Nielsen SoundScan is an information and sales tracking system created by Mike Fine and Mike Shalett in 1991. SoundScan is a method of tracking sales of music and music video products throughout the United States and Canada. Data is collected weekly and made available every Sunday (for albums sales) and every Monday (for songs sales) to subscribers, which include record companies, publishing firms, music retailers, independent promoters, film and TV companies, and artist managers. The Nielsen SoundScan is the sales source for the Billboard music charts, making it the largest source of sales records in the music industry.
Nielsen SoundScan began tracking sales data for Nielsen on March 1, 1991. The May 25 issue of Billboard published Billboard 200 and Country Album charts based on SoundScan "piece count data," and the first Hot 100 chart to debut with the system was released on November 30, 1991. Previously, Billboard tracked sales by calling stores across the U.S. and asking about sales - a method that was inherently error-prone and open to outright fraud. Indeed, while transitioning from the calling to tracking methods, the airplay and sales charts (already monitored by Nielsen) and the Hot 100 (then still using the calling system) often did not match (for instance Paula Abdul's "Promise of a New Day" and Roxette's "Fading Like a Flower" reached much higher Hot 100 peaks than their actual sales and airplay would have allowed them to). Although most record company executives conceded that the new method was far more accurate than the old, the chart's volatility and its geographical balance initially caused deep concern, before the change and the market shifts it brought about were accepted across the industry. Tower Records, the country's second-largest retail chain, was originally not included in the sample because its stores are equipped with different technology to measure sales. At first, some industry executives complained that the new system -- which relied on high-tech sales measurement rather than store employee estimates -- was based on an inadequate sample, one that favored established and mainstream acts over newcomers.
The Recording Industry Association of America also tracks sales (or more specifically, shipments minus potential returns) on a long-term basis through the RIAA certification system; it has never used either Nielsen SoundScan or the store-calling method.
Sales data from cash registers is collected from 14,000 retail, mass merchant, and non-traditional (on-line stores, venues, digital music services, etc.) outlets in the United States, Canada, UK and Japan.
The requirements for reporting sales to Nielsen SoundScan are that the store has Internet access and a point of sale (POS) inventory system. Submission of sales data to Nielsen SoundScan must be in the form of a text file consisting of all the UPCs sold and the quantities per UPC on a weekly basis. Sales collected from Monday-Sunday or Sunday-Saturday are reported to SoundScan every Monday and made available to SoundScan subscribers every Wednesday.
Nielsen SoundScan clients include these:
Anyone selling a music product with its own UPC or ISRC may register that product to be tracked by Nielsen SoundScan.
SoundScan is a subscription based service with many packages available for varying levels of access. Subscriptions must be negotiated with SoundScan. Billboard publishes music charts on a weekly basis which use SoundScan data, but do not give sales figures.
The incorporation of Soundscan tracking by the Billboard charting system was noted by the industry as being a possible cause of the early '90s popularization of alternative music in the United States; an explanation floated was that the previous call system provided data that under-represented marginal genres. Under Soundscan, exact data about alternative music sales allowed these acts to appear higher in the Billboard charts than before, and this chart success fed back into increasing the genre's perceived popularity in popular culture. In addition, Soundscan data quickly found use in the promotion departments at major record labels, as a way to use sales data to persuade radio station music directors to add tracks by high-selling alternative artists such as Nirvana.