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RIAA Almost Down To Pre-Napster Revenues
...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."
It's a hard truth for the recording industry to accept, but as a friend of mine said, "when you're into Napster, you're into music." I have to say I bought a few dozen CDs during the Napster era. I've purchased one since the downfall (and that was a gift). Here's hoping the artists get more joy out of the RIAA than ordinary users like us.
Amateurs discuss tactics. Professionals discuss logistics.
Let's see you keep raising prices even though costs of production are declining (particularly the switch from LPs to CDs years ago) even when everyone knows what the real cost of raw materails is. You cheat all of the artists on royalty payments. You try to stop or price out of existence every streaming radio station. YOu insist upon a tax on all blank recordable media in Europe, and try the same in the US. Shutdown Napster and half-heartedly have some of your members set up bad "replacements". Effectively kill the singles market, insisting that everyone buy full albums from one-hit wonders.
And, then you are shocked and apalled that everyone is sharing Digital copies?
--- Ron
Back when I was in college in my 20's I bought a lot of CD's. Now I'm in my 30's and I don't buy near as many CD'sas I did when I was in my 20's. There was, however, a brief increase in my CD buying when Napster was around. I hate all of our local radio stations so I'd look at the playlists of websites that played music I did like. I couldn't hear the music though. With Napster, I had the ability to preview the songs which usually then meant going on to Amazon.com and buying the CD's. Now, for one reason or another, Napster is gone and I just don't buy CD's anymore. I know I could use Limewire or some other sharing program but I don't. I can say for a fact that Napster caused me to buy more CD's. My friends have similar testimonies.
Make less crap.
I'm not going to buy an $18 dollar CD dammit. I'll buy two $12 dollar ones though. Make less crap, drop the cost of the CD, and I'll buy more. As a finger to the man, I'll just use etree for now (though the RIAA get kickbacks for CD-R sales so I lose either way). I've bought all the CD's of the artists I want to buy for now. Nothing appealing has come out lately.
psxndc
The emacs religion: to be saved, control excess.
The mass market of consumers owns a CD player and likely has one in their car. The mass market consumers do not own MP3 players that they use over their home stereo or in their car or even as a portable device for that matter. So despite the large number of "casual" Internet users that became proficient at downloading a few MP3s via a file sharing service (re: Napster), most people still bought CDs.
I think what the RIAA is missing here is that the people who really download lots and lots of MP3s are never going to spend the money to buy this music in the first place. Case and point: I really wanted Tenacious D's album so I bought the CD. A good friend of mine kinda likes Tenacious D, but not enough to buy the album, so he downloaded the MP3s he likes. Since he never would have bought the CD in the first place, you can't really count him as lost revenue. He would have never bought the CD.
It would be interesting to me to find out how many people who used Napster (and still use Morpheus, et al) that never intended to buy the CDs in the first place. Removing them from the equation would provide a more accurate look at what the RIAA lost/gained.
My sigs always suck.
Where did I read this.....was it /....or maybe cnet?
Anyways...DVD's are at a turning point and there is a split in the ranks of the movie studies about how to handle DVD's inthe future. Extra bonus material is starting to cost way too much becuase actors and directors are starting to have pay for that bonus material getting written into contracts. So that extra 3 hours of behind th scense footage is now going to start costing studios real money to produce becuase the talent knows thats a revenue stream for the studies and they want a fair cut.
Also the licensing deal with BlockBuster is coming up for renewal....and it looks like BlockBuster isnt going to renew. The deal let blockbuster get advanced distribution of movies for rental before they were available for commercial sale...and the studies got a percentage of the rental take. Now it seems both sides of that deal are backing off. The studies think getting titles out quicker for sale is a good idea...and blockbuster is looking at the lower cost of stocking DVD making up for any lost revenue garnished by having a rental only window before full release. Both the studies and BlockBuster think they can make more money by selling cheaper...
More interesting still Warner Bros. is looking very hard at dropping the price of their DVD catalog through the floor...the idea being to get people to buy a DVD like they buy magazines in places like Walmart. Part of the reason is a lessoned learned trying to watching the record studies fight to keep control. If the price is low and reasonable...do people have less incentive still and more incentive to pony up the money....it seem like someone in the movie buz has woken up to the reality of file swapping...its always going to be there, the question is can you encourage people to buy instead of steal. If the DMCA is the stick....are $3 DVD's sitting in the checkout racks of your local Walmart the carrot?
