Will the Recession Kill Karaoke Music? What the Numbers Say
November 25, 2008 The sobering news is that the U.S. is in the midst of an economic crisis that is sending shockwaves throughout the entertainment industry. No segment will be immune, not even karaoke. Sales of karaoke music CD’s will certainly be affected by recent sales trends showing that U.S. music CD sales have so far been down 12.7% for 2008 according to billboard.biz, while digital sales of individual tracks have been growing at a steady pace, up 34% from mid-2007. Indeed, iTunes is now the largest retailer of music in the U.S.[i] Unfortunately, this growth in digital download sales cannot make up for the slowdown in album sales. The decline in CD album sales is due in large part to reduced capacity in retail stores. There are signs that a substantial portion of the karaoke music segment is actually moving to another platform; video game consoles. The video game industry has been booming of late and gamemakers are putting their sites on a broader market of potential gamers. Karaoke games and other “rhythm titles” as this genre is called – provide just the mass appeal that has brought casual gamers into the console market with titles such as Karaoke Revolution and Guitar Hero. Hoping to follow the success of Karaoke Revolution, and Sony’s Singstar, both Microsoft and Disney are debuting two new karaoke titles this year; “Lips” and “Disney Sing-it.” Indeed, videogames may be the future of growth in karaoke music sales as gamers are encouraged to buy additional songpacks online. This industry may be just the growth engine that the karaoke music industry needs, and it is an engine indeed. U.S. videogame hardware and software sales combined totaled nearly $18 billion in 2007, exceeding the box office receipts of the motion picture industry in North America by nearly $10 billion. Sources: BBC News. Branson Sells Virgin Music Stores. September 17, 2007. http://news.bbc.co.uk/2/hi/business/6998606.stm (accessed November 1, 2008). BBC. U.S. Video Games Sales Hit Record. January 18, 2008. http://news.bbc.co.uk/2/hi/business/7195511.stm (accessed November 1, 2008). NAMM. Music & Sound U.S. Industry Summary & Imports and Exports. Statistical Summary, NAMM, 2007. Rolling Stone: Rock n Roll Daily. October CD Sales Down As Economy Struggles with Recession. November 6, 2008. www.rollingstone.com/rockdaily (accessed November 20, 2008). Smith, Ethan, and Nick Wingfield. More Artists Steer Clear of ITunes. August 28, 2008. http:''www.WSJ.com/article/SB121987440206377643.html (accessed November 1, 2008).
Virgin Music Store in West Hollywood, CA
Big box stores such as Best Buy and Target have significantly reduced shelf space, and the trendy Virgin music store chain closed for business in the fall of 2007.
Flat is the New Up
The same story has been playing out in the karaoke CD market as well. Wal-Mart has been reducing its shelf space for karaoke music over the years, and no one is yet in a position to determine if sales growth has shifted to online retailers. One major online karaoke music retailer put it bluntly, “flat is the new ‘up’” in the industry, referring to stagnant sales as better than decreasing sales and is the best anyone can hope for in this economic climate. This coming holiday season will be very important in terms of their health in the midterm since a substantial portion of sales happen in the 4th quarter.
Of course, 2008 sales figures will likely break with any growth trends that may have been reflected in past years. Thus, videogame console sales are likely to level off in 2008 once the dust clears. As for the music CD market, it is safe to assume that trends in the karaoke music market are sensitive to the overall music industry since major music artists’ new releases and hit songs produce fresh product for karaoke publishers, who regularly produce karaoke tracks of new popular hits within weeks of their release. This being the case, many industry insiders caution that several big ticket releases are scheduled for the end of this year such as Gun’s n Roses, Kanye West, David Cook, Beyonce, and Nickelback; strong sales of these could reduce that 12.7% decline figure at year end, making industry execs relish “flat” over “down.”
