"Market information Regimes", or "Where We Get Our Info", or "Why SoundScan makes Billboard My Bitch".

By jndrum

In the music business, as noted in Allie’s last post, we rely heavily upon Billboard data for our statistics and industry news. We assume that the generation, distribution, and interpretation of all this data is accurate, reliable, and reflective of actual market conditions. One of the thrusts of the music industry is to relieve the ambiguity and uncertainty surrounding the market, that is, crunch numbers, research blogs and print media, keep an eye on trends, etc. As of now, Billboard is quite a reliable source for accurate POS information and industry news (we all get the daily emails and for me, it’s become like reading the newspaper everyday). But, it hasn’t always been this easy and we now take the accuracy of the Billboard charts for granted.

The American commercial music field really has its roots in the 1880s, developing around printed sheet music publishers, touring theatrical shows (minstrel shows), and early vaudeville acts. As the business grew, it became necessary to develop new copyright laws to accommodate new technology. As many writers note, our current dilemma with digital music copyrights is nothing new. Needless to say, amidst all the new technology in the first half of the 20th century (the microphone, phonograph, expanded radio reach, etc) Billboard emerged in Cincinnati in 1894 as “Billboard Advertising”. At this point, it was mainly a method of discovering talent for booking agencies across the United States. From 1894 to 1913, the magazine ran articles, not statistics, on vaudeville, burlesques, circuses, Wild West shows, and all things entertaining. From then until 1948, Billboard focused on generating the “most popular songs” from a combination of radio, record stores and publishing and licensing companies to supplement their articles on industry news.

On August 4th, 1958 Billboard split its song charts into three categories: “Best Sellers in the Stores”, “Most Played by Jockeys, and “Most Played in Juke Boxes”. This move towards removing the ambiguity of the market enabled accounts to start trusting Billboard as a source of dependable, accurate information. The “Hot 100” category was implemented in 1958 as a reliable predictor of future sales, mainly for singles.

However, from 1948 to 1991 all of the information gathered on Billboard’s statistical charts was sales information from a “sample” of records stores and radio stations in the United States. Stores would report the estimates of their weekly sales of a record and Billboard’s research teams to tabulate the charts and interpolate the information. The data went directly to the Billboard offices, making it nearly impossible to independently verify. Also, there were several reports throughout the period of “buying chart position” that are better represented in the payola scandals of the time. For example, buying advertising in the magazine for better positioning and directly influencing personnel on the Billboard team is well documented in several reports (see Karshner 1971, Denisoff 1986, Dannen 1990, Negus 1993, and Peterson 2000).

In the 1980s, Mike Fine and Mike Shallet developed SoundScan Inc, a company that was implemented in 1987 to accurately pinpoint point of sale purchases based on the number of scans, not an arbitrary report from record stores. Soundscan threatened Billboard’s ability to influence the industry with their quick movement to sign exclusive agreements with labels and record store chains to hoard all of the new information, effectively keeping Billboards older and less effective methods out of the market. Billboard was outraged, reportedly because chart positions could not be manufactured or manipulated anymore due to the development of true POS data, although this was denied fervently by Billboard execs. Finally, on May 25, 1991, Billboard, in desperation, signed an agreement with SoundScan and the first POS based chart appeared in Billboard Magazine courtesy of Fine and Shallet’s SoundScan.


Our business then, is based on the business and competitive market of other 3rd party statistics reporting companies. It’s an important lesson for us, in that we should never put all of our chips on the table for numbers that can’t be independently verified and expounded upon. But, the Billboard charts that we have now are by far more accurate and reliable due to the development of Fine and Shallet’s SoundScan POS system.

So thank you Mike and Mike. Even if I don’t feel as though “music is my bitch”, I can be certain that the Billboard charts are my bitch.