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Yet Another Look at CD Sales
citizenkeller writes "Dan Bricklin, of VisiCalc fame, has published a very interesting essay on "CD sales, downloading, and burning". In his own words: 'Given the slight dip in CD sales despite so many reasons for there to be a much larger drop, it seems that the effect of downloading, burning, and sharing is one of the few bright lights helping the music industry with their most loyal customers. Perhaps the real reason for some of the drop in sales was the shutdown of Napster and other crackdowns by the music industry.'"
It's the economy stupid. That's the reason for the drop. Plus there is a lot of crap that sounds the same. It's not the pirates.
Maybe the real reason there was a drop in CD sales was *gasp* the fact that we're in a recession? The Dow Jones was up around 12000, now it hovers around 8000 - CD sales seem to have held up surprisingly well, actually.
Personally, I've bought many more CDs since Napster than I did beforehand, 'cause I discovered lesser known groups like Apocalyptica that I really enjoy listening to.
The slashdot crowd has been saying that ever since the shutdown of napster. Many /. folk have commented on how the nap music to preview before they buy. Others mention how Napster and after Gnutella have actually increaded their CD buying. Most people link the slow down in CD sales to the economic downturn rather than making the RIAA's claim that it's from file trading.
I think it's pretty clear that file trading is pretty neutral on the music industry and i join others in wonderment over the industry's heavy handed tactics to stop file trading when there is no evidence that it even might hurt their bottom lines.
I've said it before, but people don't seem to get it yet: The music industry has a larger plan, namely to seize on the issue of "piracy" to justify purchasing legislation mandating the infrastructure required to support ubiquitous pay-per-use. Today's battles aren't about unit sales of music, but rather about shifting America to a pay-per-use entertainment business model.
This is why the RIAA is perfectly willing to shoot itself in the foot in the short term (5 years). It lets them bleat about piracy while they try to get rid of that revenue-limiting buy-once play-many business model
Remain calm! All is well!
Napster is long dead. There are MANY other (better) options now available. When my roommate used Napster back in the day the average search returned a good enough list to download something at a decent speed. But let's look at Kazaa. The average list resulting from a search is insanely long and the combination of downloads for a higher speed is SO much better. Granted Napster would have incorporated the same thing into itself but that's not the point.
My point is that just b/c Napsters gone does NOT mean that people are no longer able to download/burn music. That's just stupid to say that b/c it is gone there is no more desire to buy CDs.
My theory (based on my own economic situation after the stocks went to shit) is that economics have played a large role in the downturn of everything, including CDs.
Already have an Internet connection, already have a CD burner, already have P2P software, blank CDs running me about $1 a piece/average.
New CDs run me $9.99 - $17.00 depending (especially for smaller bands like I prefer to listen to, SCI, WSP, etc).
What am I going to do? I am going to download the damn MP3s or SHNs and burn them. Just like everyone else is.
Stop w/the happy horseshit.
Support freedom of music. etree and FurthurNET
They are losing buisiness because they are treating their customers like shit. You dont' treat your customers like shit and stay in buisiness for long. Eventually they must learn the painful lesson that laws can never overpower market forces and customer satisfaction.
--Won't that be grand? Computers and the programs will start thinking and the people will stop. - Dr. Walter Gibbs
If I opened a bakery, and all I did was sell white bread, eventually I'm going to hit a saturation point. After that, I can't expect my sales to improve much year over year.
... you'd think I was nuts .
So I could either increase the price of my white bread, to compensate for the lack of additional sales. But that's a dangerous route to take, because for every price increase, I'm going to probably lose customers (either to another bakery, or to people who just decide to bake at home).
If I wanted the government to mandate that people can only buy white bread, or only from me, or that other bakeries pay me a $0.05 for every loaf they sell, or that consumers pay me a $10.00 levy when they purchase a new oven
The right choice would also expand my product line. and sell other types of bread. Of course, this too will reach a limit. But as long as I sell a variety of products, at reasonable prices, I should make enough money to cover my expenses and be happy.
Right?
Tuus crepidae innexilis sunt.
Too bad that most people think that this theory is crazy and will never happen.
Pay-per-view is the holy grail for the music publishers. (not the artists, it's actually the death of art) I hope that if they ever do get this passed that there is some sort of riot, but unfortunatly it will be silently accepted like everything else.
Apathy.
Besides the obvious - who in the current economy has tons of available cash to buy lots of CD's - there's the incredible rate at which the price of CD's continues to go up. Um, I'm not a marketing major, but seems to me that if your product isn't selling at $20 and testing says the people like your product they're just not BUYING it, odds are really good that your price is higher than they're willing to pay.
