February 25, 2011 at 2:43 pm

Music Industry Chart Corrected: Sales Declining More Than Bain Claimed

music industry decline, bain's chart corrected

One might imagine that Bain and Company, a global consulting firm with thousands of employees in offices all over the world, could produce a chart accurately depicting music sales over the past few decades. Sadly, that did not appear to be the case.

Evolver.fm was duped by a phoney-baloney chart from Bain’s January 2011 “Publishing in the Digital Era” study (.pdf), which appeared to indicate that U.S. record labels’ sales revenue in the first decade of the millennium was higher than in the ’70s and ’80s. We weren’t alone. Peter Kafka of All Things Digital, music industry chatterbox Bob Lefsetz, and John Gruber of Daring Fireball reposted the chart — as did Business Insider, which made Bain’s bogus chart its “chart of the day” earlier this month.

However, Modcult pointed out several problems with that chart, after which Michael DeGusta cleared things up with a follow-up article including the corrected chart above, and some specific dissing of Bain’s “analysis”:

  • The chart uses raw revenue numbers, not adjusted for inflation or population.
  • The chart is labeled ‘Global Music Turnover’ but the data is actually U.S. only.
  • The chart says ‘Bain Analysis’ but it’s very unclear that they did any analysis, since anyone paying the RIAA $25 can login and immediately see virtually the same chart, albeit formatted slightly differently.
  • They fail to clarify how and if they distribute the RIAA’s 16 sometimes vague categories amongst the four they use.

One might quibble with some of the points above, but at the very least, Bain’s failure to adjust for inflation is enough to discredit its chart. DeGusta’s version above reflects U.S. music-purchasing habits more accurately, indicating that music sales are in fact dropping more than previously reported. We regret posting Bain and Company’s ill-conceived chart in the first place. For more analysis of the RIAA’s sales data over the past few decades, see DeGusta’s Bain smackdown.

(Image from Business Insider)