RIAA Sales Compared to Download Statistics

OneInEveryCrowd writes "According to an article at SFGate, although the recent crackdown and lawsuits have caused a 22% drop in downloading, the drop in CD sales actually accelerated during the same period. My own response to the RIAA crackdown was to get a Netflix account, get into fansubs, and swear off CD purchases for life. If this was mainstream behavior CD sales would have dropped to zero. I was still pleased to see that many people responded in a similar fashion though." An EMI executive has a piece giving the standard industry view, but this piece about Universal slashing CD prices may be more telling.

Comments

Well it worked elsewhere

[gowen]

CD sales in Britain are up and most of the credit is going to price cuts.

Who'd have thought it: a depressed economy leads to changes in price elasticity. I demand the Nobel Prize for Economics

Re:Well it worked elsewhere

[ichimunki]

Exactly. An exmaple from amazon.com == DVD: snap-case edition of "The Matrix"? $14.99. CD: "The Matrix: Music from the Motion Picture"? $14.99.

Seems to me that one of these is a feature-packed disc with a few hours of full-motion video that cost many millions to produce and that one of these is 13 short tracks of minimally interesting audio that cost a fraction of what the other cost to produce. Even more telling, Lawrence Fishburne hasn't appeared at any MPAA gatherings giving speeches like Courtney Love's "Math" speech. So I also wonder which set of "artists" is being more fairly compensated for their work.

Re:Well it worked elsewhere

[Andy_R]

In Britain, the single really is dead, and our local RIAA equivalent (the BPI) killed it.

Here the big record companines want their latest manuifactured boy band to get to number one, so they promote the single for months before realease to get pent-up demand, then they launch the single at a huge discount to the normal price, and it gets to number one. Then they raise the price massively to try and recoup their losses after the first week.

The result of this is that if you hear a single and want to buy it, the chances are it's either not out, or it's overpriced at 4.99 (that's $7.90, not for an album, but for a SINGLE!).

The artists make no money at all from singles because high overall sales have been sacrificed for one week peak sales, and the discount price is only achieved by record companies GIVING shops the CDs for free, which they recoup from the artists under the name of "marketing expenses"

Sucks, doesn't it? But wait, I've only told you half of it...

The all important charts here are compiled by the BPI, and a few years back theye were getting their asses kicked by small dance labels that were actually putting out music that the public liked. The BPI was paying a fortune to get the small label acts to remix their tired formula pop, and still losing the sales batte. In order to stamp out long dance tracks with plenty of remixes, they introduced a rule that a single only qualifies for the charts if it is less than 20 minutes long, and has less than 4 tracks on it, which favours low value for money baladeers.

To make matters worse, the chart rules allow 2 different CDs for each single to be released, as well as a DVD single (The DVD single is only allowed to have 1 video track on it, the video is entirely static for 2 of the tracks!) so to obtain all the versions of a track that the US gets on 1 CD single, we would have to buy 3 disks at 4.99, making a total of 14.97, which translates to $23.70

That's TWENTY THREE DOLLARS SEVENTY CENTS for the same music you americans get on one single, and to listen to it all, we have to swap CDs, and also have a DVD player that doesn't actually show moving pictures most of the time!

Is it any wonder the single is dead here?

The moral of the story is....

[Lord_Slepnir]

...don't start suing the crap out of your largest group of customers (college / high school students) and then expect sales to go up.

Looks Good

[Doesn't_Comment_Code]

[despite a] 22% drop in downloading, the drop in CD sales actually accelerated during the same period

Yes! So it wasn't the downloading that caused poor sales afterall. It was the
crappy music + high prices + strongarming.

Also, congratulations to all who have not purchased CD's in protest. Keep up the good work.

Re:Looks Good

[Elwood P Dowd]

I second the congratulations to those of us who have given up CD purchases.

I also would like to thank those of you running pirate operations selling fake CDs on the street and in retail outlets. Way to go.

We don't need no water.

Re:Looks Good

[BWJones]

Yes! So it wasn't the downloading that caused poor sales afterall. It was the
crappy music + high prices + strongarming.

Crappy music indeed. It seems that the industry after pushing grunge really hard was looking for the next new thing and jumped on the rap bit and engineered music garbage pushing it really hard in all mediums and exposures. I watched part of the MTV music video awards and never felt so out of touch with the music industry which any marketer will tell you is death. Lots of the new popular music completely misses the target for me and I am sure much of the music buying public. For me, I have been focusing on expanding my collection of older bluegrass, jazz and finding all that punk stuff that never made it to CD. Most of those purchases are not from the current RIAA libraries and I am sure many others are doing the same type of thing or ignoring music entirely leading to the current numbers.

