RIAA Almost Down To Pre-Napster Revenues

Third time's the charm. Napster came out in 1999, and the Recording Industry Association of America had two great revenue statements for that year and the next. But now that CD sales finally are down year-to-year, at long last they get the chance to blame Napster for their woes. There's just one thing wrong...

...they don't have Napster to kick around anymore.

For yesterday's press release, the RIAA commissioned a survey by a research firm to prove that music-downloading is to blame, but all they tell us about it is that "23 percent of surveyed music consumers say they are not buying more music because they are downloading or copying their music for free." No more details provided, no link to the survey's raw numbers. So what does this mean? I guess 77 percent are buying more music because they're downloading it for free?

To put the new sales figures in perspective, a look at the big picture will be helpful. Free music-trading software had been in serious trouble since mid-2000. Despite indications that music-trading was helping sell CDs, the labels forced Napster to implement a name-blocking scheme. We ran a story in March 2001 pointing out that its traffic had fallen by 60%.

Then SF Gate ran a nice story last August, pointing out that declining RIAA sales seemed to mirror Napster downloads:

"At this point last year, with Napster in full swing, record sales were up 8 percent from the previous year. This year, sales of new albums -- not including established catalog titles -- are down 8 percent. That's quite a pendulum swing."

Sure, other file-trading software has taken Napster's place, but at this point it's fun just to watch the industry limp around after shooting itself in the foot.

Not that it's really hurting money-wise. All this week's numbers mean is that the RIAA's total revenue has declined almost to 1998 levels. In 1998 they made $13.71 billion; after peaking in the mid-$14-billions, last year they made $13.74 billion.

This probably is due party to the crummy economy, partly to their failure to find any new sound to co-opt and mainstream recently, and partly to lack of big artists releasing megahits like they did in 1999. You know music officially sucks when the labels have to pay someone $28million not to sing.

Oh, and partly due to the RIAA raising CD prices by $1.16, which is $0.25 over and above inflation (which has been higher than wage growth lately anyway). CDs are 94% of their revenue. Most industries, faced with declining sales, try lowering their prices. Not this one.

I've got two pieces of advice for the RIAA.

The first is to stop pissing off your own artists so much that they blow off the Grammys and throw their own party just to stick it to you. The musicians and singers are the ones making you rich. I know you think they're all interchangeable, but if you alienate them enough, when a new technology gives them an edge, they'll drop you like yesterday's sound.

The second is to reread Robert Heinlein's very first story Life-Line:

"There has grown up in the minds of certain groups in this country the notion that because a man or corporation has made a profit out of the public for a number of years, the government and the courts are charged with the duty of guaranteeing such profit in the future, even in the face of changing circumstances and contrary to public interest. This strange doctrine is not supported by statute or common law. Neither individuals nor corporations have any right to come into court and ask that the clock of history be stopped, or turned back."

Comments

Stupid...

[SamMichaels]

This is stupid...maybe the reduction in sales is due to paying $18 for a CD...because back when sales were up, it was $14.

Stupider

[tiltowait]

It costs less to make a CD than a casette tape. So why do CDs and DVDs cost more than tapes? Because it's what 'they' think the market will bear... wankers.

The economy blows

[Bob Abooey]

Plain and simple. People cut out the little extras when things go bad and CD's fall into that category. Plus most new music just friggin blows anyways. Really.

How about the source material?!

[InterruptDescriptorT]

Go watch MTV or MTV2 for a while.

Tell me you instantly want to go out and buy the albums groups are hawking. The music is either pablum for the teen masses, a la Britney Spears, pseudo-intellectual neo-sensitive grunge like Creed, or mindless, repetitive breakbeats with woman singing, 'ooh, ooh baby' underneath it.

Not inspiring, is it? There's good music being made, but it's not being marketed. Maybe the RIAA hasn't got it through their inscrutable little heads that people don't want the same shit they've been given for decades! People want intelligent, thought-provoking, emotionally engaging music. Meanwhile, this crap is pushed on it, and frankly, I think the CD consumer is starting to wise up and decide it's just not worth the $15 to buy the CD.

Good job, RIAA. Keep it comin'. Meanwhile, I'll find my niche music in the corners of the Internet where you'll never find it hiding.

Re:How about the source material?!

[G-funk]

People want intelligent, thought-provoking, emotionally engaging music.

No. YOU want "intelligent, thought-provoking, emotionally engaging music". People, as a whole, want Britney Spears. Or to be more correct, they want the cd of the music they keep hearing on the radio / video hits. The big boys know this, and they love it. Whatever they feed us, we as a group eat up. Until this changes, the RIAA/MPAA will just tighten their grip on the public and their devices.

