Michael Jackson sales surge expected to last months

Fri Jul 3, 2009 5:25pm EDT

Freshly printed covers of Michael Jackson's 'The Essential' CD are pictured in the Austrian 'ArtPress' factory in Hoefen July 3, 2009. REUTERS/ Dominic Ebenbichler

Freshly printed covers of Michael Jackson's 'The Essential' CD are pictured in the Austrian 'ArtPress' factory in Hoefen July 3, 2009.

Credit: Reuters/ Dominic Ebenbichler

NEW YORK/DENVER (Billboard) - In the days following Michael Jackson's June 25 death, fans flocked to record stores and digital music outlets to purchase one last memory. And merchants say they expect the Jackson sales surge to last for weeks -- maybe even months.

"With the around-the-clock coverage and questions about his death, this story will keep going, with every development giving it a new bit of life," says Kerry Fly, vice president of purchasing and marketing at wholesaler Eurpac.

Jackson's solo album sales in the United States skyrocketed from 10,000 copies in the week before his death to 422,000 in the week ended June 28, according to Nielsen SoundScan.

During the same period, U.S. track downloads surged from about 48,000 copies to 2.6 million. The week of his death, the best-selling track was "Thriller" at 167,000 copies, and the top-selling album was "Number Ones" at 108,000.

In the United Kingdom, Jackson held 11 of the top 200 album positions and 43 of the top 200 singles based on sales monitored by the Official Charts Co. for the week ended June 27. Despite the inclusion of only two full days of sales after Jackson's death, "Number Ones" topped the OCC album chart after selling 46,400 physical copies and 10,000 downloads. "Thriller" also reached the top 10 for album at No. 7, with combined physical and digital sales of 14,900.

Among Jackson's best-selling albums in the United States during the week ended June 28, the split was sharp between physical and digital retailers, which appeared to relate to the availability of titles at physical retailers. Anticipation of a Sony price cut on catalog titles appeared to prompt U.S. retailers to stock popular greatest-hits collections like "Number Ones" instead of studio albums like "Thriller" or less popular compilations like "The Essential Michael Jackson."

From the day of Jackson's death until the following Tuesday (June 30), U.S. retailers of physical CDs had ordered about 3 million of his Sony Music Entertainment albums, while international orders hovered around 5 million copies, sources say. Although Sony had to scramble to meet demand, it got high marks for getting Jackson product to stores June 29, after most retailers had sold out of the artist's inventory during the weekend.

Universal Music Group, which owns the Motown label, caught a break when it experienced a smaller run on the Jackson 5 catalog: It had already shipped plenty of product as part of its Motown 50th-anniversary promotions.

"By dumb luck, we weren't completely caught off guard," says Universal Music Group Distribution president/CEO Jim Urie. He notes that the company also shipped the rest of its Jackson 5 inventory and had U.S. orders for 300,000 album copies as of June 30, which will be back-ordered until July 6.

ALLOCATING LIMITED SUPPLIES

Sony wasn't as lucky. The supply of solo Jackson CDs in the U.S. market was relatively low at the time of his death because 13 of his albums were part of the major's previously announced move to reduce prices on 8,000 catalog titles. The price cuts, which kicked in June 29, lowered the wholesale cost of the standard version of "Thriller" and "Off the Wall" from $9 and $7.81, respectively, to $6.40 and $5.40.

With the price change imminent, retailers had been waiting to reorder product at the new price. But when Jackson died, those pricing considerations went out the window.

"On Friday morning, I got out of bed and went straight to my computer to order Jackson product," says Dedry Jones, owner of indie retailer the Music Experience in Chicago. "I didn't care about old price/new price. People aren't asking price on Jackson. They are just buying it."

Faced with massive demand, Sony decided to ration product rather than try to fulfill entire orders, according to retail sources. So the entire account base received enough product to get through June 29, with new shipments arriving the next day.

"Sony is rationing Jackson product, but they did right by us," says Carl Mello, head of purchasing for New England-based retailer Newbury Comics. "Of course, they didn't ship us what we ordered, but they got us in more than I expected. The rest of our order will come in during the week."

Moreover, Sony appears to have taken on the costly option of shipping product to individual stores -- on an overnight basis -- rather than sending bulk shipments to an account's warehouse. "Anything you ordered, they would bear cost," says an executive at a midsize U.S. chain.

