By Jeffrey O. Valisno, Sub-Editor

Dahan-Dahan’: The changing worth of music sales

Posted on September 05, 2014

BREAKOUT STAR Maja Salvador would be the first to admit that she’s not a great singer. So she was surprised when early this year Ivory Records offered her the chance to do a full-length solo album.

What surprised the recording industry, in turn, was when the 25-year-old actress achieved a record that eludes even the established singers these days.

Within three months after Ms. Salvador’s debut CD, Believe, was released, the album became a certified gold record. By June, sales had exceeded 7,500 copies.

The album -- with its catchy carrier single, “Dahan-Dahan” -- is now close to achieving platinum-record status, with total sales nearing the 15,000-unit mark.

Ms. Salvador accepted the gold award at the Sunday afternoon TV variety show, ASAP. “Hindi ko akalain na magkakaroon ako ng album, kasi dati niloloko ko lang na gusto kong magka-album at tinupad po ‘yun ng Ivory,” she said. (I never imagined that I would record an album, because I would joke to myself before about having my own album, and Ivory Records fulfilled that wish.)

The Philippine Association of the Record Industry, Inc. (PARI) is the non-profit trade organization responsible for awarding certifications on music recordings in the Philippines.

Since 1990, the group composed of recording companies has honored singles and albums for units sold, based on the standards set by global industry group International Federation of the Phonographic Industry (IFPI).

PARI chairman Marivic A. Benedicto admits that pirated music -- its availability and proliferation -- has greatly affected how the music industry operates, and how albums and singles now get certified.

If Ms. Salvador had released her album between 1990 and 2002, she would have needed to sell at least 20,000 units to receive a gold record award, Ms. Benedicto said.

“All over the world, the number of units that needed to be sold to achieve gold record awards has been reduced because of illegal downloads and music piracy,” Ms. Benedicto explained.

She said PARI reduced the required unit sales for a gold record to 15,000 units between 2002 and 2007. It was further reduced to 12,500 units between 2007 and 2009; then again to 10,000 units between 2009 and 2011. The current level of 7,500 units for a gold record award was implemented in March 2012.

Ms. Salvador’s achievement is remarkable -- and more so that of young actor-singer Daniel Padilla.

The 19-year-old star continues to reap the fruits of his phenomenal fame with his third album, i heart you. Released by Star Records, i heart you achieved platinum record status in less than a month after its release last April. (His sophomore album, DJP, was certified double platinum last year.)

PARI certified i heart you platinum after its sales exceeded 15,000 copies.

In the beginning, when PARI started certifying music sales, an album needed to sell 30,000 units to get a platinum award, Ms. Benedicto said.

Since then, PARI reduced the required unit sales for platinum awards to 25,000 units in 2007, down to 20,000 units in 2009, before the organization slashed the threshold further to its current 15,000-unit level as of 2012.

If receiving gold and platinum awards is getting more challenging in recent years, diamond record sales are an even rarer achievement.

When singer-songwriter Jose Mari Chan was awarded the country’s first-ever diamond award for his 1990 album, Constant Change, album sales at the time exceeded 400,000 units.

Mr. Chan repeated this success five years later, when his album Christmas in Our Hearts also sold more than 400,000 units.

Today, if an album sells more than 150,000 units, it is already qualified for a diamond record award.

Despite the lower sales requirement, achieving diamond record status is tougher than ever.

Only three other local albums have been awarded the prized diamond certification to date -- Nina’s Nina Live (2009), Christian Bautista’s A Wonderful Christmas (2010), and Sponge Cola’s Araw Oras Tagpuan (2011).

Mr. Chan said CD sales -- or sales of albums in a “physical” format -- have declined by 75% to about P699 million in 2010, from a peak of P2.7 billion in 1999.

“Ask me now to replicate my diamond record achievement, and I will tell you outright that I can’t,” Mr. Chan told BusinessWorld in an interview.

“There are so many distractions nowadays for the music fans. There is so much free stuff on the Internet, it became less appealing to go out and buy a physical CD,” he said.

