Mining the wisdom of the online crowds
generates music business intelligence,
identifying what’s hot and what’s not.
BY VaRuN BhaGWaN, TYRoNe GRaNDiSoN, aND DaNieL GRuhL
By the People
How MUsiC CHarts are created has remained relatively
the same for the past 50 years despite dramatic shifts
in the industry’s underlying business, technological,
market, and cultural assumptions. The charts, which
are generated and published periodically, are based
largely on retail sales and radio-listener statistics.
However, one of the most significant demographics for
the industry—the teen market—has notably altered its
new-music-consumption behavior due to the recent
availability of online content and digital downloads.
This phenomenon is recognized by chart creators
eager to incorporate these observations into corporate
marketing strategies in order to stay relevant to the
younger generation and generate sales.
The Sound Index system demonstrates a new
way to measure popularity in the world of music by
incorporating the Web, online communities, and social networks. It enables the capture of what’s hot and
what’s not on the Web while tracking
the popularity of emerging records
and artists in real time. It allows the
music industry to keep tabs on the demographic it considers most important and for the public to quickly learn
about new music.
Music charts are useful decision-support tools that influence the visibility and success of artists, as well as
help calculate their financial rewards.
Popularity drives radio and television
programming decisions concerning
the music to be covered, the resources
to be allocated, and the premiums ultimately paid to artists and their representatives. These charts are critical to
the continued success of musicians, as
well as music-industry professionals.
Since the late 1990s, the Web has
emerged as the most popular medium
for young people worldwide. Hundreds of millions of users have moved
to the Web to listen to music, explore
new music, and purchase individual
songs, ringtones, records, and albums.
In fact, 48% of teens in the U.S. did not
buy a single CD in 2007, up from 38% in
2006.12 Thus, traditional music charts
are losing their relevance and appeal
to their key demographics. 15, 16
Recognizing this long-term business and
cultural trend, music-chart-generating
organizations have begun to incorporate digital streams, but these streams
still make up only a small proportion
of the data reflected in the charts. In
summer 2009, Apple’s iTunes, which
sells digital singles downloads, was
the largest music retailer in the U.S. in
terms of revenue.
In the U.S., Billboard (http://www.
billboard.com) has published the Billboard Hot 100 music charts every week
since 1958 ( http://www.billboard.com/
In the U.K, the British Broadcasting
Corporation (BBC) has published its
Top of the Pops ( http://www.bbc.co.uk/
totp/) music charts since 1964. Simi-