-jef
If I liked it, I would usually go and buy it just to have a nice hard copy of it, even better if it has lyrics and band pics etc. Everyone I know with the money to spare would do the same.
Now that I can never find music anymore, I simply don't buy CDs anymore. I haven't bought a CD in months, and the last one I bought was a Christmas present for my fiancee.
Someone please tell me, just how the fuck am I supposed to find music when I have no interest int he type of music that gets radio play? Even if I was interested in that type of music, most stations play the same 20 songs 10 times every day, for months and months at a time.
Abso-fucking-lutely ri-fucking-diculous!
Sticking feathers up your butt does not make you a chicken - Tyler Durden
The simple point is that media of any sort is limited in supply.
:)
Except of course digital media. The "supply" isn't limited by any "natural" market forces, so the industry needs laws to artificially make it so.
But you know that.
Pop quiz (pun intended):
How much had did that lady spend on music last year before discovering Kazaa?
If your answer was "zero", explain how the RIAA can have "lost" any money from her non purchases this year.
You know, when the Soviet Union was coming apart from within, and they finally admitted that it was farcical to try and control demand for products, we all nodded smugly and went "Uh huh, but of course". We laughed at the notion that you can decide how many and what color of cheap plastic toothbrushes to make five years in advance, on the basis that people will only demand the shoddy, expensive products that you produce.
Strangely, we blithely ignored the fact that the same model was alive and well in the USA with music. A (de facto) single huge conglomerate decided how many albums we would buy, and the "artists", the content, and the price, all in advance. They expected that demand would match the predetermined supply.
And then we learned the Soviet lesson. Street vendors started selling toothbrushes more cheaply than the state shops. Some of them were even better quality than (gasp) the cheap plastic state approved ones. It was illegal, but they were massively popular. And over here, we started to see guys on the corner giving music away. It was illegal, sure, but it was undeniably popular. We, the People wanted it.
Strangely, the Russians (nee Soviets) adapted. They deregulated. They said to the toothbrush sellers "Go ahead, supply the demand. Come in out of the cold, run the shops, pay taxes. Everybody wins."
We haven't got there yet. We're still at the stage of trying to stamp out street corner trading by making street corners illegal. It's farcical, and it will look increasingly so with hindsight. We need to take a look at the Russian model: if you criminalise demand, all you are doing is spending a lot of time, effort and money into turning a lot of people into criminals. Far better to bring it in out of the cold, ask We, the People what we actually want, and come to a fair compromise.
Please don't respond with the childish "We want free music, so there can't be any compromise.". Russians want free toothbrushes, but they're happy to settle for paying for convenient access to a wider choice of better toothbrushes. Similarly, we want free music, but at the moment, our choice is free music, expensive CD's, or a tiny selection of expensive and crippled digital tracks. Give us the opportunity to buy only the tracks we want, in high quality, without idiotic content control, and without paying for the priveledge of having them marketed to us, and we might find out that we actually still like buying music after all.
If you were blocking sigs, you wouldn't have to read this.
Things are very different. My school had to implement and upload/download limit on internet1 traffic whlie they go over the options on how to control this problem. (Most likely they'll be using a packateer...) The problem has been caused due to music/movie etc transfers on morpheous and kazaa. Becasue of our schools privacy policy and unrestrictive content, the school doesn't want to censor or block any incoming material or outgoing. They don't monitor content. Into the first couple weeks of the semester, before the bandwitdh restrictions, the network was soo saturated to the point that i1 traffic was
Hell, if Sorority Sarah can burn the new N'SYNC album on her Compaq, she's not going to buy it.
Who's the black private dick, who's a sex machine for all the chicks?
Extra bonus material is starting to cost way too much becuase actors and directors are starting to have pay for that bonus material getting written into contracts.
Columbia/Sony lately has been solving this problem by leaving out bonus DVD features, allowing mastering to greatly increase the bitrate for the primary video signal, making the DVD look as good as a 480-line picture can provide. See Columbia's Flash site for details.