RIAA Price Cuts

[Bubbahyde]

They can drop the price to near give away but if the talent and quality of the artist\cd isn't there its still not worth the price. Case in point Metallica's St. Anger CD.

Still don't know what to buy

[WinDoze]

My single biggest gripe is that $12 is still too much to take a chance on. The radio plays the same 15 songs over and over, day in and day out. Since I'm not interested in those 15 songs, sometimes I feel the need to take a chance. But aat $12 a pop, I still won't.

Sales price drop = drop in income/profits

[Whigh]

Does anyone remember when the RIAA claimed that they were suffering a 15% drop in profits for their artists, after they dropped production by 20%???? Sounds kinda familiar. I wonder if they're going to claim a loss of income/profits for their artists after this price drop, and then blame it on music file sharing?

Downloading is the new mindset

[mopslik]

...the drop in CD sales actually accelerated during the same period.

Most people these days are used to the idea of "try before you buy". Take away that ability, and sales will drop.

The people who download without buying would naver have contributed to a sale anyhow. Those that would have bought are being alienated.

Prices are cheaper, but where are the good bands

[maddskillz]

The Riaa has been blaming sluggish sales on people downloading music, but they have been ignoring another reason for the poor sales: The music isn't that good.
I love alternative music, but lately everything has sounded like Creed, or some crappy form of pop-punk.
I haven't bought any music lately, but I haven't downloaded any either.
Once they quit trying to make everyone sound the same, I will probably start buying music again, as long as the price is resonable

Re:Netflix?

[jargoone]

That confused me as well. So you start watching DVDs as a way to revolt against the RIAA? That's like shopping at Best Buy because you don't like your local organic grocery store's underhanded business tactics.

CD Sales

[mt2mb4me]

Meanwhile, he noted record stores report that blank recordable CDs are outselling recorded CDs, a trend that shows computer users are not only downloading songs, but copying and burning CDs.

Uhh last time i checked i cant just go and buy a 50 pack of brittney spears for $19.99 USD. so hmmm, if everyone spent the same ammount they would have on ONE cd for 50 blanks, they would out sell CD's by 50:1.

Re:CD Sales

[Inode Jones]

"Music blanks" are not quite the same as "data blanks".

Superficially, they look the same, use the same dye technologies, etc.

To assist tracking, CD-R[W] media has a spiral pressed into it which the write laser follows. The return from the pressed spiral is not strong enough to pose a problem for CD players. The spiral also wobbles at a fixed rate to provide a timing reference. This feature is called "Absolute Time In Pre-groove", or ATIP.

At the beginning of the ATIP, a further sub-wobble encodes data such as the media dye type, recording speed, laser power,... and whether the media is an "audio CD" or a "data CD".

Early Philips audio CD recorders will accept only "Audio CDs" as indicated in the ATIP. They also implement the serial copy management system (SCMS) and refuse to make a second-generation copy.

Your typical burner, OTOH, doesn't give a damn about audio vs. data or SCMS, so you can burn to your heart's content.

CD players, not equipped to read the ATIP, can't tell the difference either.

The idea behind "music" vs. "data" was to charge a higher price for the music blanks, and to use the uplift to compensate the industry for piracy, while letting users of "data" blanks get away from the levy.

Of course, in reality it doesn't work that way at all. Almost no one buys music blanks any more (unless they happen to own a Philips recorder), anyone can copy a music CD using a computer data CD-R burner onto a data blank, and certain countries levy data CDs as well as audio. Oh, well...

RIAA's fundamental flaw in logic:

[sxltrex]

All lost CD sales are caused by the consumer getting the music elsewhere.

This is pure bullshit. How did they initially combat filesharing? They raised prices. I have never illegally downloaded a single file--instead I've simply gone without.

I went into Borders to pick up a Linkin Park CD. They wanted $20. I walked back out. I did not go back to my computer to download the songs. I've simply lived without them. I'd like to own the CD, but give me a fucking break. $20? Universal's price drop is a good sign. Maybe they'll be able to earn me back as a customer.

This makes no sense

[Pope]

My own response to the RIAA crackdown was to get a Netflix account, get into fansubs, and swear off CD purchases for life.

So, wait, your answer is to watch more movies? How does that have anything to do with music?

Once again, we have a false analogy that keeps cropping up in these discussions: that a movie and an album of music have anything in common other than general size and shape. I keep seeing arguments on /. that given $20, people would rather buy a DVD than a CD. Sorry, that's ridiculous! I don't remember the last time I bought a DVD and watched it twice a day for 2 weeks, like I have with some of my more favourite recent albums.

Going further, I can't rip a DVD and watch it on my iPod on the subway or while I'm working, movies take up far more of my attention to enjoy them.

The argument is rather dumb as far as I'm concerned.

Nice spin doctoring ...

