Brian W.
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| Posted: 29 January 2009 at 3:52am | IP Logged
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I stumbed across this interview online with Geoff Mayfield, director of Billboard's charts. Although it's from December of 2004, it's the most comprehensive info I've ever seen on how and why Billboard compiles its charts the way it does. It includes a detailed explanation of some of the disadvantages of their pre-SoundScan system.
It also answers some questions I've always wondered, like does Billboard count Amazon.com sales. (The answer is yes.)
Someone else excerpted it from a U2 fan site.
Quote:
Interview: Geoff Mayfield, Billboard Director of Charts and Senior Analyst
By Devlin Smith, Contributing Editor 2004.12
...To get the bottom of how Billboard creates its charts, as well as get insight into the retail end of the record business, Interference.com spoke with Geoff Mayfield, director of charts and senior analyst with Billboard.
What do you do as the director of charts and senior analyst?
My primary job is to oversee the charts department, which compiles more than 40 charts for Billboard, most of them sales charts or radio charts. Our department wants to make sure that we're making the best use of the data that’s provided to us to assist readers in determining not only what's most popular but what the trends are and things like that, and to make sure that the charts are a helpful map in determining popularity. My senior analyst cap primarily is borne through the column ["Between the Bullets"] that I write that analyzes album sales as well as assisting the editorial department in identifying trends.
Who are these charts intended for?
They are the absolute report card for recording companies and they are a road map for either people who have to make decisions about buying music or video product, or for people who program either video or radio channels.
How exactly is the album chart put together?
All of our sales charts are based on data provided to us by Nielsen SoundScan, and Nielsen SoundScan has been in business since 1991 and they use the actual point of sale systems that retailers themselves use to track inventory. It's not like a separate system where when you make a purchase the cashier has to remember to scan something twice, it takes the actual information from the cash register and from that we have a universe that represents more than 90 percent of the US retail marketplace. You can be very comfortable about predicting national numbers to not only report what happened within the panel but what the actual overall sales would have been if you had the other remainder of the marketplace reporting.
The only thing I can think of that counts things for a living that might have a larger universe would be the box office for films, which is essentially almost 100 percent of that marketplace is represented in that sample. But when you look at TV ratings, radio ratings, Gallup Polls or other political polls, the sample is usually a fraction of 1 percent. Very few things that count things for a living have the luxury of a sample that counts more than 90 percent.
Sampling retail sales is not a new concept, music was a little bit late to it, it’s already happened in pharmaceuticals and the food industry before music picked it up, and the toy industry also had a pool together before the music industry picked it up. With that said, I don't know of any other field that picks up retail data that has as large a sample as Nielsen SoundScan has in the music market.
What was the system before SoundScan?
Before that people would report to us their best sellers according to rank, so we would get like their 20 best sellers and we would assign points, the highest point value going to the title that was reported the best seller and then a declining scale from there. Then there were a certain amount of titles that retailers could report as “strong” and then another certain amount of titles that retailers could sort as “good,” and we weighted the accounts that reported to us but that data still wasn't as specific, if you had two chains that did about the same volume.
At the time there was a chain called Camelot Music that did most of its business in malls, it was primarily the eastern part of the US and Texas, and they didn’t come much further west than their Texas stores, and they did about the same volume as Wherehouse that had most of its stores in California, with a heavy concentration of stores all west, including Oregon, Washington, Arizona, and they tended to have larger stores, they had some malls stores. They had about equal market share, you could take maybe the same two records and if Camelot’s top record was ahead of the No. 2 record by a small margin and then you went over to that other chain and found that the same two titles were on top of the chart but in an inverse order, and one of those might have a much larger sales tally than the other. In the system we had, as well meaning as it was, those two titles would have come out a wash because the reporting chains had the same weight and those votes would kind of cancel each other out when, in fact, if you had looked at how those two titles sold at those two companies one of them might have had a clear advantage that you couldn't capture without that important piece which was not only was it your top seller but how many did it make to be your top seller.
