NARM DAY 2: THE RESEARCH DUDES DELIVER THE DATA

Sunday afternoon’s annual research presentations started with Nielsen Online’s Richard Sussman talking up the emerging mobile market and the global explosion in sales, of which China will account for 30% all by itself. Sussman posits that in two years, 50% of the cellphones in North America will be smart phones, with the iPhone outpacing all others combined for downloaded content.

Nielsen Music’s David Bakula followed with some sobering news. Business was up at online stores, clubs and superstores, with electronic outlets, toy stores and book stores all down. The numbers for total music sales went from $9.9 billion in 2000 to $5.3 billion in 2009—no surprise there. And although we’re seeing a slight uptick in digital LP sales, while track sales have flattened since 2007, Bakula expects the track numbers to comp better as the year goes on, as we start comping $1.29 against $1.29 instead of 99 cents a track.

Also no surprise in the fact that while rock is tops as the most downloaded genre, Latin, gospel and country remain at the bottom. Vinyl continues to explode, with a whopping 74% of those sales coming from the indie stratum.

And with some 98k worth of album releases last year, only 2.1% sold more than 5k. On the plus side, 2009 was a fantastic year for catalog sales, with Michael Jackson and the Beatles powering the market. The flip side of that is that this year’s comps will suck.

Big Champagne’s Joe Fleischer made a compelling argument that the unbundling of the single from the full-length was more devastating to the industry than piracy. He showed that even in the illegal downloading realm, people are only stealing an average of two songs, even when they’re available free. But he feels that we might be approaching the bottom of our slide.

Joe compared the current state of affairs to the early ’80s, when “we were on the ropes, in between successful formats and unsure of our future.” He made the argument in graphic detail that the bubble the modern music industry is coming off is being mirrored in the stock, real estate and auto industries; that we’re coming off a 30-year bull cycle and could be seeing the bottom.

He also made the case that in the beginning of the “impressions” market (YouTube, etc.), we were hoping to turn those impressions into sales, when in fact they turned into consumption. The unbundling of tracks from LPs, in his estimation, makes the current kinds of label deals unprofitable. “The LP isn’t dead; it’s just optional,” he said. “And that producing albums but marketing singles makes for an enormous business challenge. We need to adjust the front-end economics.”