Ms. Benedicto believes there is still hope for the local recording industry. She cited the removal of the Philippines last April from the US piracy watch list after two decades. This “sends a strong message that intellectual property is respected in the Philippines,” she said.

In a statement posted on its Web site, the Office of the US Trade Representative (USTR) said the Philippines -- which was first listed in 1989 and had been consistently on the watch list since 1994 -- had undertaken in recent years “significant legislative and regulatory reforms” to protect intellectual property.

If one considers that the United States is among our top trading partners, the USTR decision is expected to boost investor confidence in the Philippines.

“Removal from the watch list creates the proper investment climate,” Ms. Benedicto said. In the meantime, record companies are relying more on “digital” album sales -- or sales of album tracks on the Internet and on mobile phones -- to drive growth.

In 2012, PARI has began recognizing sales of singles and albums through the Internet and mobile phones to determine music certifications.

A total of 25 downloads of a mobile telephone monotone ring tone and ring back tone translates to one-unit sale, while downloads of 10 full-track MP3 songs on iTunes, Amazon, and myMusicPH online music stores, as well as 10 “true tone” and “polytone” song downloads on mobile phones also count as one-unit sale.

Streaming music from global Web sites like Spotify and Deezer are considered too in determining music sales. A song gets credited with a unit sale when it is streamed at least 5,000 times on Spotify and Deezer free service. The threshold is lowered to 1,000 times when the streaming is done on the premium service where users pay for more features (like downloading a track for a fee).

Sunita Kaur, Spotify Asia managing director, said over a million playlists have been created in three months since Spotify launched its services in the Philippines last April.

“We all know that the Philippines is a music-loving country, so we are already not surprised about the warm reception that Spotify got here,” Ms. Kaur said in a chance interview.

Without providing specific figures, she said the Philippine market is “among the fastest growing” in the region for Spotify.

“We hope to become the best alternative to music piracy in the Philippines as we offer Filipinos free and legal access to 30 million tracks,” she said.

Mark Bonifacio, marketing manager of record company MCA Music Philippines, said the industry increasingly relies on digital sales to drive growth.

“Sales on the digital platform now account for as much as 80% of the total sales of an album,” Mr. Bonifacio told BusinessWorld in a telephone interview.

“Before, like in the case of Jose Mari Chan in the 1990s, all the sales were physical sales. He actually sold more than 400,000 units of cassette tapes and CDs to get that diamond award. But in recent years, we have seen the sales of CDs dropping,” he said.

Mr. Bonifacio cited MCA Music Philippines artists including rapper Basilyo and commercial model Solenn Heussaff, who both notched platinum record awards last year from the strong digital sales of their albums.

“Music fans nowadays prefer to download individual tracks, rather [than make] a commitment to buy an entire CD,” Mr. Bonifacio said.

With an estimated 106 million mobile telephones in use in the Philippines, Mr. Bonifacio believes that digital sales will increase.

Record companies are happy with that development. But for Mr. Bonifacio, promoting CDs remains important because CD sales provide higher margins.

“That is why we still have mall shows and CD signing sessions around the country. That encourages fans to buy the CD. You cannot have your idol sign on your digital download, can you?” Mr. Bonifacio said.

In the case of Ms. Salvador, sales of her album significantly increased when a tablet manufacturer bought digital downloads of her song, “Dahan-Dahan.”

Gadget manufacturer Coby made the song available for free for those who buy its Kyros 7015 tablet model. Ms. Salvador is the endorser of the Coby Kyros tablet.

“I am not really familiar with what happened to Maja’s album, but that is the practice we [call] in the industry as bulk buying,” Mr. Bonifacio explained.

With the tough conditions in the music industry, recording companies bet big on popular celebrities with a strong following -- especially those outside the music world like Ms. Salvador, who said she will do a follow-up album next year.

“I still can’t believe I am actually a recording star,” Ms. Salvador said. “It is a dream come true.”