Will I retire or break 10K?
AIR, the licensing deal only covered tapes - and BB gave up a good chunk of revenue for teh early distribution rights. I think BB has discovered:
a) They can make more money off of DVDs because they have to share less and used DVDs are worth more than used tape - which allows them to recoup more (if not all) of the purchase cost.
b) There is very little competition to worry about, so first access to new movies doesn't provide enough return to warrant the profit sharing arrangement.
c) As studios drop DVD prices, BB cost of goods gos down as well - and there are probably enough people who will pay $2 to rent a DVD rather than buy one for $5 - especially when they know BB will dump used ones for $3 after a few months. That really has to scare studios, because it mean sthey have a very small window to sell DVDs before the off-rental units start to cut into new sales. So the studios are caught in a double whammy - lower prices mean less revenue up front, and a shorter period where new DVDs have no competition from used ones.
I'm a consultant - I convert gibberish into cash-flow.
Why do we get defensive every time the RIAA trots out the "falling sales, evil pirates, end of civilisation as we know it" line?
Why don't we respond with: "Yeah, sales are down, and it's your fault, you soulless reptiles. What the fuck are you going to do about it? I hate your over engineered muzak, and the dead eyed meat puppets that mime to it, and your old fashioned distribution system, and the fact that most of the cost of an album goes to weaels in marketing and legal, up the noses of desparately unhappy borderline morons in G-strings, or in <strike>bribes </strike> campaign contributions. Fix it, and fix it now, or get the hell out of the way and let someone else have a go at supplying the demand rather than trying to control it through an abusive monopoly."
Oh wait, I just said it.
If you were blocking sigs, you wouldn't have to read this.
I dunno about you, but I gave up on MTV, it just sucks too much. I also don't listen to the radio too much, it's just more of the same crap that's on MTV. If you want to find a new artist who's any good, about the worst place to do it is MTV or the radio.
Mostly I find new music from referral from friends. "Hey, check this out." That used to be done by going out to a bar and listening to a band, something I don't really have the time for these days. These days someone sends me an MP3 clip. And you know what? If I like it, I first try to see if I can buy it straight from the artist (many many small bands sell them off their own websites). If I can't do that, I try Amazon. Because you can bet your bottom dollar that the cool stuff isn't at Best Buy.
Outside of those kinds of referrals, I've subscribed to an actual (gasp) pay-for-stream service, RealOne. Their commercial-free genre-based streaming system is worth $10/month; terrific for background noise.
But having used RealOne for a few months now, I can see places where their model is seriously incomplete. For one, if I like a clip it's a pain to go listen to it again or to go listen to the whole album. There's no way I can forward a reference to the clip to someone so they can hear it too. There's a link to Amazon to buy the album, but no way to buy it and get it on MP3 immediately and the album delivered later.
These companies really need to use a mixed model to build a strong business. You need streaming content for "browsing". You need referral services for audience building. You need purchasing features for retail. And, this being the internet, you need immediate gratification so that when you buy the album, you have it /now/. And if they're going to charge CD prices for MP3 content, they're going to have to send the CD too.
jim frost
jimf@frostbytes.com
Sure it will work. Its all about marketing. The RIAA isn't marketing. They are demanding through the use of force. They are trying to sell by beating people with a stick, rather than appealing to their good senses.
There are many profit motivated people who are trying to appeal to the masses with free music. The RIAA does not want any of that and wants us to believe that free music/software/beer will never work and will be the end of entertainment. Uh huh.
Then when file sharing popped up, I had friends ICQ'ing me tunes "hey listen to this", I'd listen, like it, then go buy the CDs. I *do* rip them to my house's file server and copy them to work to listen there. Point being, exposure through alternate channels has caused me to start buying CDs again.
Some stuff I've purchased recently (remember, I'm 42) includes, Rage, Limp Bizkit, Dream Theater, Dishwalla, Satriani, and a bunch of others I would have never been exposed to any other way...
Remember, I'm an old fart. We don't listen to music on the radio when in the car, we listen to lame right-wing talk show hosts or motivational tapes trying to convince ourselves that we still have "it." So how do we get exposed to new music?
