On the subject of heavy single discounts, here is a New York Times article from January 1996- around the time I said it started taking shape:
www.nytimes.com/1996/01...rts-manipulated.htmlAre Pop Charts Manipulated?
By NEIL STRAUSS
Published: Thursday, January 25, 1996
Until 1991 the pop music charts were notoriously unreliable. Paying off record store employees with free albums, concert tickets and even vacations and washing machines was the standard music-business method of manipulating record sales figures. Even the Billboard magazine charts, considered the most prestigious in the business, were compiled from store managers' oral reports, which were inaccurate to begin with and easily swayed.
That was before Soundscan. Five years ago, this company in Hartsdale, N.Y., began compiling Billboard's charts a new way, using a point-of-sale computer system that tallied sales of each record by picking up the bar code scanned at the cash registers of thousands of stores.
Soundscan added a legitimacy and authority to the charts. Payoffs became a thing of the past. "Today, the only way to make a record go higher on the charts is to sell more copies," Bruce Haring writes in his new book on music-industry subterfuge, "Off the Charts" (Birch Lane Press).
That may be true, but like accountants searching for loopholes in a tax law, there are those in the music business who have found ways to exploit even Soundscan's sophisticated system.
Before 1995, a single had never e'tered the pop charts in any of the top five positions in its first week of release. Last year, four singles had their debuts at No. 1: "You Are Not Alone," by Michael Jackson; "Exhale (Shoop Shoop)," by Whitney Houston, and "Fantasy" and "One Sweet Day," by Mariah Carey.
Was the singles market suddenly stronger? No, record companies were learning how to influence the charts.
Last week, record stores around the country received this fax from Columbia Records, the label for which Ms. Carey records, and Round the Globe Music, a marketing company: "Attention all Soundscan R&B singles panelists. Your product is on the way. Mariah Carey, "One Sweet Day." We're going for No. 1 this week. Thanks for the support!"
What did the message mean?
"What we do is we talk to the stores," said Neil Levine, president of Round the Globe. "We try to get them to put the records on sale or position them well to give them an added push. A lot of the time we'll send them in-store play copies of various records so they can discount them. Our job is trying to get a record to first place, so we do weekly faxes to retail stores. That wasn't in any way a bribe."
One East Coast record-store owner who received the fax has another explanation. "One hand washes another," he said, speaking on the condition of anonymity. "If we do them a favor, they'll do us a favor."
The fax is not the only way Columbia helped push "One Sweet Day" to No. 1, where it has remained for nine weeks. The label also encouraged a rush of sales in the early weeks by giving out free copies to stores reporting to Soundscan or by offering them four singles for the price of one. Stores could then put "One Sweet Day" on sale for 49 to 99 cents, more than $2 below the average price of a single. This has become a common practice for promoting high-priority releases.
"One of the things that we've learned is, you build a better mousetrap and all of a sudden the mouse starts finding ways to get around your trap," said Michael Shalett, who founded and runs Soundscan with his partner, Mike Fine. "Record companies have realized that you can get a record up the charts real high by giving it a sort of running start."
One way in which labels accomplish this, Mr. Shalett said, is to release a single to radio and wait until it receives heavy airplay before making it available commercially. Because a single is not eligible for the charts until it goes on sale, this insures that it enters the singles charts, calculated by a combination of sales and radio play, at a high spot.
"So when you've pumped up the song way high on the radio, all of a sudden you release the single and sell it for 49 cents," he said. "And I'm not aware of any economist who knows how to make money at that price."
Aside from maneuvers like these, Mr. Shalett maintains that Sound scan is virtually foolproof. "We're talking about campfire and nuclear power when it comes to where we were five or six years ago and where we are now in terms of realm of accuracy," he said.
Certainly Soundscan has changed the way the music industry does business. In addition to enabling record labels to plan their marketing campaigns more effectively, sales statistics, which thanks to Soundscan can be broken down by region and genre, are crucial factors in the programming decisions of radio stations and MTV as well as in the planning of a tour, from the choice of an opening act to the number of concerts planned in each city.
