How Billboard Chart Changes Affect Musicians Big or Small
By Tomi Mendel

Late last year, Billboard announced an interesting rule change in the way it keeps track of music sales, declaring that works must meet a minimum price standard in order to qualify for charting. Sales data for any record priced at lower than $3.49 for the first four weeks of its release is no longer being tracked by Nielsen Soundscan, effective November 21, 2011. The same rule will apply to individual songs sold for under $0.39. In effect, this is intended to prevent music artists and record labels from artificially inflating sales numbers with special discounts and giveaways. Bill Werde, Billboard’s editorial director, explained the decision on the company’s website, saying “Billboard doesn’t want to control the marketplace. We just want to count it. But free or almost-free albums don’t represent a marketplace.” 

The impetus for this change comes from a highly successful marketing scheme employed by Lady Gaga for her album Born This Way. In a cross-promotion ploy to draw customers to their brand-new Cloud Player service, Amazon.com struck a deal with Gaga that allowed their users to purchase the album for just $0.99 on the first day of its release. Born This Way became the biggest one-week seller in six years, moving 1,108,000 copies. However, in the second week of its release, now lacking the extreme discount, sales dropped an astounding 84% to 174,000. It’s probably the clearest indication of the power of cheaper pricing, as well as being strong evidence for Billboard’s stated belief that such tactics contribute to an unfair marketplace.

Still, this decision is intriguing because introducing price standards for music chart eligibility potentially stands at odds with the free-for-all Internet culture that is continuing to shape the future of the music industry. Although Billboard is seeking to represent the market more fairly and truthfully with the change, it is possible that just the opposite could happen. With increasing amounts of music becoming available for low or no cost on the Internet, there is a chance that Billboard’s sales charts will come to inaccurately reflect what people are listening to in the real world. It is difficult to predict how the music industry will look even a few years from now. However, if interest in paying for music continues to decline, it’s easy to imagine an environment where the most popular music is not necessarily the most financially successful. 

Consider a scenario where an album, sold for only a dollar or two on the artist’s own website, manages to go “viral” in the same way that videos can today. Under these new rules, it would receive absolutely no sales recognition, even if it were downloaded ten million times. Of course, Billboard maintains a Social/Streaming chart to keep tabs on Internet and social media activity, as well as services like Spotify. However, these types of statistics, while informative, are not quite a direct replacement for traditional sales figures. In this hypothetical album-gone-viral situation, fans would still have no official source for finding out how many albums had been sold.

On the other hand, the new policy might turn out to be a small coup for the traditional music industry. From a business perspective, it gives artists and record labels a strong incentive to avoid the types of promotional tactics that boosted the sales of Born This Way. Music purchasing data is important to labels for marketing and advertising purposes, along with the prestige that comes with having a top-seller. Setting an eligibility threshold based on price discourages major labels from jumping too quickly and too fully into new Web-based distribution models, and therefore could prove to be a clever way of maintaining the financial foundation of the music industry for at least a while longer. Perhaps it could delay the arrival of a free-for-all Internet marketplace that sometimes feels inevitable. 

Why do the Billboard charts matter? In the end, their function is primarily historical. They attempt to provide an accurate document of the most popular music at any given time. However, the information they provide is of a lot of importance, especially to the music industry. In the present, music that sells a lot has a better chance of more radio play, appearances in advertisements, and general cultural notoriety. People like to know what others are listening to and share in the experience. Record companies, for their part, want to know what is successful so they can try to create more of it. Long-term, the charts are the most reliable source for telling the story of changing tastes or recurring trends, as well as providing historical context for the significance of a given work’s sales figures. Any doubt of Billboard’s importance to music makers are dashed by the fact that, even since the establishment of the pricing rules, we’ve already seen another very public attempt to try and game the system. In an (so far unsuccessful) effort to have a record-setting sixth song from a single album go to number one, Katy Perry released “The One That Got Away” at the low price of $0.69. As with the Born This Way strategy, this represented an attempt to artificially boost sales in order to create the appearance of a historic success. In this example, a chance at the Billboard Hot 100 record was of more value to Perry and Capitol Records than whatever money they lost from lowering the price of the single. 

Meanwhile, the Internet has brought us a few models for music distribution that might render these kinds of pricing rule nuances totally irrelevant. A donation-based model, in which artists allow fans to name their price, is becoming fairly common on sites like Bandcamp. Back in 2007, Radiohead received a lot of publicity for embracing this kind of a strategy, allowing people to pay whatever price they chose when purchasing a digital download of In Rainbows on the Internet prior to the official CD release. Interestingly, most people ended up “deciding on a normal retail price” rather than opting for a cheap or free album, Radiohead spokesman Murray Chalmers told the BBC. The move was big news at the time, and it was the first instance of such a major band so fully endorsing the digital download era. Since then, it has also become common for many up-and-coming artists to make sure fans can easily stream their music on the Web prior to making an actual purchase. This can be done through services like Spotify, which pay through advertisements, or via an artist’s own Web page. 

These newer distribution models can be incredibly useful for bands because they allow people to hear the music without concern for the cost. Requests for donation rather than a fixed price can also be a clever means of appealing to downloaders’ hearts. Fans who purchase songs or albums in this way can feel a more personal connection to the music. This is not only because of the more active role they play in the purchase by naming their own price, but also because of the sense (not always accurate) that their money is going directly to the artist rather than to bloated, corporate middlemen like record labels or music retailers. Precisely because of this more active, personal involvement, music lovers are much more likely to recall the price they paid for In Rainbows than whatever the cost Wal Mart or Target set for OK Computer. Rising artists should embrace this and use modern technology to create a more intimate and memorable connection with fans. Those kinds of successes are more important to smaller bands than the inflated sales numbers of the top-forty world. 

In fact, when it comes to aspiring musical artists, Billboard’s rules are not likely to make much of a difference at all. Up-and-comers need to focus on the future rather than their place in history, and they would be foolish to allow themselves to be hindered by pricing standards. Especially for an unknown band, low prices and giveaways are a great way to reach more listeners and start building buzz on the local level. By contrast, for established artists and labels, it is important to do anything possible to make institutions like Billboard take notice. Even if it means using crafty, sometimes questionable sales ploys, a pop star's ability to stay in the consciousness of the music mainstream is crucial to his or her cultural livelihood. People like Lady Gaga or Katy Perry need to find ways to maintain a presence in the charts and in the press in order to assert their relevance. In the case of aspiring music makers, however, the opposite is true. It is the traditional powers of the music industry who must seek them out in order to remain relevant. If your garage band is selling millions of albums on the Internet for $0.02 a piece, Billboard is absolutely going to find a way to document that in order to maintain its reputation as a trusted resource for measuring music popularity. A rising musician’s task, therefore, is to embrace new technologies and strategies in order to push the medium forward. Billboard and other industry leaders will adapt accordingly. 

In the end, the pricing standards announcement is not likely to have a huge affect on either major stars or up-and-comers. Still, it’s an interesting reminder of the transitional period we live in when it comes to the music market. Many questions remain about how new technology will change the way music is created, promoted and distributed. The future could usher in a new era of freely downloadable, independent success stories, or it could end up being something completely unexpected. Billboard’s policy change is a recognition of the exciting, ever-changing landscape of today's music world, and the only tragedy will be if these new standards inadvertently prevent them from properly documenting it.