Don't you find it odd that 20% of these people filled out a survey saying "I downloaded free music from the net."? Most of these people know it's illegal. I have a hard time imagining they'd fill out that survey.
In any case, I bet the survey's question was more like "Have you ever downloaded music?", "Did you pay for that download?". And then, I think the RIAA said "every time somebody downloads a song, they don't buy a CD."
This sounds like baloney to me. The reason I'm not buying CD's today is that I'm boycotting the RIAA. I suppose they could blame that on Napster, i.e. suing Napster and not providing a solution to fill consumer's desires.
"Derp de derp."
OK, unemployment is up, consumer confidence unexpectedly dove yesterday....what do these companies expect???? Infintely increasing market share and sales. RIAA let me give you a clue....the world economy is in a RECESSION! These dopes haven't even considered the macro-economic state of the world.
I guess it's easier to blame napster and the terrorists and whoever else they can think of.
-ted
Just a sampling of music from indie labels that I have bought and liked:
* Appleseed Cast, "Low Level Owl Vol I,II", Deep Elm Records
This has to be one of the best recordings of last year. This band reminds me of Radiohead, yet with an earthy tone drawn from their subdued vocals and natural samples.
* Morton Feldman/Ives Ensemble, "String Quartet II", Hat Art Records (limited pressing of 3000)
The first complete recording of the 4-6 hour string quarted by the legendary composer. Takes a bit of will to listen to, but well worth every second.
* Boxhead Ensemble, "Two Brothers", Truckstop Media
A string ensemble. Not pop, but a great spin.
* The Notwist, "Neon Golden", import (forget the label)
A german band, singing in english, which fuses electronic and acoustic music very well. The inflections of the lead singer can be a bit confusing at times, but soon grows on you.
* Unisex, "Stratosfear", Double Agent.
Good pop/electronica music. Catchy with only one poorly executed track on the album.
* Mirah, "You Think It's Like This But Really It Is Like This," K Records
Low fi, post punk, female vocals that tug at your heart.
I've been searching out obscure and hard to find music for the last several months now, and I feel good about supporting the indie music scene and I've enjoyed the music to boot.
The middle mind speaks!
This drives me nuts. Everytime there's a flux in the economy, the RIAA uses it as a scapegoat to blame falling sales etc. etc. blah blah blah. Gimme a break.
"the study found that ownership of CD burners has nearly tripled since 1999"
Again with the analogy that more CD burners mean more piracy of songs. Again they fail to notice that the number of computers in the world is growing, operating systems and applications get larger, more people are backing up data to CD than before, etc. True, I think the number does contribute something but put it in perspective people.
"Global piracy on the physical side costs the recording industry over $4 billion* a year"
I still fail to see how anything except under-estimating production expenses or over-estimating demand will "cost" the recording industry money. So they're saying that $4 billion dollars worth of music *might* have been purchased instead of downloaded? Where do they get these numbers?
"DVD Video Continues Steady Increase"
Yeah, no shit. And DVD player sales continue to increase. Is piracy to blame because people can't rip DVDs very easily? So once DVD burners are the "in" thing, is the RIAA going to blame piracy on lower sales? No. DVDs will continue to flourish because more production companies are now seeing the need to create good quality and content DVDs. VHS sales are way down not due to piracy but to the fact that I'd rather spend my money on a DVD with commentary and extras than half that on just the movie. As more players get out there and more quality DVDs are released, the sales will increase. I don't need to be JoJo to figure that out. And yes, even when DVD burners outnumber CD burners, I predict that DVD sales will STILL increase each year (providing that studios don't stop making good content DVDs).
"Cassette Popularity Sharply Declines"
Oops. Guess we should blame piracy again here. Sales are down. Oh no! Sorry, just peeved at how they blame everything on piracy as usual, like how parents blame game companies on how they corrupt youth or something. When will the real players accept their own responsibilities. Silly, silly, silly.
liB
I'd like to see some usage statistics on Morpheus. I'd be willing to bet that most people look for specific songs, not whole albums. If I'm right, then the RIAA's case weakens.
