Commerce Vs. Consumption: A Revolutionary Rethink Of Billboard's Album Chart

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Imagine you're in a Tower Records in the late '90s. You head for the cash register with a credit card and two compact discs in your hand. Let's say one CD is by OutKast, the other by Smash Mouth (remember, it's the late '90s). The following week on the Billboard 200, America's premier album chart, both of the CDs you bought have been tallied. In effect, by plunking down 16 bucks per disc, you and thousands of fellow Americans gave each of these albums a "vote" on the chart that week.

Now let's flash forward three months: You're playing the OutKast CD constantly, but the Smash Mouth disc is gathering dust, having been played maybe once or twice. How is this activity reflected on the Billboard charts?

Simply put, it isn't: The album chart doesn't reflect what you and your fellow buyers did with those discs after you acquired them. Sure, you could tell a friend, "Hey, I'm really loving that OutKast album," and perhaps that will inspire your friend to go buy the CD, too, helping to keep it aloft on the album chart. But that's a pretty indirect way to reflect your abiding love of that album. Three months ago, your trip to Tower Records gave equal "votes" to a pair of CDs you now feel very differently about — one vote each for the OutKast album you adore and the Smash Mouth CD that's now a beer coaster.

Throughout its nearly 60-year history, this is how the Billboard album chart has worked: capturing popularity only at the instant someone decided to buy an album. Honestly, it hasn't been a bad system — it serves as a proxy for artists' popularity week to week, and as albums ride the chart for months and years, you can interpret a long run as a sign that a disc has gone viral, infecting new waves of fans (or, in the case of Pink Floyd's Dark Side of the Moon or Bob Marley's Legend, new generations).

In 1991, when Billboard teamed with Nielsen SoundScan to factor direct cash-register sales into the chart, the Billboard 200 — as it was then renamed — became far more accurate. I picked the late '90s for my imaginary example above because it was a time after SoundScan started, when album commerce was strong and the chart was great at capturing those sales. We chart observers refer to the last two decades in Billboard as "the SoundScan Era," acknowledging the revolution that better data brought to chart-watching.

Well, it may be time for us to coin a new term: the Streaming Era. Or maybe we should call it the Consumption Era? Not as catchy, I know — but consumption may be the most apt term for what Billboard intends to measure with a just-announced overhaul to its flagship album chart.

The new Billboard 200, which will premiere next week — Billboard calls it the chart's "biggest upgrade in more than 23 years" — will not only factor in streaming music from providers like Spotify for the first time. It's going to rewire the chart in fundamental ways. Now, the chart will capture albums both at the moment of purchase and later, reflecting their playability and ongoing digestion by the public. In essence, the music business's longtime authority for defining what a hit is has determined that it is no longer enough to measure an album's place in the market simply by how many people bought it.

On the most basic level, Billboard's album-chart revision is an acknowledgement that music consumption has evolved massively, especially since Spotify came to America in 2011. During the '00s, as downloading exploded, the music industry had already grown accustomed to gradual but steady drops in music sales — usually a single-digit percentage every year. But in the '10s, traditional sales began to really plummet, and the drop has accelerated this year: In 2014 so far, album sales have declined roughly 13 percent from the same period in 2013.

While Billboard and Nielsen say they have been working on their new chart formula for more than 18 months, Dave Bakula, Nielsen's senior vice president of industry insights, said the industry's rapidly shifting business model made the new chart imperative. "When you see traditional album sales continuing to decline and even digital sales declining, while audio stream are up year over year, you realize this is the segment that's going to continue to grow," he says. "This new chart is going to change the way success is measured and, because of that, change the way business is done."

The Billboard 200 will still derive the bulk of its data from sales of albums, both on physical media — CD, vinyl, even cassette — and full-album digital downloads. What's new to the chart is the inclusion of digital album cuts that are both streamed and downloaded.

In particular, media coverage of the new chart has focused largely on streaming, which is indeed major news. Nielsen and Billboard will now count 1,500 song streams from an album as equivalent to one album sale. This 1,500-to-1 ratio is meant to roughly approximate the revenue the industry receives when you stream a song versus when you buy an album. (Though I imagine Spotify-haters Taylor Swift and David Lowery will think even that estimate is too generous.) So, for example, every 1,500 people who stream Iggy Azalea's "Fancy" in a week will equal one sale for her album The New Classic. Or, if you live in a household with a child under 10, the 1,500 times your kid plays "Let It Go" in a week — sympathies — will equal one more Frozen soundtrack sale.