That’s the other thing that you realize when you get chance to look at more specific data is that some No. 1s are bigger than. The other problem is there's a maximum number of points you can have the way we used to do it, so you could have a big record and now it’s fighting to keep its place at No. 1 because it can only go down from the maximum number of points it earns. Whereas if you have a system that's built on specific data and something truly is dominating the marketplace, it's easier for that title to remain number one as long as it deserves to because if it’s outselling the No. 2 title by 600,000 or 500,000 or a significant margin, its lead is protected as long as it’s outselling all of the others.
For a lot of reasons [SoundScan works better], and speed of chart as well. Some accounts we had to call actually on the Friday prior to publication and then we tried to have as many of the big ones as possible on Monday, but you were missing that weekend business from the people reporting on Friday. The other advantage of having point of sale and the system we have now is it’s much faster if there's an impact from an appearance on or an appearance on “Oprah Winfrey” or anything like that. It's much more common, there were only six albums that had debuted at No. 1 in our old system and now it’s a pretty common sight to see an album debut at No. 1 in the Billboard 200, and that is more a reflection of how things actually sell in the marketplace.
How often are you getting this sales information?
We only get a pull from SoundScan once a week. With some retailers, they are gathering data more than once a week but the final processing happens on Monday and Tuesday and we only get data from them once it’s been completely processed. On rare occasions we have to rerun the chart on a Wednesday because after it goes up someone will discover that there’s a discrepancy that was not rectified during the processing, but by and large the chart that we receive on Tuesday is the same chart that will stand at the end of the day on Wednesday. Nielsen SoundScan puts its charts up for their subscribers on Wednesday morning.
Now that we have so many additional ways that people purchase than we did in 1991,do things like Amazon.com count?
Absolutely. Nielsen SoundScan has a vested interest in making sure it’s as complete as possible so not only did they go to the Amazon.com world as soon as it could, but it also went to digital sales as soon as it could. Not long after iTunes happened, iTunes happened, I want to say, in March of last year, and by the middle of the year Nielsen SoundScan was collecting data not only from iTunes but any other cyber service that was selling downloads was also represented in that sample and they’ve kept up with it. They added the PC platform for iTunes when it came out, they added Napster when it came out, they added Sony Connect, so they’ve really stayed on top of that, the Walmart.com, because they, as well as Billboard, have a vested interest in continuing to represent as complete a picture as possible. If we had stuck ourselves in the corner where we were only counting physical sales with the knowledge that digital distribution would become an increasingly important sector as we go forward, that would be a mistake.
Do iTunes sales then count on the singles chart?
If someone buys the whole album, it will count, yes. If someone goes in and buys eight out of 12 tracks, that will count toward individual track sales, but if someone actually goes in and purchases the entire bundle, so that everything that is on the physical album is on that bundle, then that will count as an album sale. The same with singles, which is a little confusing. If they have actually packaged a single that has not just the lead song that people are interested in but the same B-tracks that are included on the retail-available single, which is a smaller and small consideration these days because, unfortunately, there's just not a lot of singles that are made for market anymore, but if the bundle has the same content as the retail-available single and is identified by a UPC code, then that will count toward the singles chart. But most of the transactions we’re getting from iTunes and its competitors are individual track sales.
How are singles being counted now since they’re not being sold as often as they once were?
We still count them it’s just that the numbers are really, really small. We added [the digital] chart as soon as Nielsen SoundScan began to count digital tracks and the volume already was ahead of where retail singles are. Not long after the lead was like 10 to 1 and now it’s greater than that. It's a very unfair comparison because there's a wide assortment of hits that are made available in the digital marketplace and there are very few hits that are made available in the singles marketplace, and then on top of that, because there's been such constricted variety of material available, retailers frankly had to abandon making sections of their stores dedicates to singles, there’s just not enough titles, there’s not enough variety for them to have a large singles section in their stores the way they used to. Even if a hit does come to market, its sales potential is limited.
[snipped-out U2-related stuff]
When counting sales, if someone comes out with a boxed set or double CD, does that count as one or multiple sales?