Duh...

[sporty]

I was unemployed for 3 months. What was the biggest luxary I had spent money on? Seeing lord of the rings. Yes. That was my biggest luxary spending. Well, that and food.

With ~5.6% people unemployed, and cut backs of course... WHERE DO YOU THINK WE WILL GET THE MONEY TO BUY $18 CD'S!!

Thank God I'm into older stuff now. At least those are a little cheaper...

What the RIAA really wants

[diabolus_in_america]

The RIAA continues to harp on declining profits and the disasterous effects of Napster and other P2P sites because their agenda, I think, from day one has been to get some sort of legislation that gives them the power of a Federal agency, while maintaining their for-profit status.
It may sound strange or conspiracy minded, but look at the way most of their press releases are written. Their releases make liberal use of the words, such as "piracy" and "illegal."
The RIAA is not just looking for the courts to shut down any site that they deem a danger to their continued profitability. They are looking for the government to give them to the power to do something about it themselves.

Re:What the RIAA really wants

[Rogerborg]

• The RIAA continues to harp on declining profits and the disasterous effects of Napster and other P2P sites because their agenda, I think, from day one has been to get some sort of legislation that gives them the power of a Federal agency, while maintaining their for-profit status [...] Their releases make liberal use of the words, such as "piracy" and "illegal."

You forgot to mention that they are protecting the National Economy (ergo, the Free Market, ergo the Free World), and (in the case of the MPAA) they're beseiged by filthy foreign pirates flooding the country with stolen DVD's and such.

I agree with you absolutely, and have done since about 1995, when them DMCA was just a glint in a crack addled lobbyist's eye. Back then, this was crazy talk. When the DMCA passed, we gasped and laughed and thought it would never stand, and largely missed the point that the DMCA was never the final goal, just a means to generate very public failed attempts to stop the Evil Pirates. We couldn't imagine anything worse than the DMCA, so we (largely) assumed that this was as bad as it could get, and that we could beat the DMCA by fighting it.

Then the SSSCA arrived, put a toe in the water, and slunk off to wait for the propaganda to soften us up. I think that was the catalyst that prompted a lot of people to realise the long term plan.

Hear this clearly: the music industry lobbyists aren't stupid. Greedy, ruthless, soulless. But not stupid. They know they can't control the market given current technology. They know they can't stop street corner swapping by making street corners (P2P services) illegal. The goal from day 1 has been to demonstrate that they can't control it, because of that pesky old assumption of innocence thing.

So, here comes the SSSCA. While we debate whether the DMCA was too far, the lobbyists whisper in their bought politicians' ears that the debate is really how much further should we go?. If we let people have hardware that allows them to copy data, of course they're going to copy it. I mean, politicians are corrupt and greedy, record industry lobbyists are corrupt and greedy, so everybody must be corrupt and greedy. Offer a roofied starlet to a Senator, and the question isn't "Should I fuck her up the ass?", it's "Can I fuck her up the ass without getting caught?". Why should Joe Public be different?

I personally think that the RIAA must be really pissed off with P2P figures right now. I mean, they never intended to win the case against Napster. The whole idea was to show that it was unwinnable, that they needed extra powers. Their lawyers got out of hand, and forgot the goal. And now we see that P2P figures match CD sales. They can't spin it otherwise. They want to show P2P taking off while sales plummet, but we just stupidly keep on buying the CD's when there's anything decent to buy, and only sharing music when it's worth sharing. Damn our honesty!

Oh, what's the use? We've been over this so many times. Our politicians are so endemically corrupt that we've stopped even caring. The SSSCA will be bought and forced on us before Joe Sixpack knows what's happening. A small core of us will say "Told you so," but that'll be cold comfort.

Hey ho. Buy the biggest drives you can, while you can. Stock up on blank CD's and DVD's. Enjoy our brief Golden Age of being given the choice of "easy and cheap but criminal" or "restrictive and expensive but legal" music purchases, before it becomes a choice between expensive crippleware or nothing. Hey fucking ho.

My advice for musicians

[e-gold]

Go *around* the RIAA quintopoly. Scott McCloud's cartoons "I Can't Stop Thinking" five and six have some ideas (which for some reason REALLY anger some folks). I have worked for tips before, it's not always the best living, but it pays the rent and tips of a reasonable size are a lot more palatable than overpriced CDs to consumers, and a lot better than nothing for musicians.

Anyway, lots of technology exists that could easily stop the bottleneck that limits feedback between consumers & the music business. I know, because I sell (some of) it for a living...
JMR

Classical Music

[wiredog]

In the past year I've "discovered" Mozart, Listz (sp?) Beethoven, Copland, and other composers of orchestral music, and I'm listening to some opera. There's hundreds of years of differing styles and composers. I listen to DC101 or WHFS for about 1 week every three months to see if anything new or interesting is on (usually not) and then go back to WETA.