This streaming rule captures an aspect of music fandom that's wholly new to the album chart: consumption on an ongoing basis. Unlike the CD buyer whose OutKast purchase is tallied once and then never again, a Spotify user who falls in love with the same album will have her playback counted on the Billboard 200 chart week after week. Mind you, the 1,500-to-1 ratio means these plays don't count nearly as much as the sale — but cumulatively, millions of streams will add up, giving a chart boost to albums months after they debut. This data, combined with the traditional, single-event album buyer, is meant to give a fuller picture of an album's currency.

"People should see this new chart as a ranking of an album's popularity throughout its relevancy," Silvio Pietroluongo, Billboard's Director of Charts, told me. "How many albums did you purchase and play over and over? How many did you play once, then never again? This new chart is like a heat index of albums — here's what hot, not only this week but continuing to generate that kind of interaction and passion."

So yes, the addition of streaming is the most profound change to the album chart. But there's another, less heralded rule change: Nielsen and Billboard will now also count 10 song downloads — singles purchased at an online retailer like iTunes, typically for $1.29 — as equivalent to an album sale. The ratio here is more straightforward: 10 tracks at a buck and change per song is roughly equal to a $10 to $15 CD.

This metric, commonly referred to as a "track-equivalent album" or TEA, has actually been a standard revenue measure in the music industry for about a decade — basically, ever since Apple's iTunes brought purchasable downloads to the mass market and turned every track on an album into a de facto single. Since the mid-'00s, a label measuring the success of an album project has used TEA math to boost its sales total. For example, Katy Perry's hit 2010 album Teenage Dream sold about 2.8 million traditional copies (CDs and full-album downloads); that's a smash number nowadays, if a bit modest for an album that generated a half-dozen hit singles. However, Teenage Dream looks like an even bigger blockbuster when its more than 20 million sales of individual tracks are factored in. At a 10-to-1 ratio, that adds more than two million in TEA sales to the project, making Teenage Dream a virtual quintuple-platinum album.

So if TEA has been around since the mid-'00s, why hasn't it been baked into the album chart until now? Reportedly, label executives have been clamoring for Billboard to include TEA in the chart, but until now the magazine has demurred. "We've actually had a TEA-based chart at Nielsen SoundScan for years," Bakula said. "So it's exciting that it's now being embraced at the Billboard 200 level."

You can understand Billboard's caution. For one thing, since 2005, hit buck-a-song downloads have been well captured by Billboard on its flagship song chart, the Hot 100 — they are a more natural fit there. But more important, to music lovers and especially the artists who make albums, TEA and a traditional album sale aren't the same thing. Ideally, an album sale represents a fan consuming the artist's latest work in toto. By contrast, the TEA metric is typically dominated by an album's biggest hit song(s), not all of its deep cuts. (Imagine if the Stones' Sticky Fingers consisted entirely of 10 repeats of "Brown Sugar.")

In other words, 1,000 fans buying and listening to the entirety of Beyoncé's self-titled album isn't the same experience as 10,000 fans downloading "Drunk in Love." But on Sony Music's quarterly revenue statement, they are equivalent, thanks to TEA. And on the 2015 album chart, they will be too, finally.

The big reason Billboard has changed its policy on downloading and TEA on the album chart goes back to streaming, which has shifted the paradigm. The fact is, nobody's tracking full-album consumption on Spotify. In my discussions with Billboard's Pietroluongo and Nielsen's Bakula, I learned that, because streams are measured cumulatively, there's no practical way to measure how many consecutive songs from an album an individual streaming user consumes. Nielsen has no idea if a Spotify user who just played track one of an album goes on to play tracks two, three and four. (You may be relieved to hear this if you're the NSA-paranoid type who thinks your every online move is being watched.) The upshot is that, for Billboard, baking streaming into the album chart meant accepting the idea that 1,500 plays of The Black Keys' hit "Fever" is functionally equivalent to one purchase of their album Turn Blue. While they're at it, why shouldn't Billboard also embrace TEA and regard 10 download sales of the same hit as equivalent to the album, too?

