RIAA says sales are down. SoundScan says “No way.”

Who should you believe?

The following includes slides and facts presented at my NAMM 2011 panel presented by H.O.T. Zone as well as reprinted material from a 2004 article.

Moses Avalon

In April of 2004 I was working on a piece for Keyboard magazine about bar codes. I was trying to determine if the “free” barcode many CD Replicators provide is a real added value to the indie artist, or just a bogus premium.  But what evolved was a much bigger and more important story.  Talking to SoundScan revealed a massive mistruth disseminated by the RIAA about the reality of declining record sales.

Soundscan (owned by Nielsen) uses the barcodes on CDs to register sales at record stores.  The correlated data contributes to the Billboard chart listings, as well as much of the market research used by record companies.  Through my investigation I learned things that would contradict reported statements by the RIAA. Mainly that US labels have had a significant reduction in sales from 2000-2004.

My panel at the 2011 NAMM show this year is all about getting to the bottom of the fallacy that the music business is in disarray and this means understanding why SoundScan can say sales are stable yet the press, visa vie the RIAA, can say sales are plummeting.

So to facilitate that I’ve reprinted the key portions of that April 2004 article in this piece.


Cary Sherman, president of the RIAA, responded personally to me in April of 2004 and in the process exposed intriguing insight into the way the RIAA calculates “losses.”

At the time Sherman claimed in a speech in early 2004 to Financial Times Media at a Broadcasting Conference in London that the industry was experiencing a “7% decrease in revenue since last year [2003].” He named piracy/file-sharing as the main reason.

But when speaking to a representative from Soundscan I learned the following:

–For the first quarter of 2003 Soundscan registered 147,000,000 records sold.

–For the 1st quarter of 2004 Soundscan reported 160,000,000 records sold.

That’s 13,000,000 more units, almost a 10% increase from 2003 at the time Sherman made his January of 2004 assertion that sales were in decline.

So, I asked the Soundscan rep, who would only speak to me if I didn’t use his name, “Would you disagree with what the RIAA is implying?”

“I would NEVER disagree with the RIAA,” he said, smirking.

But he did explain the rational that would allow both of these seemingly inconsistent realities to exist in the same universe, “The RIAA reports a sale as a unit SHIPPED to record stores.  Whereas Soundscan reports units sold [to the consumer] at the point of purchase. So, you’re talking about apples and oranges.”

Really!?! I fact-checked this with Cary Sherman, who confirmed, “He is correct,” and added, regarding RIAA and Soundscan data, that “The two sets of numbers tend to be similar, but because of timing differences, they’re usually a little different at any point in time.”

Similar?!?!  How is a 10% increase for first quarter of 2004 similar to a prediction of a 7% decrease for the entire year of 2004?


Now armed with the secret decoder formula, I went back and read the RIAA and International Federation of the Phonographic Industry (IFPI) Web sites more adroitly.  Sure enough, every time the RIAA complained of large drops in “unit sales” it included international sales, not strictly domestic.  Every time it spoke to domestic “losses” it was referring only to “units shipped in the US” to record stores. It seemed obvious that if the RIAA confined their revenue statistics to the US market alone they may not be able to publish any losses in REVENUE at all for 2000-2004.

There is only one logical integration of all these statistics with the Soundscan data: even though actual point-of-purchase sales were up in the first quarter of 2004 up by about 9% in the US–and the industry sold over 13,000,000 more units in Q1 2004 than in Q1 2003, the Industry is still claiming a loss of 7% because RIAA members shipped 7% fewer records than in 2003. (Sales would ultimately level off for 2004 at a 12% decrease.)

Forget the confusing percentages, here’s an oversimplified example:  I shipped 1000 units last year and sold 700 of them. This year I sold 770 units but shipped only 930 units. I shipped 10% less units this year. And this is what the RIAA wants the public to accept as “a loss.”

In other words had major labels been more conservative and less pathologically optimistic about sales growing each year, they would have shipped about the same amount of units and then the RIAA would have nothing bad to report.  Sales of Albums (remember that in this comparison we’re only talking about Albums) leveled off slightly during between 2000-2004, mostly due to the fact that cassettes were  all but discontinued and digital downloads of singles became the fad.  (See the chart below)

I’ll go a step further. Less shipments and more sell-through should mean higher profit margins and faster turnaround; and shouldn’t that be good for both the retail and wholesale side of the industry?  “Sure,” admitted Sherman.


Actual Album sales dipped about 10% a year between 2000-2004 and were on the rise during the height of the so-called Napster debacle. From 2004 to today, we see steep decline, but this chart does not account for singles sales or increased revenue from licensing.

Labels are spending almost 30% less to sell the same amount of recordings since 1985. Where is all the profit going? See the next slide.