DIGITAL SALES SURGE

Meanwhile, Jackson's catalog did brisk business at digital retailers, which don't have to worry about supply and already enjoy lower wholesale pricing than brick-and-mortar stores. Digital vendors were also helped by the fact that many physical retailers sold out of Jackson albums during the weekend.

In the week before his death, 64 key Jackson tracks sold a combined 30,000 copies at iTunes, the dominant U.S. digital vendor and the largest overall music retailer, according to sources. During the week ended June 28, sales of those same 64 tracks skyrocketed 60-fold to reach 1.8 million copies at iTunes, the sources say. Similarly, iTunes sales of 16 Jackson solo albums and compilations went from slightly more than 1,000 copies in the week before his death to 225,000 copies for the week ended June 28, sources say.

In total, Jackson albums took 10 of the top 15 best-selling album slots and 21 of the top 100 on the day after his death. His singles represented 13 of the top 25 songs sold on the same day, with "Man in the Mirror," "Thriller," "The Way You Make Me Feel," "Don't Stop 'Til You Get Enough" and "Smooth Criminal" all making the top 10.

By June 30, those totals began to slip. His album rankings fell to six of the top 15 and 16 of the top 100, but he held on to the top two spots with "The Essential Michael Jackson" and "Number Ones," respectively. Singles, however, fared better, with 11 staying in the top 25, including the No. 2 spot with "Man in the Mirror."

Jackson's sales also jumped at Amazon's MP3 store. The day after his death, he was the No. 1 artist of the day and had 13 of the top 25 songs sold and 11 of the top 25 digital albums. On June 30, Jackson's singles share increased to 15 of the top 25 songs, while album sales fell to seven of the top 25 titles. Amazon posted a tribute to Jackson on its home page.

At Verizon Wireless, the largest mobile operator in the United States, Jackson's songs took five of the top 10 downloaded songs through the weekend, with "Wanna Be Startin' Somethin'," "Thriller," "Beat It" and "Billie Jean" holding the top four spots.

SEARCH IS ON

Daily search volume for Jackson's music at peer-to-peer file-sharing networks jumped nine times above the level seen the day before his death (June 24), according to the P2P measurement firm BigChampagne.

But downloads and P2P traffic don't tell the full digital story. Virtually every major digital music service reported unprecedented spikes in volume and activity surrounding Jackson's music as fans flocked online to pay their respects.

On YouTube, Jackson's music videos generated heavy traffic. "Beat It" was viewed nearly 1 million times from 10 p.m. June 25 to noon the next day. "Don't Stop 'Til You Get Enough" registered 800,000 views in the same time frame, followed by "Billie Jean" with 750,000 and "Thriller" with slightly more than 700,000.

The online streaming music service Pandora says registered users created more than 500,000 custom radio stations featuring Jackson songs June 25-27. Microsoft offered a free copy of the "Thriller" video to all Xbox 360 users, resulting in 50,000 downloads during the two days after his death.

LIKE LENNON, BUT BIGGER

The Music Experience's Jones says he thinks heightened interest in Jackson's catalog will last for the rest of the year. "Christmas," he says, "is going to be about Michael Jackson."

Others aren't convinced that the sales gains will be sustained through the end of the year but agree that they'll last a while. "Usually when an artist dies, the sales surge is over within two weeks, but for John Lennon and Elvis Presley sales went on for a while," says the head of purchasing at a large music account. "I would put Jackson as bigger than Lennon."

Sue Bryan, the head of the music and video department at J&R Music in New York, also sees parallels with customer reaction to Lennon's murder in 1980. "The night it happened, we had a customer crying in the store," Bryan recalls. "It's a very emotional thing for a lot of people."

Newbury Comics' Mello says demand has been strong for all manner of Jackson product. "We cleared out some Jackson stuff that we thought we would never sell, like his old videos," Mello says. "Look at what's going on at eBay. Regular versions of Jackson's albums are going for $50 and $60, and these are titles that you couldn't have sold the day before his death for $3."

Amid all the hoopla, retailers tried to put Jackson's death in perspective. "Who else could die today and have this kind of impact in music?" one retail executive asks. "Dylan? I don't think so. Madonna, Sting or Bono would have some impact, but not like this. Maybe Paul McCartney could have as much impact, But after that, if you think about it, who is left?"

(Editing by Sheri Linden at Reuters)

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