There is a lot of confusion about that—a unit is a unit. The reason people get confused about that is that the RIAA, the process that establishes gold and platinum albums is independent of the tracking that comprises our charts. If you have a boxed set, they multiply those shipments by three if there’s three CDs, and with double albums, if it’s over a certain length, they will do the same thing with that as they do with boxed sets. But for us a unit is a unit.
How much of a difference is there between what your numbers say and what the RIAA says?
They usually bear each other out. There can be fluctuations. One of the things we don't track are typical record club sales, and I have to qualify that because it used to be we didn’t do record clubs at all. Now record clubs, especially in Latin music, can be involved with the up front marketing of an album. Before we really didn’t want to track record club because it was all after market, an album would be out for six months, or even a year, before it got added to record club and then you would have this artificial spike that happened only because this after market had picked up that title. But now if there is direct marketing that happens, we do count those kinds of sales. I have to qualify, we no longer exclude record clubs but the only transactions that I’m aware of that are tracked are proactive at the beginning of a release as opposed to the old model where an album came to record clubs a half year or a year after it hit market. In those cases, like if you look at “The Bodyguard,” for instance, which is an older album, its certification level is a few million higher that its SoundScan number and the difference is the record club.
In advance of creating these charts does pre-analysis and hedging of bets go on?
I don't really do a lot of that because it happens so fast. You can speculate and speculate as much as you want but you really don't have a true sense how much something is going to sell until it actually has a chance to start selling. If something ships large that tells you retailers have confidence that it’s going to sell big. It used to be that you had to ship twice as many records as you were going to register in your first week, so if you were going to have a first week of 500,000, you needed to ship 1 million to get that. The shipping model is more efficient now, we’ve actually seen a lot of cases where you don’t have to ship as much product to yield a big number, but there is something about you have to send a certain amount of copies to the wrong stores to have the right amount of copies in the right stores, so I think that’s in play. But really none of it means anything until the consumer gets the chance to say whether they’re going to buy it or not.
A case in point was the last 98 Degrees album, that had come after other boy bands, had had really, really large albums and really, really large first weeks and I think that there was a lot of confidence by a lot of retailer that 98 Degrees was going to have similar success so they had a huge ship. Their first week was okay but compared to what they shipped, it didn't look that big. Every once in a while you’ll have something which kind of makes any speculation you do before it comes to market kind of a moot point.
The other thing is you have to remember is not so much what the short game it, it's what the long game is and sometimes people get kind of wrapped up in what the first week number is and really what’s important is how’s it going to sell at the end of the day. a good case, Eminem shipped close to 4 million copies, well you think he’s guaranteed to have a million-plus week but there was a fly in the ointment, they had to rush release that to market, they had to bring it out with an abbreviated sales week. It sold over 700,000 copies in its first week and sold more than 800,000 copies in its second week, and that’s still 1.5 million copies in the space of about 10 or 11 days, and that’s a more important number to me than whether he had a million-plus week.
What days does your chart reflect?
The tracking week ends on Sunday, so it’s a Monday through Sunday. Some of the accounts we report report Sunday through Saturday, but the tracking week officially goes Monday through Sunday.
So why then do new records get released in the US on Tuesday when they’re released on Monday in other parts of the world?
The US adopted Tuesday as a street date in the late '80s, I don’t remember the exact year now. Here's the problem with Monday, more and more stores receive new releases not from their warehouse but directly from the manufacturer. In the scenario where it comes from your warehouse, it will go to wherever your depot is and then it will ship out and you’re responsible for making sure it gets to the store on time, that it doesn't get out before it's supposed to get out. But with more and more new releases going directly from the record company to the store, then the store is dependent on the UPS route and you’re at a competitive disadvantage if it’s the day that the U2 album came to market and your competitor gets it an hour before you do or, worse, they get it several hours before you do. They made Tuesday the street date saying, "We’re still going to ship on Monday but you have to hold that product until Tuesday so that no matter what time you open, you have the product available," so that’s why they changed it. Whether you were at the beginning of the UPS route or at the end of the UPS route, you were going to have the same advantage. |
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Edited by Brian W. on 29 January 2009 at 3:53am
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Topic: Interesting Geoff Mayfield interview