For all you album-driven classicists out there offended by Billboard rewarding short attention spans, remember: Just because thousands of fans buy Turn Blue the old-fashioned way — to be exact, in its first week last May, 164,000 fans bought it — that doesn't mean all of them listened to the full album. On the album chart as it has been formulated for a half-century, all sales — even those by consumers who play only half the album one time, or those who receive a disc for Christmas and never crack the plastic — are equal in the eyes of the chart. Add to that the fact that singles-driven albums have been selling and charting well for decades; I chuckled when Pietroluongo at Billboard reminded me that in 1997, Chumbawamba's Tubthumper album sold a staggering three million copies off its improbable titular radio smash.

In short, there's little point wallowing in nostalgia — the album chart has always been an imperfect yardstick. Indeed, a theory I coined here at NPR Music two years ago, "The AC/DC Rule," is premised on the idea that the album chart can be a faulty way to measure an artist's career trajectory. (My rule states that initial sales and chart position of an album are a reflection of the act's prior work, not the current album itself. It's why, say, Jackson Browne's only No. 1 album is the largely forgotten 1980 disc Hold Out rather than its blockbuster 1977 predecessor Running on Empty.) As important as the invention of SoundScan was in 1991, it didn't solve this problem. If anything, SoundScan made it worse: Accurate data made No. 1 debuts easier, which amped up the focus on the first week. Over 23 years, hundreds of albums have debuted at No. 1 and then faded quickly, many of them trading less on the quality of the album itself than on the artist's prior work. (Secret Samadhi, anyone? Fairweather Johnson?)

What Billboard and Nielsen are hoping is that the new album chart will, to some extent, redress this balance. Because traditional sales will still be the largest piece of the pie, chart-topping debuts will still be common — Pietroluongo said he's been studying test versions of the chart for months now, and only a couple of times has a different album on the test chart threatened the No. 1 album on the published chart. (And by the way, even with her albums off Spotify, Taylor Swift's blockbuster 1989 would have been No. 1 no matter what.) The big difference under the new system is that high-debuting albums that might have quickly tumbled after a week of excitement by diehard fans could now linger longer in the chart's upper reaches. "If you're three hits into an album, with continued streams and sales for two or three hits, that might keep the album afloat, maybe six or eight months into its life," Pietroluongo said. "You're accumulating more opportunities to build the album's story as you gather stream and track sales."

If there's bad news in this new system for anyone in the industry, it's veteran acts, who may see lower chart positions while newer acts get a boost. Pietroluongo offered me a couple of examples from a mid-November edition of the album chart. On the published version of that chart, with the old rules in effect, Bette Midler's latest album made a No. 3 debut, and new artist Hozier's album ranked at No. 17. Had the new rules been in effect that week, Midler's album — which is available on Spotify but isn't benefiting from a hot single that might be heavily streamed — would have ranked lower, at No. 6. The Hozier album, meanwhile, would have ranked at No. 10, boosted by sales and streams of his current smash song "Take Me to Church." Tough break for the Divine Miss M, but we're talking about the difference between a Top Three debut and one just outside the Top Five, not a total decimation of her album-chart rank. On the whole, Pietroluongo and Bakula say the differences between the old and new charts will be more subtle than those seen after the switch to SoundScan data in 1991.

More than anything, what the new rules do is turn the album chart into a hybrid that measures more than one thing: big sales in week one, and a steady rhythm of streams and sales later. In other words, it makes the Billboard 200 more like the Hot 100, Billboard's ultimate hybrid chart that averages together airplay, sales and streams to determine the top songs in the USA. Doesn't that increase the risk of overlap between the two charts? Pietroluongo says he hasn't seen it in testing — and that anyway, new hit songs aren't always included on an album right away; plenty of Hot 100 hits won't be reflected on the album chart and vice-versa.

As a chart analyst and fan, I am reserving judgment on the new Billboard 200 until it launches — I suspect that it will have flaws, albeit a very different set from the old chart. For one thing, as we've seen all too often in our new digital economy, this move threatens to make big hits bigger. At a time where music's one percent are already consuming too much of the oxygen in the room, a chart rule change that rewards acts currently on the radio could make superstars even more elite. Then again, the roster of No. 1 songs on this year's Hot 100 has, by and large, not lined up closely with the year's top-selling albums like Frozen or Beyoncé. I suspect the No. 1 album and single will still be different most weeks.

More than anything, I'm hopeful that this move makes the album chart, which has been sleepy for years, relevant again. And, in turn, makes the album format more relevant — perhaps rumors of its death have been exaggerated. It's ironic that the album's life as a commercial medium might actually be prolonged by technologies that unbundle and dismantle the album. If streaming really is the future of music consumption, maybe it had to destroy the village in order to save it.