Stefani, Peas Lead Singles Boom

The digital singles market is thriving as CD sales tank

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The Black Eyed Peas sold 3.4 million digital singles in 2005, landing four songs at once in iTunes' Top Forty — but they aren't exactly celebrating. "It's exciting, but at the same time, there is no question that it has a very negative effect on album sales," says Peas manager David Sonenberg. "And on a single, you don't make very much money."

As album sales continue to decline — they dropped seven percent last year — the market for digital singles is showing explosive growth: Music fans bought more than 350 million songs online in 2005, a 150 percent jump from 2004, according to Nielsen SoundScan. In October, Gwen Stefani's "Hollaback Girl" became the first digital single to go platinum, and in the final weeks of 2005, digital singles outsold CDs for the first time. While many in the music industry are encouraged by the new market, some argue that its expansion is coming at the expense of album sales. "There's no doubt that it's happening," says Rob Thomas, whose hit "Lonely No More" sold 483,000 copies as a download, nearly half of the full album's 1.2 million.

"To me, we're back in the Fifties," says Nick Ferrara, a music attorney who works with Maroon 5. "Downloading is a singles business and not an album business — it's not good for anybody's bottom line." Superstar musicians can make as much as two dollars per physical CD sold, but most artists earn a mere fourteen cents in royalties per ninety-nine-cent digital track — and the top rate is no more than twenty-four cents.

Some hit singles are outselling the albums that spawned them: Pop group the Click Five, for instance, sold more than 400,000 digital copies of their song "Just the Girl," and their debut album, Greetings From Imrie House, sold only 268,000. "Part of me likes the idea of being a singles band," says Click Five guitarist Joe Guese. "Maybe if you prove yourself — have a string of successful singles — people start buying the entire record."

Even some veteran acts are seeing their singles sales nearly outsell their albums: Weezer moved 972,000 copies of Make Believe — and 962,000 digital singles of "Beverly Hills." "You have to look at it like this is how the world is now, and it's great that we sold that many singles," says manager Dan Field. "'Beverly Hills' was played on Top Forty radio, where really young kids listen — and there is some advantage to having the lower price point, because kids can just check it out."

Field and others suggest that the hottest singles market since the age of the 45 will force the industry to develop new strategies. "It's a great opportunity for building artists," says George White, a senior vice president at Warner Music Group, which is experimenting with releasing new music in three or more song bundles. And whatever the impact on album sales, all prefer it to rampant piracy. Says the Click Five's Guese, "At least people are paying for it now."

Top ten digital singles of 2005:
1. Gwen Stefani, "Hollaback Girl," 1.2 million
2. Kanye West, "Gold Digger," 1.1 million
3. Weezer, "Beverly Hills," 962,000
4. Kelly Clarkson, "Since U Been Gone," 960,000
5. The Black Eyed Peas, "My Humps," 918,000
6. The Killers, "Mr. Brightside," 889,000
7. Fall Out Boy, "Sugar, We're Going Down," 831,000
8. The Black Eyed Peas, "Don't Phunk With My Heart," 816,000
9. Lifehouse, "You and Me," 809,000
10. Green Day, "Boulevard of Broken Dreams," 804,000