Add to that problem the fact that most music the recording companies are releasing (esp. the stuff they really push) all sounds the same. Either you get copy cats, really is there that much difference between the many "look at my navel" bimbos out there??? Or you get stuck with a group that had a hit album once so all their later albums try to sound just like their one good album. Even if you find a group you can enjoy and listen to, usually you're stuck paying $20 for their CD which has maybe 2 good songs and the rest is crap...
Of course, given alternatives, people are going to find other ways to get their music of choice.
...We all stop sponsoring terrorism by not bying music which is under the control of RIAA?
Buy indie music from labels who have nothing to do with the helldemons. Check out text file I have attached below.
List of Record Labels that feed RIAA
Everytime you buy a CD that's on that record label listed, you directly finance the people who turn around and take away your fair use rights and civil liberties.
Think about that for a while. As for the Dropping CD Sales, all I have to say is:
The laptop sales are also dropping. I guess it could be attributed to the widespread online hardware piracy via Lapster
(disclaimer: this is a shameless plug for a website, but I am a satisfied customer)
Convenient way to buy independent CDs, without giving any of your money to the RIAA: CD Baby
They even let you pass a message to the artist for every CD purchased. Plus I love the line on the "about" page: "No Microsoft products were used in the creation of this website."
Remain calm! All is well!
for the money. Most people realise that you get like 50+ hours of enjoyment out of a good game while you only get a couple of hours out of a cd until it becomes background music. With the exception of that rare album that you play until your roommate destroys your stereo in retribution.
Also video games have multi million dollar budgets, are in development for years. Most albums are produced with at most a couple hundred thousand dollars, and composed in only a few months. Video games are big business, and may eclipse movies (if they haven't already).
Piracy is a paper tiger. Those who have discovered new artists through file trading have spent more money than the "freeloaders," most of whom wouldn't have bought anyway, have held on to. I suggest having a look at this Life In Hell comic strip from 1988. It shows that the RIAA's whining about piracy was BS then, and is BS now. The music biz first said player piano reels were killing them, then said the radio giving away free music was killing them, and so on. It's the same old BS.
How ya like dat?
What is your point? The industry's claim for years has been that piracy has been *THE* major reason for dropping sales, a viewpoint which has been fairly impressivly argued against. Of course there are more than just one or two reasons for the downturn, but clearly the major one is the economy, followed closely by the thin-gruel-like consistency of most pop music today.
Arguing that since the economy cannot be the *ONLY* reason it is somehow less valid to proclaim it as such than the industry's fallacious attacks on internet piracy is a farce.
I'm sure that one or two deeply religious parents out there have forbidden their children from buying Marilyn Manson albums - does that then also mean that we can claim that "Religion is *THE* reason for the downturn in music sales", as the record industry would have if it chose to exercise a vendetta against religion next?
"So on one hand, honey is an amazingly sophisticated and efficient food source. On the other hand it's bee backwash."
Where the article begins to fall down is when the author begins to speculate without hard data such as his belief that cell phone usage adversely affects music sales. It completely falls down when he counters the very data with the following quote So since burning and downloading didn't cause a sizeable dip in sales it must have caused an increase instead? This conclusion is incorrect and quite illogical.
The author also seems to imply that shutting down Napster reduced the degree of copyright infringement but this seems unlikely given the number of P2P services that sprang up in its stead from Kazaa to Audiogalaxy to Gnutella.
BOTTOM LINE: The article correctly points out that the claims of the music industry of the costs of copyright infringement are exaggerated but falls down by claiming that copyright infringement fuels sales without anything more than a gut feeling to back this up.
...trying to explain to my gf why I wasn't going to buy her a RIAA produced CD. Her eyes have an impressive range of motion.
Because of the media monopolies crackdown on Napster (and because I am also having a harder time finding music that is worth listening to and CD's that are worth the price.) I decided to boycott their products. So I probably helped a tiny bit with that drop.
I hoped at one point the RIAA companies would get the message. Instead my small boycott has been spun into more ammunition to be used against me.
Speaking as a part time, small volume, music sharer. I bought more music two years ago then I have in a long time and I KNOW for a fact the Napster helped fuel my desire for music.
Go figure.
-Derek
As proof of this, let's look at the top 20 selling albums of all time as an example:
1. Eagles: Greatest Hits
2. Michael Jackson: Thriller
3. Pink Floyd: The Wall
4. Led Zeppelin IV
5. Billy Joel: Greatest Hits
6. AC/DC: Back in Black
7.Shania Twain: Come on Over
8.Beatles: White Album
9.Fleetwood Mac: Rumours
10.The Bodyguard Motion Picture Soundtrack
11.Boston: Boston
12.Alanis Morissette: Jagged Little Pill
13.Garth Brooks: No Fences
14.Hootie and the Blowfish: Cracked Rear View
15.Eagles: Hotel California
16.Beatles: Beatles
17.Bruce Springsteen: Born in the USA
18.Pink Floyd: Dark Side of the Moon
19.Guns N Roses: Appetite For Destruction
20.Elton John: Greatest Hits
The list is a little rock-heavy, but look at the difference bewteen the bands. There's a huge variety of musical styles here. In other words, the exact opposite of what's being sold now. Listening to the same carbon copy crap is boring, and the opposite of entertaining. Until the RIAA and the record companies start releasing albums from artists who are willing to experiment musically, then sales will not increase.
