The “Zero Effect”: Do Consumption Charts Penalize Artists Windowing Streaming Services and Most Compilation Records?

The following is an excerpt from a post on MusicTechPolicy (Music Discovery and Purchasing Survey Results).  David thought it worked as a stand alone post, so here it is.

The “Zero Effect”:  Do Consumption Charts Penalize Artists Windowing Streaming Services and Most Compilation Records?

by Chris Castle

Although we can’t tell how consumption charts are weighted (as far as I know that information hasn’t been released publicly), it’s pretty clear that if you are not on streaming services–meaning you have zero streams–you will be penalized in the chart.

I picked the consumption chart for the first week of Taylor Swift’s October 27 release of the 1989 juggernaut to try to measure how the consumption chart reacted.  The choice was admittedly cherry picking, but with a purpose:  Taylor’s sales were historically significant and her reported streaming should have been somewhat muted given Spotify’s well-publicized decision to reject the record on the artist’s terms.  This would potentially yield good benchmarks for testing the consumption chart at the margins as well as the more bread and butter titles below the top 10.

Based on data for the week ending November 2, 2014, Taylor Swift’s first week sales were so strong it probably doesn’t matter that her streams were somewhat lower for the consumption chart.  At #1, she outsold the #2 NOW 52 title by 10:1, and NOW 52 outsold the #3 Sam Hunt album by 10:8–but Sam Hunt had 4 million streams that punched up the chart position.  NOW 52 had zero streams because it is a compilation record.

Compilation records and soundtracks do not get credit for streams because they have no streaming rights.  This is true even if the music services allow playlists–or possibly create playlists themselves–using the compilation or soundtrack brand in the metadata with the track listing of the underlying tracks.  These playlists work because the individual tracks are already available on the service under direct license from the label or artist licensing the tracks to the compilation or soundtrack. (This is the kind of free riding that was the heart of Ministry of Sound’s recent lawsuit against Spotify and probably why Spotify settled.)

The “zero effect” is much greater further down the chart, however.  In the same week of November 2, Frozen: The Songs, a compilation record, got credit for zero streams and 10,723 albums sales for a chart position of 49.  Blake Shelton sold 8,735 albums but got credit for 930,928 audio streams and a chart position of 44.  The same week Iggy Azalea sold 4,947 albums but got credit for 5,060,617 streams for a chart position of 25.  In other words, Frozen will never have any streams because compilation records typically do not get streaming rights, and got a much lower chart position in spite of selling over twice as many albums.

If you compared based on album sales alone, the Guardians of the Galaxy zero effect soundtrack would have entered the chart at #25, not #40, Sam Smith would have been #15 instead of #6, Bob Segar would have been #23 instead of #34.  Another zero effect soundtrack is Now Disney 3 that would have been #40 instead of #59, and U2’s Songs of Innocence would have been #64 instead of #94.

Seasonal records such as Christmas albums are also penalized.  The Nov 2 chart showed that based on album sales alone, Home Free’s Full of Cheer would have entered the chart that week at #66 instead of #104.  While the title had 26 streams, that was a sufficient penalty to cost the record 38 chart positions.

Conclusions?  Charts are relative beasts to begin with, and the consumption chart won’t keep a phenom like Taylor Swift from dominating the top position.  Measuring streams probably isn’t enough to affect the top 10 or the top 5.  But for records that are compilations, soundtracks, seasonal or other specialty titles that either aren’t allowed a streaming audience based on contract, are windowed, or haven’t found that audience yet for another reason, the consumption chart penalizes high sellers that are not present or are not credited with streams on streaming services.

If chart position matters to your record, then this should be of concern to you as the zero effect creates an incentive to stimulate streams for chart position–assuming you can get credit for streams.  Some would say that the more streaming, the lower the sales.  Without getting into cause and effect on that issue, it certainly can be said that the lower the streams, the lower the chart position even if sales of a given title are higher than another given title.

From a profitability perspective, artists whose records sell but don’t stream may well be thankful.  If that trend continues, then it would also stand to reason to question the benefit of chart position as a selling tool.  But then we hear about services like YouTube routinely deleting billions of fake plays in its video playlists during December.  If this same phenomenon is repeated in streaming services used to measure chart position….not to imply that anyone in the music business would ever try to rig the charts.  Perish the thought.

So what is it all about?  Is there a “zero effect” or is there zero affect?  Sales or streams?