Maybe, but “we, the people” will never be able to figure them out due to this confusion, deliberate or not. Regardless, it’s certainly been a great excuse for majors to clean house of over-paid executives. AS for Overpaid CEOs..?  Well, see for yourself.

It's easy to say profits are down when you keep paying yourself more and your employees the same-- for 20+ years.

But as for a US major label’s bottom line, the effect could never rise to the RIAA’s/IFPI’s claim that file-sharing is the “major factor” of revenue loss for labels, and certainly not for artists. At least not before the advent of LimeWire in 2004.

Nope. My analysis suggests that the number one reason for the loss of jobs in the industry is self-perpetuating major label PR, and that the number one cause of loss of unit sales revenue for artists is STILL record label accounting practices.

If sales are rising or leveling, but profit is falling, there is only possible explanation:  somebody in control is being paid a lot more now than they were in the good old days.  Who could that be?  The Sr. VPs?  No, their salary has stayed about same over the past 15 years at about $300-$350K/yr.   Entry level interns?  No, they have kept pace with inflation rising from about $18K a year to $35k, just past the minimum wage level.  How about CEOs?  Yep.  The average CEO salary has bolted from $850K in the mid to late 1980s to a whopping $3Million a year in 2010.

Looks to me like we found out what is really causing declining profits and it ain’t the cost of polystyrene.

Mo out

Leave a comment.  Hey you read this far, why not?


  1. Chris Rich says:

    Of course I’d read this far. Your content rocks.

    But we still have a snapshot from 6 years ago and the landscape has changed significantly for piracy shrinkage.

    Could CEO looting also be enhanced by the Merger and Acquisition frenzy that occurred in the last 5 years or so?

    Weren’t the Vivendi and WEA deals examples of grotesque overpayment made by wanna be morons, Bronfman and Messier?

    A whiskey guy and a water guy have baby boomer fantasies about owning declining rock stars and cut ridiculous leveraged deals while grotesquely over paying themselves.

    And then there is the definition of units. Pop has moved back to singles as the main sales unit much like it was in the early 60s. Singles are probably the default unit item and albums were a transient aberration due to boomer demographics.

    Most pop types can’t do an album worth of compelling songs over the course of the standard contract run. Think of all the one hit wonders stuck cranking out a run of crappy albums to aggravate the fan base.

    If the basic working unit drops from a 16 buck album price point to a 99 cent single price point doesn’t that make a hash of the numbers too?

    So we have the ‘Bronfman effect’, the bloated CEO salary issues, the shift in unit size/price and an explosion in ways to steal music. Oh and a global recession unlike anything seen since the 1930s.

    And there is another looming problem. The big profit engines, rock and even hip hop are declining in popularity and we are stuck with the training bra circuit, 12 year old girls in love with Justin Beiber as the main driver of sales. It’s a rehash of Frankie Avalon and Bobby Sherman… Remember them?

    Jagger looks like he’s ready to keel over and even Eminem is turning into a geezer.Kids would rather play Guitar Hero on a game box than play a guitar. Bloated suburban folk music is reverting to its default status.

    The hottest music scene for young adults is dance music from DJ’s. My focus is legacy instrumental music, Jazz classical and ‘world’ music which gets dumped by the RIAA into ‘other’ along with other unrelated stuff.

    That stuff never sold well anyway and is getting clobbered by pirates while the industry dithers over catalog depth in a time when they can make 74 thousand titles from, WEA, (I think), available for download from a server farm instead of playing peek a boo with availability. I want to buy the entire Nonesuch Explorer series. dammit but the division is run now by gen x airheads who are trying to sell me the fragments of Uncle Tupelo..grrrr.

  2. Don Coyer says:

    Good post from Chris!

    It looks like Moses has nailed it again. These people have been in the game for so long and are geniuses at the shell game, so it’s always hard to be sure exactly what is going on.
    It amazes me how these CEO’s, not just in music, but also in movies,and the banking industry, can basically sack the company, get a gigantic severance package, and leave a smoking ruin in their wake. How were these sharks allowed to get this much control over our industry? It’s the same right down the board for any corporate endeavor…it’s strip-mining, and they only care about today with no thought of tomorrow. THERE’S THE BOTTOM LINE FOR YOU! It looks like it’s going hand-in-hand with the way our government is being run.
    What we need is a visionary who realizes that the industry is dependent on creativity and great music and bands, not on people who don’t build anything, but only take. How hard is this to understand? These people are the type who, when they have sucked an enterprise dry, will drop it and move on to the next big thing they can leech off of.

  3. Moses Avalon says:

    You do realize your chart makes an excellent business school case for why it was a good idea to fire all the people who actually knew how to make and market a record?