Personally, the last CD's I purchased were Ozzy Osbourne: Live at Budokan (and the remaster / reissues he's released this year), and Black Sabbath's Past Lives. I doubt I buy any more CD's this year.
I really don't see how your "mathematical" refutation works. First you're using totally unkown quantities to try and boost a group by making generalizations:
Today, pretty much the only people who are offline are older people who are afraid of/unable to learn the "new" technology.
You then follow this up with:
I highly doubt these people buy many CDs; hell, they may not even own a CD player.
Of course his statistics show that these people don't buy many CD's (thus the 54% of population and only 39% of sales).
Finally, you throw in:
As for the nonusers, this splits into two main groups the way I see it: younger people who are against piracy and older people who don't use their computer for much more than web browsing and email.
Convenient grouping. Care to back it up with any statistics or facts? I'm a P2P non-user yet I'm an IT professional with multiple computers and a broadband connection at home. I'm against piracy, but I don't classify P2P as piracy.
So, after all of this inanities you then trot out the following:
Ultimately, I think the only relevant numbers would be if you could figure out the statistics for Nonusers, Dabblers, Learners, and Lovers between the ages of 13 and 25 or so and their CD purchasing habits because these are the users who make up the statistically significant number of music downloaders and purchasers.
OK, fine. Let's control for that. By your figuring the percentage of users in that group should be *MUCH* higher. So, since these people make up a significant portion of total CD sales, then a drop in CD purchases because of P2P usage would also be *MUCH* higher.
If the 13-25 group represented 75% of sales and out of that group you had 75% of the P2P learners and lovers then say a 50% drop in purchases from this group would be manifested as a greater spike in total sales losses.
Again, no matter how you slice it, the numbers just don't add up. (Controlling for age groups is irrelevant as this study is about overall CD sales.)
--- I wish I could hear the soundtrack to my life. That way I'd know when to duck.
If the opportunity presented itself where I could legally give a swift kick to the behind of everyone behind the current dominate music distribution model, I would. That given, I thought I would give a take on this whole downloadable music thing that I haven't read before.
This article makes a little inroads in the direction, but I want to point out that just like music downloaders are in various categories, you have a whole continuum of music PURCHASERS. And it isn't a descrete category that people fall into... it is a continuum.
On one side, you have the people who compulsively buy buy buy everything music. On the other side, you have people who don't buy any music at all. In between, there are all sorts of levels of music purchase. And somewhere in between, is the "sweet spot" of consumers which can be swayed one direction or another to buy or not buy CDs.
Now, you have a disruptive technology like online music distribution. Some people like it for the convenience. Some people like it for the cost. Whatever. It doesn't matter except that in most cases, it slightly pushes them down the continuum towards not being as big of a music purchaser. (However, yes, there are counter-trends, like someone getting more excited about music and finding a new favorite group, and supporting them.)
But whenever someone downloads music, in general terms, it pushes them down the continuum towards being a non-purchaser. The effect on an individual level is probably quite small, and difficult to measure. However, when aggregated across a large population, the impact is dramatic.
I think the problem with surveys of how downloading CDs have affected music purchasing decisions is that it is too focused on the individual level. From their point of view, their behavior may not have changed significantly. Or they may not be aware of any change. But a slight change has occured.
That slight change is enough to push some people out of the sweet spot and into becoming a non-purchaser. Or the aggregate of a large number of people sliding down the continuum has an affect on sales figures.
So, this is the basic guts of the theory that I have when it comes to online music downloading vs consumer purchasing.
Comments? Questions? Criticisms?
First, the most important hard number that matters: 13%. This is the percentage by which record sales (as measured by SoundScan) are down this year over the same time last year. That's a HUNK. Study after study has failed to demonstrate that downloading either is or is not responsible for this dip. It ain't the only thing, IMHO.
Among other things, this bust comes at the end of a decades-long boom period for the record industry, and like so many other businesses, labels have spent the last few years riding a bubble. Unsurprisingly, the bubble has burst. We all know that selling records is a low-margin business that usually loses money (SERIOUSLY. NOT KIDDING.). If a larger label makes a killing it is probably on a runaway hit that sells hundreds of thousands, or millions, not ten thousand or less like the vast majority of releases do. Most labels lose money most of the time, and the ones that steadily make money generally do so on a scale that doesn't even register on the radar of the major-label wonks.