[molarmass192]

Meanwhile, he noted record stores report that blank recordable CDs are outselling recorded CDs, a trend that shows computer users are not only downloading songs, but copying and burning CDs.

That's a gem, using the same logic, if guns outsold waterpistols, that would show that more people are commiting murder. This may come as a shock but CD-Rs can also be used to record data (gasp) or am I the only person in the free world who uses them for this purpose? Also, what if people are creating mix CDs of music they legally purchased? Nah, impossible.

Also, we need to do a little lesson in math:

50 CD-Rs == $10
50 CDs == $750

Does anybody want to bet that even if music CDs were $0.20 each, CD-Rs would STILL outsell CDs.

Nice job distorting the data to fit their pitch though.

RIAA CEOs - do the math!

[Sodade]

Back in the old days, when I had my first CD player, I went out and replicated my sizable record collection at $12-$13 a pop (note that I lived in Berkeley, which is blessed with two awesome non-chain retailers - Rasputins and Ameoba) - this took all of my struggling-student-with-no-loans spare cash. Over the course of a year, I bought 80+ CDs. It sucked hard, but I hated records and tapes (no nostalgia for me). Back then, the rumor was that the price of CDs was inflated to cover the cost of retooling manufacturing and would come down below record prices because they were cheaper to make.

Five years later, the prices didn't go down and my 200+ CD collection was stolen from my ghetto appartment. I was literally in tears. That was more than $2500 and I was still pretty poor due to the early 90s resession. The upside was that stolen CDs were valuable because there was a budding used CD market in the Bay Area. Once Rasputins & Ameoba started selling used CDs in quantity, I stopped buying new CDs altogether. This is early 90's and I already dropped out of the label's direct market. Here I was, a 20-something kid that was so in love with music that I would spend the better part of my expendable cash on CDs and I dropped right off their books because I could buy "Nevermind" for $9 if I waited a month after it came out.

Funny thing is that when I started making serious money, I still wouldn't buy new CDs. I was used to paying $6-9 and there was no way I could go back. I probably missed out on a lot of music, because I was limited to what college kids would buy and return.

Then came burners - I spent many hours burning all of my friends CD collections. Shortly thereafter came MP3s. I was already pirating software on the FTP scene (another economic lesson to be learned for the SW companies, but I'm not gonna stray there), so suddenly, I'm not even buying used CDs anymore.

So where does this leave us? Well, I'm in my mid 30s, make 6figs, and I like a huge variety of musical genres. I could spend $250 a month on music and not bat an eye, but I don't. The labels have alienated me. I virulently despise them, but I am a music addicted consumer. If they offered me something that had value to me, I would embrace the bastards with loving arms.

So, what can they do for me that would convince me to give them my money again? Simple:
1. Save me time - downloading stuff on Kazaa is work: sifting through the crappy files, figuring out which songs I am missing from a given CD, and organizing the 40+gigs of it all - this stuff takes time and my time is worth money to me. Figure out ways to save me time and I will pay a price for it.
2. Selection - I am limited to what the masses are trading. I like obscure shit and am willing to experiment, but not at $12.99 a pop - no fricking way!
3. Ease my concious - I admit it, I feel bad for screwing the artists by downloading mp3s. The problem is, they are already getting so screwed by the labels. It's kinda like buying Nikes - hard to say whether it helping the poor little Indonesian kid or not. Besides, the less that people give the labels, they less they have to offer the artists who should really all jump ship anyway. I buy Timberland clothes 'cause they make a big deal about how their sweatshops are less satanic than others. Treat the artists well so I don't feel bad about promoting your exploitation of them. Tax the superstars a bit to feed the starving artists - music should be a middle class profession.

So, how can the labels meet these needs? Again, simple:
Give me FTP access to a full catalog (all labels in one place)of high quality, verified, DRM-free and properly tagged MP3s. How much would I be willing to pay for this? Figure 2-4 bucks for 10 songs. That's $.20 - .40 a song. Bill me based on bandwidth - that's 5-10 cents per MB (assuming an average of 4min songs). The only real limit to my spending at this price is the availability of good music - better go find some talented new artists fast!

This would

Napster drove sales

[jdunlevy]

From the SFGate story:

Overall, recorded music sales are down 31 percent since mid-2000, when the Napster online file-sharing phenomenon was in full bloom, said RIAA President Cary Sherman.

So, is it possible the full-bloom Napster phenomenon actually delayed a drop in recorded music sales? (Online music file-sharing exposed more people to more music than they were being exposed to by other media such as radio, and this could have been driving demand. More demands meant more sales.)

Old people with disposable income

[digitalhermit]

I took a couple sociology courses back in college. One of the interesting things I got from the courses was that people enjoy feeling that they are somehow unique, even though population demographics will indicate otherwise. Sure, each person's collective interests will make them unique, but generally, people tend to follow trends and are quite easily grouped.

