Phonographic markets are well defined complex systems almost as old as financial markets. They are studied by economists and sociologists [1], [2], [3], [4] and [5], but have never been explored by mathematicians and physicists. Since Thomas Edison (1877) the phonograph, gramophone or record player has been commonly used for playing sound. Although in 1906 these devices were elusive for common people, the Italian tenor Enrico Caruso was the first and only artist who sold more than 1,000,000 copies of his record before The Beatles [6]. In 1948 Columbia released the first ever long playing record (LP) that would hold at least 20 min per side. Since 1967’s The Beatles ‘Sgt Pepper’s Lonely Hearts Club Band’ long playing records have dominated the phonographic markets worldwide. The new formats (vinyl, cassette, compact disc and mp3, etc.) were more and more popular. Thus, Michael Jackson’s ‘Thriller’ has become the most popular record ever and sold over 110,000,000 copies [7].
On the other hand, currently his success is impossible to repeat because of digital piracy, marginal utility, etc. [8]. Global music sales in 2009 fell by 7% to US $17 billion. This is disappointing, but amid the decline there are some very positive points. No fewer than thirteen countries saw music sales grow in 2009, including important markets such as Australia, Brazil, South Korea, Sweden and the UK [7]. Digital sales in some of those markets rose at very encouraging rates, reflecting the new opportunities of online and mobile channels [8].
Since 1991, Nielsen SoundScan began tracking sales data from cash registers collected from 14,000 retail, mass merchant, and non-traditional (on-line stores, venues, digital music services, etc.) outlets in the United States, Canada and the UK. Previously, Billboard tracked sales by calling stores across the US and asking about sales—a method that was inherently error prone and open to outright fraud [6] and [9].
Traditionally, the record charts are based on weekly record sales. According to the IFPI (International Federation of the Phonographic Industry), the world’s largest phonographic markets are: the USA, Japan, Great Britain, France and Germany (Fig. 1) [7] and [8]. 80% of weekly record sales belong to the four biggest record companies (Universal, EMI, Sony BMG and Warner Bros). All the world’s most popular artists are signed to these companies [7]. Thus, since 2003 it is possible to find their weekly record sales exactly [10].
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Fig. 1.
According to the IFPI more than 95% of the total revenue of music in 2003 was derived from the 30 major countries in the proportion shown above, organized by geographic location.
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The phonographic market differs from financial markets because the price of a record (LP, CD, mp3) is constant. Therefore, the value of an artist is defined by weekly record sales. In my research, I have chosen the portfolio of the world’s most popular 30 artists according to the record sales between September 2003 and September 2011.
The motivation of the present study concern the search for the kind of topological arrangement between artists and built Minimal Spanning Tree and the associated subdominant ultrametric hierarchical tree. This method has been successful in spin glass systems [11] and [12] and financial markets [13], [14], [15] and [16] because of meaningful economic taxonomy. The topology and hierarchical structure associated with it, has been obtained by using information present in the time series of stock prices only.
In this paper, I use these methods on the phonographic market where we have artists instead of stocks. The value of an artist is defined by weekly record sales. The graph is obtained starting from the matrix of correlation coefficients computed between the world’s most popular 30 artists by considering the synchronous time evolution of the difference of the logarithm of weekly record sales.