So what do we have? We have: four major labels, owned by conglomerates who wish to use the Beatles/Dylan/Zeppelin/Stooges/Clash catalogs to cross-promote their products, and to finance other ventures. These conglomerates have little patience or interest in sinking money into new artists who will lose money for years at a time.
We have Best Buy, Circuit City, etc. selling discs for LESS than WHOLESALE, to the point where small record stores are buying their stock on the sly FROM THESE STORES instead of from the labels themselves.
We have an environment where, in the last year, TWO of the largest distributors have gone out of business (That's like WB Films and Paramount going tits-up), and TWO of the largest retailers-- Virgin and the Musicland family of stores.
We have radio AND touring in the hands of basically ONE company.
We have declining fan interest in the lastest dead horse trotted out by U2, Britney Spears, String, and the N'Backstreet Boys.
All this adds up, not to downloading killing the industry, but the industry starting to feel the effects of too many boardroom ultimatums and short-term decisions.
13% of sales have gone PFFT. It's a market correction, and a lamentable one, that the conglomerates that own the majors have precipitated themselves. Janis Ian is right-- the future is with people selling their own records out of the backs of cars, and this just might be the real start of that.
MP3 got bought out by the recording giants (Vivendi Universal) some time ago (this is why they're now plugging artists like eminem on the front page). Then they changed the mp3.com contract so it screwed the artists.
Most of my favorite mp3.com artists stopped posting new material after the contract change.
So, no, mp3.com is not an indy option. Sorry.
DNA just wants to be free...
I know late -- but here is my view. I used to always get burnt in the 80's - 90's buing CD's that ended up being crappy. After awhile -- I got tired of the whole "hear one song on the radio" -- think that maybe, just maybe this CD may be the next "Dark Side Of The Moon" -- 90% of the time it ended up being bait and switch. So I stopped wasting my money.....Thus without ever even offending me -- the RIAA was out my cash.
Fast forward to Napster and AG. I am really able to give the music a proper test drive -- hence I find a new band that makes the hair on my arm stand up -- I rush to the record store to purchase said CD. Rinse, Repeat. Hell, from my point of view -- the record companies should have been paying Napster and AG rather than suing them. (Maybe the radio stations would have gone broke...)
Fast forward to Post-Napster, Post-AG...(never used Kazzaa (I don't have a windows machine -- they don't have a linux client) -- I have played the dangerous game of trying to decide what bands to buy based on a carefully placed track on the bands website -- or maybe a low quality snippet or two elsewere. I am about 2 for 20 again...Right back to where I last left off.
(+1 Funny) only if I laugh out loud.
So if I rip a CD I'm lumped into the same catagory as those who download copywrited music? Every time I buy a CD the first thing I do is to rip it so I can listen to it on my computer while my CDRom is being used as a CDRom, not a CD Player. Nothing about ripping music I already paid for is against the law.
"If just half of the blank discs sold in 2001 were used to copy music, that would mean that the number of burned music CDs worldwide is about the same as the number of CDs sold at retail."
That is a statement with absolutly no statistical backbone. I just said that I rip every CD I buy. I then make my own CD's with my own mix of music. Once again, nothing illegal. And yet the RIAA wants to use that statistic to show that I'm a "pirate".
"...over 50 percent of those music fans that have downloaded music for free have made copies of it.
Yep, and I'm part of that 50%. But I still didn't break the law because I downloaded the songs legaly from Amazon.com or epitonic .com or any number of artist websites that give away free music. Once again the RIAA lumps legal behavior in with illegal behavior in an attempt to boost their statistics. I don't have a single illegal mp3 on my computer, but once again, I'm lumped in with the "pirates".
While Bricklin missed pointing out these statistical errors at least he did point out some other significant points:
- CD prices have gone up significantly.
- Radio and MTV are presenting a narrower selection of music.
The obvious answer there is to support college radio and internet radio. Present more choices to the customer and they'll buy more. And yet the RIAA is killing both!Unfortunatly, in this country rather than letting an absolete industry die a well deserved death we'll probably prop it up with more unconstitutional laws and continue to prosecute the industry's most faithful consumers as prirates. The record industry keeps shooting itself in the foot and then blames it's customers for making it pull the trigger. It's pathetic.
There was an interview in one of the local papers with one of the big discount retailers of CD's here in Australia (JB-HiFi). They were asking the sales manager about the drop in CD sales (aprox 80% of previous years) and he squarely pointed the finger at DVD sales. He said they have seen a drop in CD sales but DVD have exploded. Previously they only sold a couple of Videos (eg a small percentage of CD sales) but DVDs are growing in leaps and bounds. They have even taken over the shop next door to one of there city stores to cater for the selection of DVDs and it is always full. The sales manager beleive that DVD's were taking up a fair proportion of the CD budget that people spent on entertainment, and believed that downloading and coping of songs has nothing or very little to do with it.
Go out and get sailing!