Thank God for NPR.

RIAA can blame congress on this one...

[sdo1]

Congress passed the 1996 Telecommunications Act which, among other things, deregulated the airwaves. That put control of a majority of the big-market radio stations in the hands of a small number of companies. DJs are no longer DJs, they're "radio personalities". Playlists come from corporate and they're narrower than ever. As a result, the music that gets played is homogenous in the extreme. Oh, by the way, one company in that mix controls the majority of concert promotions too (Clear Channel Communications).

So why are CD sales off? Maybe because music that's on the radio is so weak and generic. Because the bands that get promoted are done so from on high in a corporate boardroom. The record companies have always managed things from above, but before the great airwave merger-fest started in 1996, they still had to work with local DJs and concert promoters and that invariably meant more variety. Now they all work in a harmonious corporate union and the result is music that more or less sucks.

They want a scapegoat? They need to look at this slick machine they've created.

-S

Its NOT about CD sales at all

[dnoyeb]

If napster lives, "the people" will choose the stars, not the recording industry. The RIAA knows and is not comfortable about this.

Now artists will be able to command MORE money.

Today, I watch RAP on TV and hear it on the radio and realize they are forcing complete garbage on me. 95% of RAP is total trash. Yet they still sell this trash because they force it down your throat.

This is what the RIAA wants.
1. they go find a no name artist.
2. Sign him/her to an abusive contract that he/she will agree to out of desperation or necessity.
3. He/she drops a hit record and the RIAA takes all the profits (see 2).
4. By the time he gets name recognition and can sign a quality contract, the RIAA wants him to be washed up so they can push their NEW no name artists.

So its not about CD sales at all. Its about power. Its just like any other industry. If you can flood the market with artists, their salaries will drop. But napster will allow us to filter to the songs and artists we like, and IGNORE the trash we dont, sending salaries for those artists who remain right back up.

You're fooling yourselves

[schnitzi]

I'm a little befuddled by the tack that free music advocates are taking against the RIAA -- denying that song swapping will cause a decline in CD sales.

Of course it will cause a decline. It may not have yet, but the CD's days are numbered. Why? They're an obsolete technology. They're clunky. They require packing and shipping. They hold a limited amount of music. They're prone to loss and scratches. If you think song swapping won't accelerate the decline in sales, you're fooling yourselves.

The record companies see the writing on the wall, and are trying to milk as much money out of CD sales before their collapse. Of course they're going to whine about everything that can even be perceived as a drop in sales; it's just part and parcel of doing everything they can do to receive court decisions sympathetic to their financial interests.

Re:Downloading Music

[Starship Trooper]

I think the big problem with your theory is that you can't copy toothbrushes. Nor are "street corner merchants" like Kaaza making cheaper toothbrushes; they're copying other people's toothbrushes.

If we created a P2P tool that had a real referral system and a way of promoting new music, that would be one thing. Instead, we have a system where you must know what you're looking for before you find it. We still learn what music we want to hear from the Radio and from MTV; we just use P2P technology to get it cheaper/for free.

P2P should be replacing the advertising channels. Instead it's trying to replace the retail channels.

And that really is illegal.

YOU're part of the problem

[nanojath]

"This strange doctrine is not supported by statute or common law."

The problem with this Heinlein quote is that the RIAA's beef, however much we may vilify them (and they are unquestionably vile), IS supported by statute and common law. There are few people less supportive of the Content Kings than me but if I have to say it a million times I will: as long as all we're doing is trying to justify the violation of copyright law, which is what downloading copyrighted music or burning a copyrighted CD that you do not own UNQUESTIONABLY is, we will NEVER make progress in changing things to a better system.

Legitimate consumer and legal beefs with the RIAA are plentiful:

* Do the Content Kings REALLY own the copyright to specifc recordings, or should many have reverted to the authors?

* Does the way the "legitimate" online music businees operates qualify as monopolistic practices?

* Is the DMCA constitutional, or is it in fact an example of "prior restraint," illegalizing the POTENTIAL uses of legitimate tools?

* Copy-protection schemes that produce "CDs" that do not follow CD specs, do not play in the range of equipment the consumer has reasonably come to expect, and reduces the versatility of the product.

* Treatment of artists, overpricing, the endless extension of copyrights... All these and more are totally valid points of attack. You wanna burn CDs, download free music? Be my guest. Hell, I speed. But stop this nonsense that somehow the courts and corporations should recognize our "right" to violate copyright law. Every argument like this just strengthens their case and makes the further legislation of information tools that much more likely.

