’t track or report such figures. This is something Plambeck fails to mention. I speculate that 4.9 million legal purchases is probably doubled in terms of illegal downloads.

I agree with Plambeck’s dual perspective on the situation. On one hand, Billboard’s chart or labeling of a platinum record may not be an accurate measure of success for today’s artists. On the other hand, regardless of how music is shared now and in the future, the competition for a number one position on Billboard will probably always be a salient part of the industry. The larger question I pose is: How does either affect what we listen to, if it does at all?

I don’t think I have ever purchased an album because it was ‘hot’ on the charts. This isn’t to say I don’t own albums that were number one in Billboard at one point or another; but it was never the catalyst to my owning it. To me, charts and rankings are designed for the artists themselves. Creating a formula in which artists can be measured in terms of popularity and success allows for managers and agents to better negotiate price for their clients and attach monetary value to something that is otherwise subjective.

Let me use an example to illustrate: Let’s say Nike wants to use a song in an advertisement they are going to run during the Superbowl. How much should the company have to pay for that song? Should Eminem’s “Not Afraid” be worth more than Kenny Chesney’s “The Boys of Fall”? You may say to yourself, ‘well yeah, sure it should be.’ But in the business world it is not that simple—prices need to be more objectively defined. What will work is when the management team representing Eminem can pitch or negotiate a price to Nike three times more than the team representing Kenny Chesney because “Not Afraid” was number one on Billboard for one week and in the top-ten for nine, whereas “The Boys of Fall” peaked at number eighteen and slid down the charts rapidly after that. That is evidence for a greater value that is difficult to argue against.

The charting and ranking of music sales is a useful tool for culturalists, historians, and business people. It may not be, however, a strong gauge of who is actually the most popular musician out there. As Plambeck’s article notes, Billboard is doing all they can to continuously transform the way they collect and use information in order to accurately rank songs. The New York Times quotes the editorial director of Billboard as saying, “its Hot 100 chart lists the most popular songs based on a formula that factors in single sales, radio airplay, and online streaming. ‘We’re constantly evolving what we’re doing and how we do it.’

This is excellent to hear. Their “constant evolving” will only make Billboard’s chart more accurate in the future. Just don’t go buying your next album because it’s high on the charts. It’s a tool for the industry. It always has been and we need not to forget that. They share it with us to help promote artists and boost sales. But I don’t think it should ever govern what you like and what you are willing to spend your money on.