    –James Barber

  4. So, what does this matter to the artist who is paying 7% to an attorney who shops & gets a record deal, 15% to their manager, 25% (at least) in income taxes, and a 360° deal to boot? Just absolutely curious, because I don’t know!

  5. John says:

    The faster we realise that just like any other billion dollar business/industry that its all about the dollar and not about the product or creativity the more we would take a step back and look at the world we live in. These men care not about you or me or talent or whatever but only about the continuous flow of money in their pockets and they will do anything to achieve this. The LOVE of money is the ROOT of ALL evil!!

  6. Moses Avalon says:

    Way to go brother. Keep up the good work. Happy belated New year…..

    Bobby Borg

  7. SEAN.FM says:

    The music industry is by far the most important human empowerment tool besides film (but film without music is pretty hopeless). The so-called powers that be know the number one agenda in maintaining their power is by getting control of the internet. The music industry catastrophe is being used to push through net neutrality laws(what a joke) and it will not change until the internet freedom of speech is grinded to a halt. So fudging numbers goes along with the playing field any time you have a corrupt government agenda involved in your industry…

  8. SEAN.FM says:

    btw Moses, you are AWESOME!! Keep up the great work!!!

  9. Dalton Priddy says:

    I find it amazing that the music industry as far as royalties are concerned is one of the few industries that has a Federal Mandate. While oil cartels, big pharma. drug cartels, Wall Street financial fat cats, have billion dollar lobbyist protecting there market share and pricing.
    Only recently has the fed taken over a few p2p torrent sites that pirate anything they can steal.
    Meanwhile, most people surveyed, think music should be free, as in AM/FM radio.
    Even the mp3 download lacks credits and info on those involved in its making like a CD or Vinyl album has.
    Somewhere along the way, those folks in charge have lost contact with what music is all about.
    They have made it a .99 cent store product as the mp3 in its current state is sold.
    Know wonder this once great industry has lost it way.
    We have a bunch of ego hardened self serving Madoff types in control.
    The scam is about to be exposed, and the content creators will soon prevail.

    • Moses Avalon says:

      @Dalton. Nice points. But the music business didn’t make this a 99 cent store. Steve at Apple did. The record companies didn’t devalue music by making it free. ISPs did. They want music to be the free toy at the bottom of their cereal box.

  10. Moses Avalon says:

    Love it!!!! I was checking your RIAA charts yesterday. Highly enlightening Moses!

  11. Moses Avalon says:

    Thanks Moses, I was there at your NAMM presentation. Well done.

    Jon Mattox
    Bright Orange Studios

  12. Dalton Priddy says:

    Well said Moses, this is the kind of investigating journal writing that puts facts before coverups. Always great to read your power points on the music biz.
    By the way, do you know where I may be able to download a gallon of gas, drugs or Apple stock for .99 cents?. Or better yet, point me to that hip new torrent site I here so much about.

  13. So, contrary to the hysteria of your e-mails. There is no competent evidence connecting tortious infringements with any losses for the record business. The copyrightr nazis are full of shit.

    • Moses Avalon says:

      @brian lee corber. You’re confusing me with another blogger named, Bob. I never wrote hysterically or otherwise that infringements were the source of losses. In fact, most of this piece is a reprint from 2004.

  14. ER says:

    Congratulations to the RIAA. They have finally found out how to manipulate numbers the way the Automobile Industry has been doing for years.
    Another thing the Auto Industry does is call gains and losses on ANTICIPATED sales. If they think they should have sold 3 billion dollars in sales but only made 2 billion in sales, they had a loss of 1 billion dollars!

  15. Perry Pansieri says:

    Very interesting Moses. This again proves to me that these music companies should be run by musicians. But again here is the delema; how can you be a business entreperneur and be a musician? It’s really tough. We need some middle ground to not lose the artistic side and yet be able to make a business work.


  16. Don Coyer says:

    If you read Stan Cornyn’s book EXPLODING, about the rise of Warner Brothers records (and Atlantic, Elektra, etc) you’ll see how this business has changed from basically a small business (moreso that you’d think) run by people who loved the music, they were music FANS, to the point where the sharks moved in and corporatized it so that it was all about business. It used to be that it was about the music and the money was a side-effect, but now it’s about money and music is a side-effect. Not only is the tail now wagging the dog, there is no dog. Only a bloated tail.

  17. Moses Avalon says:

    Just read the linked article… Its just like the movies… Only scary. Cause its real. Anyway, thanks for the laugh from the newsletter, I needed it about now. Thanks diane kelly

  18. Jan Seedman says:

    Thank you for bringing in some visual evidence to the story. I have been following your rant for years and agree with you completely. It will be interesting to see if the RIAA ever acknowledges the truth and then does something about it.