They claim that 'Napster like downloading of music' is hurting their sales. I think what's really happening, in most cases, that people are downloading songs that they're interested in, particularly the older ones. I got to peak in a couple of people's MP3 lockers from way back when, and most of their songs were made at least 2 years ago, and date all the way back to the Beatles. I realize this isn't a very accurate slice of the world, but think about it, how many people do you think are saying "Hmm... I wonder what Pink Floyd is like?" and going and finding out? What are they supposed to do? Go to the store and try to find these albums? That's fine and dandy, but you don't know what you're buying there. Why pay $10-$15 for a CD when you only want one song?
In any case, if somebody downloads a song, buying a CD still has value. Why? Because there are usually 10 or so more songs on it to listen to. What the person has actually downloaded is a teaser to go get the CD. In which case, it's even more valuable to the RIAA because if the user likes the song, they have more reason to go buy the album. If they don't buy the album, then it's likely that the content wasn't enticing enough. That's not the RIAA's fault.
Part of me can't help but wonder if the RIAA is trying to protect themselves against sales lost due to customers really know what's on the CD. *Shrug*
"But they can go download the rest of the album, if they like it!" -- this is what a RIAA rep would say in a Milhouse kind of voice. I think you can search for albums on the net. Who knows, maybe in the future Morpheus will get so good that all music is available. Until then, in the time it'd take me to get the album (i.e. searching for it, trying to find sources that are reliable, etc), I could have gone to the store and gotten it.
If the day comes where entire albums are up for instant download on Morpheus, then the RIAA has lost their own battle. Today they could provide a means for people to legitimately buy individual songs in MP3 (or equiv) format. If they did that, then I could download any song I wanted from a fast server without having all the headaches of a p2p network. Every day they don't do that, more and more people wouldn't try it if it did materialize.
In short, the RIAA's losses are their own fault. People want individual songs but can't get them legally without overpaying for them. File sharing is a result of a new market trend. A competent organization'd say "How can we make money here?" instead of fighting it like a bunch of spoiled babies.
"Derp de derp."
After all, it didn't hurt them very much, and it's far more effective political ammo than the same money spent on "Public Awareness" campaigns.
--Dave Rickey
If I buy an Mp3 do I have the right to sell it if I don't want it any more?
Let me start off by saying that most of my life I have been a music junkie. My dealer was the owner of a small record store in my hometown. I would walk into the store and he (knowing my musical tastes) would peddle me some free samplers from the record industry with a few sample songs from the album --- or sometimes a pre release FULL album thrown in for a bone. I would be ever so greatful that I was getting this "special" service. In retrospect he could set his clock by the fact that I would be marching in his store in a few days to purchase a full length album or two from the group of sample tapes he had given me before. I would leave the store with my new purchased albums and a new batch of sample tapes. Repeat and wash for 10 years and a tape collection over 500.
5 years later...The "big" record stores laugh at me when I ask for any samples. Radio does not play "my type of music"....I have know way of knowing what music to purchase....Let alone where to hear a sample before making the purchase....Needless to say, I go the next few years with only buying a handful of CD's (mostly from artists who had released music I liked "back in the day" or to replace my favorite crappy tapes with CD's.)
Fast forward to Napster....Much like the sample tapes I used to get when I was a kid...I can download a few obscure album songs from a band I read about and actually have a fair and partial decision making process....AND guess what -- I started to frequent the music stores like crazy, and started filling up my CD collection with FRESH music from new bands, and old bands I had somehow missed the first time around.
Post Napster: I have not been back to the record store because even if I had a gift certificate for a wheel barrow load of free CD's, I would not even know where to start....I tried gnutella for awhile, but it was not the same....Napster represented the WHOLE (by the numbers of people using it), everything else is just scattered pieces -- and if I was looking for top 40 or greatest hits records then maybe that would suffice -- but I am looking for obscure music from bands that may have never sold any more albums than I have fingers, never made the airwaves of radio, no MTV, yet still managed to get a record contract.
Bottom line: the industry has failed. And until I can walk into a record store that has all of the trappings of my former "dealer" OR can easily SNARF music samples from an endless pit of obscure recordings such as Napster -- then the recording industry will never see another red cent from me thank you.
(+1 Funny) only if I laugh out loud.