After Brief Respite Music Industry Slump Deepens

Carl Bialik from the WSJ writes "Sales picked up for the record labels late last year, but 2005 has been bleak. The Wall Street Journal ticks off evidence: 'During the crucial Thanksgiving week, for instance, the top 10 albums sold 40% fewer copies than the top 10 albums the same week in 2004. ... Sales of individual digital tracks on services like Apple Computer Inc.'s iTunes Music Store have increased -- but not nearly enough to offset the slide in CD sales. According to an estimate from SoundScan, overall sales of recorded music are down about 4.5%, if one considers 10 individual tracks the equivalent of an album.' The WSJ also lists familiar reasons for the decline -- 'online piracy, CD burning, high prices and competition for consumer dollars from videogames and DVDs' -- while adding, 'Lately, people in the music industry have said the same basic issues have been intensified by the growing popularity of pricey gadgets like Apple's iPod and Microsoft Corp.'s Xbox 360, as well as the rising prices for games that go with the new platform.'"

Comments

Quality Control

[chickenmilkbomb]

Maybe they should look at the top 10 grossing tours (US) from this year. According to Billboard they are:

1. U2 ($260M)
2. The Eagles ($117M)
3. Neil Diamond ($71M)
4. Kenny Chesney ($63M)
5. Sir Paul Mccartney ($60M)
6. Rod Stewart ($49M)
7. Elton John ($45.5M)
8. Dave Matthews Band ($45M)
9. Jimmy Buffett ($41M)
10. Green Day ($36.5M)

Hmm...I'm not sure about Kenny Chesney, but all of the other acts are at least 10 years old. I hate the Eagles as much as the next guy, but the mass marketed music today is Busch League, laughable.

Re:The CD is dead

[Anonymous Coward]

Keep your cds in the cases and not lying on the floor. I have many cds that are 20+ years old with no issues. Apparently you have no experience with vinyl:) We can talk about that if you want to talk about scratches.

Re:Piracy

[hey!]

Heh, it won't be long until RIAA either demands a halt in the sale of high priced gadgets such as the Ipod... or demands a portion of the income from the sales

I wouldn't be surprised if it comes to royalties. It's not like it hasn't been done before with blank media.

However, they'd be stupider than I think they are if they demanded a halt to iPod sales. Legal downloads are the only place where sales are growing. And it's not because people want to pirate iTunes. Consumers don't want much really. They just want to be able to find the music they want, not what the retail store managers think will sell. They want to be able to buy just that music. And they want to be able to play it anywhere.

Taken to its logical conclusion, this is good for music, but not necessarily good for the companies that are leading in the industry today.

The logical conclusion is that people will be able to saturate their lives with music. A lot of people are close to the point of needing earbuds surgically implanted anyway. Take those people, multiply their numbers by ten or more, and you have a very happy scenario for producers of music.

On the other hand, the "music" companies are not producers of music by in large. They're mainly distributors of music. They control the supply chain to the record shops. The have scales of production on physical media. They have muscle with radio airtime. All of these advantages are reduced or nullified by on-line distribution, unless they can control the playback platform (which Microsoft won't allow them to, and Microsoft is a key gatekeeper because it controls the majority of PCs).

If a day comes when nearly all music is sold on-line, then the reason for the existence of most of the music company's functions are gone. Local entrepreneurs will provide studios and production assistance for an hourly fee, and bands will offer their work directly to the audience through online services. The only irreplaceable value left in the companies are their portfolio of older copyrighted works. They will not be able to add to the value of their portfolio in any significant way, and copyrights ever expire again they'll be in deep trouble. They may be able to buy some copyrights from bands before the bands become successful, but ore and more bands will become independently successful.

Re:The CD is dead

[Blondie-Wan]

They forgot to mention the other reason for low sales, being that popular music, for the most part, sucks.

Actually, TFA did mention it:

But many retailers and label executives alike point to a more fundamental problem this year: A lack of hit acts. Don VanCleave, president of the Coalition of Independent Music Stores, says blame lies with "an absolute, gigantic cesspool of really bad bands."

Consumers seem to agree. This year has seen more albums come and go from the No. 1 sales spot than any year since SoundScan began keeping score in 1991 -- a sign that few hits have staying power. This year's album charts have seen brief reigns, often followed by rapid tumbles, by more than two dozen artists, including Kenny Chesney, Hilary Duff and Rob Thomas.

The music industry hasn't connected broadly with fans since the late-1990s heyday of the teen pop performed by the Backstreet Boys, 'N Sync and Britney Spears. "It's almost like we need a new genre of music," says John Sullivan, chief financial officer of Trans World Entertainment Corp., which operates music stores under the FYE and Coconuts names, among others. "There hasn't been anything fresh to get consumers excited in a while."

They don't necessarily reach the same conclusion, but they do at least bring up the idea music isn't selling as well because current music simply isn't as good or appealling as consumers would like.

Re:Getting Old

[slavemowgli]

Absolutely.

I consider myself to be somewhat of a music fanatic, and while my CD collection isn't big, it's not *that* small, either, at about 300 to 400 individual CDs. The number of CDs I bought this year? Two. There simply isn't enough good stuff on the market, and that which *is* good is overpriced, so one of those CDs was bought used on eBay.

Given the behaviour of the music industry, I'm not surprised they find it hard to sell their crap. Screwing over customers big time (see the recent Sony debacle), treating them as criminals, charging ridiculous amounts for a single album, filling albums with crap so that out of 12 songs, there are maybe two that are really worth listening to, shutting down good and useful services like mp3.com, undermining fair use rights, screwing over bands, suing single mothers and 12-year olds, and artificially narrowing the market to a few "top acts" (not even "bands" anymore!) that all give you the same mass-produced, soulless crap... those are all just symptoms of a fundamental attitude problem that the music industry has, symptoms of a kind of hubris that's pretty much unheard of in any other industry.

Are they *really* surprised that customers aren't willing to put up with all that crap forever? Contrary to what they're saying, I don't think so; they're just looking for an easy scapegoat, so they just scream "piracy! boohoo!" everytime they lose more customers. But it doesn't matter: until they actually change, they will continue to lose, and unless they eventually change, they will ultimately disappear.

When I bought my last CD, I got it directly from the band, who were selling their stuff after a concert. I got it signed by all the band members, and I had a nice chit-chat with the singer, too. It still was cheaper than most "mainstream" CDs; I like pretty much every song on it, and I listen to it regularly, as it's clear that the band are not just in it for the money - they are pouring their souls into their music, and it shows.

When was the last time you could say *that* about the latest Bitchney Spears CD you got for an outrageous sum at the local Wal*Mart?