But the more the industry relies on Soundscan's numbers, the more record labels have to gain by artificially inflating them. The easiest way to do this is to concentrate on independent retailers. Because Soundscan is in every major record chain but only in a small fraction of independent stores, records sold at the independents are weighted to account for the retailers that do not report to Soundscan. For example, one record sold at Upstairs, an independent rap store in Sheepshead Bay in Brooklyn, will show up on Soundscan as three records sold. This way Soundscan, which tracks 85 percent of record sales, ends up with a figure that estimates 100 percent of sales.
"With projects where there is a potential for tremendous sales, doing the things necessary to get your Soundscan figures up is pennies compared with what you will get when it sells two million records," said a sales executive at a record label who spoke on condition of anonymity.
"It's common practice to tweak your sales by giving free singles to mom-and-pop stores in quantity -- from 60 to 90 cassettes -- to put on sale," he said. "And some retailers will scan goods before they pass the counter and then scan them again when they're sold so they'll get a double hit."
Though there are safeguards in Soundscan's system that alert the company when an unfeasible number of records are scanned at a single store in a short period of time, an album that is scanned just one or two extra times can escape undetected. But Mr. Shalett of Soundscan says that overscanning is impractical for stores.
"It's hard for a clerk who might want to go scanning something he didn't sell a bunch of times to affect the chart," he said, "because every time you scan something, you're taking something out of inventory, and the store manager is going to have a big problem trying to reconcile the nightly deposit."
"Am I going to sit here and tell you that there haven't been times where people have played some sort of games with Soundscan? "Well, several times we've caught them."
The latest trick that record labels have been accused of is replacing the bar codes on older catalogue albums with those of new albums whose sales they want to boost. Soundscan denies that this happens intentionally.
Charlie Davin, the singles buyer at Tower Records in Greenwich Village, said: "I've heard stories of bar codes being switched around, but when I've priced my product and that happens we send it back to the record label. I wouldn't put a Fugees single on the racks when it was coming up as a Mariah Carey single."
Several record-label executives described how playing with the charts could turn a borderline record into a major hit: In a crucial market like New York or Los Angeles, a label will load up retailers that report to Soundscan with free or discounted copies of a record. It will also send field representatives into stores to buy the album in small quantities and make deals for the store to display the record prominently, play it on the in-house sound system and in some cases scan extra copies.
The label then urges local radio stations to put the single or album on their play list, based on its regional popularity according to Soundscan. If it becomes a hit in one influential market, other stations around the country will usually start playing it. If the video is good, MTV will then put it into rotation and, as one of these executives said, all of a sudden you have a hit.
A complaint about Soundscan is that it ignores certain music genres sold primarily in specialty stores. Dance-music, reggae, New Age and Latin music shops are among Soundscan's most often cited oversights. The computer equipment necessary for a store to go electronic can cost $5,000, and although record labels sometimes offer to share the expenses, some retailers lack the resources.
Last summer, the company made an effort to add some Christian bookstores as reporters. Though only two Christian-music artists had appeared on the charts before, nearly a dozen have done so since.
Records sold at such nontraditional record outlets as supermarkets and gift shops also fail to appear on Soundscan. When the Beatles' double album "Anthology 1" was released in November, for example, Capitol Records sent out a press release stating that the album had sold 200,000 more copies than Soundscan's figure of 855,000. (Capitol said it based the figure on oral reports from retailers.)
As Soundscan enters its sixth year of compiling the pop charts, is it facing a future of even more schemes and more sophisticated schemes aimed at manipulating its sales figures? Perhaps, but for now the company and music industry officials agree that behind-the-scenes tinkering will only get a record so far.
"One thing that Soundscan has proven is that you can fake it some of the way up the chart but you can't fake it all the way," said a record label executive who spoke on condition of anonymity. "Ultimately, if the record doesn't work with people, no matter how much you pervert the figures it doesn't matter. What these things can only do is help expose a record. From that point on, it's up to the public to decide."