  19. Rat Skates says:

    Using Soundscan numbers to guage ANYTHING – sales OR shipments – has some hard limiting applied. In the grand scheme of things, Soundscan hasn’t been around that long. (1991). So how do we get numbers BEFORE that time? Billboard, right? According to Billboard, they assign chart positions (today) according to SS data. How did Billboard calculate those chart positions BEFORE Soundscan was in existence? Well, I asked both parties this question. Just like well-rehearsed teleprompter-reliant politicians who circle around the question but never answer it, BB claims that before SS, all their data came directly from the labels. So they MUST have had “sales” numbers to determine the chart positions. I gave the BB person the exact date my second release debuted on their top 200 (Overkill/ Taking Over/ Megaforce/ Atlantic – 1987). He verified the position, but claimed they did NOT have the “sales” data that put it there! They said “ask for a statement from your label, or audit them”. They changed owners, dismantled and everything in between many years ago. I said, YOU have the numbers, because YOU used it for the chart position! He then did a couple Ralph Kramden hummana-hummana-hummana’s. We hung up, and then I shut off my recorder. Obviously, I’m trying to track my royalty (that I never got; my fault for not staying on top of it) Want to see the in-person visit? I’ve got things like this (and Moses pending interview) in the documentary film in-production “Welcome to the Dream- The Rude Awakening of Rock Stardom. Support is greatly appreciated!

    Thanks Moses…gotta plug!

    • Moses Avalon says:

      @Rat. Prior to SS the Billobard charts were created using 2 metrics. One you have stated correctly was shipping info from labels. The other was sell through data from record stores. Borth were subject to corruption.

  20. Rat Skates says:

    The case being: Billboard is the only pre-1991 source for numbers if the label is defunkt/ still doing time somewhere.

  21. Eric Bragg says:

    Wow, this CEO self-raise inflation is getting quite out of hand. Did nobody learn any lessons from the ENRON ordeal? Or maybe they did…. Are people learning that crime DOES pay? This strikes home with me, in my old life, as well.

    I used to work in another industry, writing code for military applications. But the business I was working for was (is) a commercial company. There was a lot of money coming in to the company, but morale was very low, due to employees being paid well below average. (Apparently they got away with this because this company is located in a place out in the middle of nowhere and no one from the small town is willing to leave their families behind for the sake of better income). Anyway, one day a big stink was released to the press. While all employees got a measley 0.2% Christmas bonus (“bogus”) check, word hit the newspaper that the CEO “was awarded” a $3M Christmas bonus! Worse still, this news broke out during our company Christmas party, and so many people got mad, the party basically ended within the following half hour. Everyone went home, depressed and angry.

    Where is justice? Who is in charge of these guys?! Of course, our government is run the same way, so how can we look to them for an answer or a better example? Are there any honest people any more? &@$*+#%! I could slap my grandma over this!!

  22. Dalton Priddy says:

    I believe Google and its sister company Youtube are the biggest proliferators and profiteers of copyrighted content in the world. To have the Feds give a winking eye and excuse by having Due Diligence is a joke.
    How can the Feds just sit back and allow Google search results for p2p networks and torrent sites and the millions of copyrighted songs and images found on Youtube to be free from copyright infringement.
    I guess when your worth 250 billion your to big to fail and are therefore exempted from the Federal Copyright act.

  23. Anthony J says:

    Mo your the best next time you come to boston or new york I will be here. Check you out. Peace.

  24. Steve R says:


    If I’m reading your charts right, based on SoundScan numbers, the record companies sold 44% less albums in 2010(350 million) than in 2000(800 million). If the cost of selling albums has gone down 30% that’s still a loss of 14%.

    Of course that makes the rise in CEO salaries all the more unjustifiable.


    • Moses Avalon says:

      @steve r. Yep, that sounds about right. 14% over 10 years or about 1.4% a year. Hardly the 16-30% year figure you see in the media. Meanwhile liceneing fees have gone up about 1000% in that same time and we’ve also added new revenue streams (like ring tines, iTunes, and dozens of streaming sources, all of whom have huge net margins) to the equation. All-in-all it might be justified to pay the CEOs a bonus for keeping the overall profits somewhat stable while both the economy and CD sales (the staple of music revenue) are sliding.

  25. […] I covered a lot of this in my blog of several weeks ago (link) but basically, units shipped has little to do with actual sales, number one.  Then, streaming […]

  26. […] I covered a lot of this in my blog several weeks ago (link), but basically, units shipped has little to do with actual sales, number one.  Then, streaming […]

  27. Daniel says:

    Great article that reveals the ‘losses of reality’ in certain parts of the music industry!

    Daniel – digital music distribution

  28. […] Reposted with permission from Moses. Share and Enjoy: […]

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