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.