Re:I guess I have a different perspective...

[Rogerborg]

• Just last week a sorority girl told me - " I love downloading music, I haven't bought any cds since I got the computer" ... you have to remember Slashdot is geared towards the geeky type. Many of us like buying the cds to support the artist and just to get the nice labeling and pamphlet inside it.

Fully fledged bastard of a good point. The amazing thing is that there is any debate about this at all on fora like Slashdot. For the majority of people, it's simply not wrong. If it were wrong, it would be hard to do, or there would be a threat of punishment. It isn't and there isn't, so it must be OK, right? Or, like, The Authorities would stop it, or something (assuming they even get that far in their thought processes).

And yet... and yet... the metrics don't support that. We see P2P use and CD sales rise and fall in unison. We (being geeks) assume that the P2P sharing drives enthusiasm for buying CD's. The RIAA selectively misrepresents the figures to "prove" that sharing kills sales.

Is there a simpler answer?

That there is no cause-effect from sharing to sales? That it's all the other way around, just like it's been for the past fifty years or so? When there's a lot of good music around, CD sales go up, and that drives extra traffic in P2P sharing. When the music sucks, sales drop, and people don't even care enough to share.

Both the RIAA and the geek brigade have agenda to show that P2P drives sales (down and up respectively), but (anecdotes aside) there's no direct evidence to support that. Perhaps CD purchasers are buying music using the same criteria that they have for the past fifty some years: does it suck? How much does it cost? Do I want my own good quality CD, or a shitty MP3/analogue tape/reel to fucking reel copy from my friend?

Anecdotes aside, copying has always been extra to shelf sales. The figures seem to indicate that's still the case. People who are going to buy music are still buying it, even though they don't have to.

Another reason CD sales are down

[c=sixty4]

I went into a record store yesterday, and saw a record I actually wanted to buy. The conversation with the clerk went something like this:

"Is this CD copy protected?"

"I don't know. They don't label all that are."

"The only CD player I have is in my computer. If this is copy protected, I will not be able to play it. I will have bought what is for all intents and purpouses a shiny piece of metal. Can I at least try this to see if I can play this?"

"Sorry, but if the case has been opened, there are no refunds."

Yes, that will encourage more record sales.

Post Hoc, Ergo Propter Hoc

[Sargent1]

I've seen this "analysis" before (that Napster boosted CD sales and that its shutdown caused the recent decline in profits), and I'm not sure I buy it. It smacks of the usual after this, therefore because of this thinking. It's like the hemline theory. Someone noticed that stock prices and the length of womens' hemlines seemed to track together. Look! The stock market is determined by how long skirts are!

It's possible that Napster had a hand in both driving up revenues and then later driving them back down. But without more evidence other than "See! See! They happened at the same time!" I'm going to remain skeptical.

Movies vrs Music

[MikeFM]

From my own buying habits I know I buy far more movies since the prices started dropping. Walmart has had VHS movies for $5-6 for some time and I've bought most of the ones they've made available. They now also have DVD's for $7-$10 which I've taken to buying instead of the VHS because I like DVD's better. I buy lots of movies because they are cheap and I buy almost no music because it's priced insanely. I actually buy the music videos on DVD for less than I could buy just the music on CD. How does that make sense?

I'll still copy and even share the movies I buy but I buy far more. I have a bootleg copy of Harry Potter but I still plan on buying it on DVD when it's released. Because of the download size of LotR I decided to wait for the DVD rather than downloading it but I wouldn't have had I still had broadband. Not only does price matter but also release schedule. The studios need to understand that the DVD should be available as soon as the movie is in theatures. In many cases we'll still go to the theature.. for the experience.. despite the fact we own the movie already. Afterall many of us go watch good movies more than once at the theature anyway.

One more thing music could learn from movies is that they need to release more than one version of a CD. A cheap version that is nothing but the CD for those who are satisfied with that and something more along the lines of a collectors edition later that might have extras such as a cool box (Rocky Horror Picture Show has an awesome DVD box), lyrics, information about the band, maybe a DVD of the music videos, etc. People will buy a product twice if the first time is a good deal and the second time offers stuff a 'true fan' will crave. Movie studios seem to understand this better than the music industry. The Phantom Menace Collectors Edition was also a nice release.. the inclusion of the film clip etc was very cool IMO and it probably cost them less than a nickle.

If movies, music, and games would drop to $3/each I might buy 10+ a week (I buy 1-2 now) and would be much less likely to bother downloading them. They have to let me play them on whatever device I want though. If I can't play it in Linux and mess around with editing them etc then I'll go back to ripping and burning.