EP to the Rescue! Short Albums Are a Rare Music Business Success Story

It’s the rare music sales success story: In resurrecting the EP, or “extended play,” a format comprising eight or fewer songs, record labels are moving enough units to build revenue for a baby act with a song on the rise, and could see even greater rewards once the “complete my album” mechanism is offered at various digital retailers like iTunes and Amazon.

Sales trends for the past few years point to the EP increasingly acting as a holdover, almost like putting an album on layaway. If you later include the songs from the EP on the full-length or the deluxe version, it’s a small economic investment to get fans to complete the collection. (EPs retail for between $3.99 and $7.99 on average, compared with $1.29 for a single and $9 to $13 for an album. The more tracks that are released, the better the deal is to complete an album — or at least, that’s the theory.)

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But Capitol Records executive vp Greg Thompson cautions that labels must spend the same amount on marketing and promotion for a hit song as they do for a hit album. “You still have to invest what you invest to break an artist. Those are fixed marketing costs,” he says. Indeed, the three majors invest most in developing, producing (budgets rarely break the $500,000 mark these days, but $30,000 a track for a top producer or mixer is not outside the norm) and marketing (radio adds can easily go for $300,000 a track) new acts. However, Ashley Burns, general manager of Capitol’s Virgin Records, agrees that a single and EP can help manage the A&R investment more efficiently. “Before, you put out the album and it’s sink or swim,” she notes. “With the EP, you can see what people are reacting to, which can guide you in how you finalize what’s on the album.”

For instance, Bastille’s album Bad Blood, which contains all the songs from the band’s EP Haunt, including the hit “Pompeii” (3.2 million singles sold) has scanned 467,000 units, according to Nielsen SoundScan.

So the theory that a buzzing sampler can generate instant cash seems to be valid. So far this year, 59 EPs have debuted on the Billboard 200, including releases by 5 Seconds of Summer, which has scanned 297,000 copies of its She Looks So Perfect EP, good enough to make it the 30th-best-selling title so far in 2014. Other EPs include Luke Bryan’s Spring Break 6 … Like We Ain’t Ever, which has sold 134,000; Austin Mahone’s The Secret, at 82,000; Sam Smith’s Nirvana, at 41,000; American Authors’ self-titled set, at 34,000; Hozier’s Take Me to Church, at 30,000; and Disney Karaoke Series: Frozen, at 101,000.

The influx comes on the heels of 82 EPs breaking into the chart in 2013, and 84 in 2012. To put that in perspective, in 2003 just 18 EPs made the Billboard 200, and as recently as 2009, only 37 hit the chart. The EP looks to be more than a passing fad, a la the much-derided three-track cassingle in the 1980s and 1990s (Los del Rio’s smash “Macarena” sold 4.6 million of them in 1996).

Meanwhile, although more albums are being released than ever, sales of full-lengths — both physical and digital — are down almost 15 percent since 2013. Of course, much of the format’s erosion can be traced to price points built on the back of 1970s mega-sellers. In embracing the EP configuration as an economic A&R strategy — “The decision to do an EP happens on a case-by-case basis,” says Thompson — record companies hope to see a better success rate than the industry’s typical one-in-10. “EPs provoke a more fluid A&R process where you can judge engagement and see the appetite of the consumer who’ve already voted with their dollars,” Thompson adds.

The one difficulty: Today’s EPs work better digitally than physically. While a mass-merchant chain like Walmart loves lower-priced music, it’s generally not in the developing-artist business. Talking buyers into buying an EP from a new act like, say, Smith in his pre-Saturday Night Live debut days, may be a hard sell — one that requires the time and effort that bare-bones record companies simply can’t afford.

Additional reporting by Keith Caulfield.