What's interesting is the choices that the music industry are making when it comes to marketing their product. The 15-25yr old demographic tends to have less discretionary income than the 25-40yr old group, yet the music industry churns out lots of product for the fiscally challenged group. OK, the idea may be that this group tends to buy more music and is more influenced by MTV and radio. Therein lies the problem. With everything else competing for the teen to young adult market, the slice of the pie that goes to the recording industry gets smaller and smaller.

So what to do? Hell, why not legislate some profits then. There's an apocryphal story about candle and gas light manufacturers suing to ban electric lighting and similar ones about horse-drawn buggy folks legislating some ridiculous traffic rules. Why? The new technology would make obsolete their business. But you see where that got the candle makers and buggy builders.

How about this wacky idea: Why doesn't the music industry start marketing and producing product for the 25-40 year old group. We long-toothed, graybearded, geriatrics would enjoy something newer than the constant stream of old Beatles, Stones, 80's era U2, and re-gurgitated 70's "classics" that bombard us. Try something new. Introduce something exotic so that we can talk about it as we quaff our Samuel Adams with our other 30-something year old friends and talk about our 401Ks. We can't exactly listen to Britney Spears or Eminem, you see. We like to feel important, still relevant, and nothing makes use more relevant than being able to "discover" some interesting sounding CD. What'll really shock you is that we have DISCRETIONARY INCOME. How about that! We can *buy* your music. Hell, we'll even pay $18 a CD to be able to be able to put it on our coffee table.

What's even more amazing is that many of these old people enjoy MUSIC. We like interesting lyrics. Some of use are even accomplished or semi-accomplished musicians and appreciate an interesting melody or a novel interpretation of a classic. Heck, even something as trite as musical virtuousity can impress us. I know this is complete anathema to your current marketing philosophy, but what can you lose?

Read carefully: MP3s increase CD sales.

[aussersterne]

Consider:

1. I will not buy an album/symphony/jam I have not heard.

2. I will not buy an album/symphony/jam I have heard but not liked.

3. I will often buy an album/symphony/jam I have heard and liked.

Re #1: No radio, no MP3 downloads... no purchase.

Re #2: Tons of this crap on radio (i.e. hear it but don't like it) because radio isn't an open forum, it's bought and paid for and it's hard to find variety if you don't like what radio is doing right now. Okay, let's face it, there's a lot of crap in MP3-land too... but the barrier to entry in MP3-land is lower, so artists that can't get on radio or that haven't been played on radio for years can be found in MP3-land.

[And no shite I won't pay for what I don't like and don't ever plan to listen to again-- repeat listening is after all, the express purpose of recorded music.]

Re #3: Every now and then something I like is on radio (and then I buy it), but mainly I find it through downloading MP3s (and then I buy it). But the point is, if I like it, I buy it. Because I want to do my own, high-quality rips instead of the net-quality stuff. Because if the three tracks I've heard are good, the other four might be worth having as well. Because I want the artist to make more. Because I want to have media around in case my hard drive dies and I need to re-rip.

Discourse:

I've bought at least 75 albums over the last two years that I first heard as a download or when someone emailed me a 128k mp3 file and said "wow, listen to this." Before the MP3 "era" I bought maybe 5-10 discs a year and often was dissatisfied with those. After MP3 started to happen, my CD purchasing increased exponentially and so did my level of satisfaction with each purchase.

I have 60+ gigs of MP3s, and I can show you an original CD to back every single one of those tracks up. Happily, I can put all those damn CDs in boxes in storage rather than having them take up space in my living area thanks to MP3. And yes, sometimes I do email one to a friend and say "wow, listen to this!" and I know that I have generated a number of CD sales this way.

Here's the kicker that drives RIAA crazy: probably 50% of the CDs I've bought after listening to MP3s are indies. Often I have to write the band after tracking them down on the 'net just to buy a copy because they're not out there in marketing channels. I know for a fact I've sent people to live performances... More than once I've emailed a friend an MP3 track along with "Hey man, this artist is going to be at XYZ in your town." Friend listens to track, likes it and *boom* another ticket is sold to the performance (and the artist makes a buck)... and nine times out of ten, the friend also buys a CD at the performance-- *boom* another CD is sold also.

The problem isn't that MP3s hurt sales of all music. The problem is that MP3s drive only the sales of good music-- and with barriers to entry (ala radio and RIAA contracts) removed, artistic expression isn't something the RIAA can get any kind of government-sponsored monopoly on. That is of course in contrast to, say, marketing and distribution channels in a particular commodity (i.e. crap music).

P.S. Please do not respond with an Ogg post.