The State of Digital Music in 2006

wh0pper writes "Designtechnica has an excellent article on the state of digital music in 2006. Digital music accounted for only six percent of total music sales in 2005. Yet even that is a massive increase over the year before, a whopping 194 percent, which is fiscally valuable as the sales of CDs continue to decrease (although even with digital sales, the record labels experienced another downturn in 2005). While the young, usually the first to adopt and adapt to new technology, have been downloading and swapping music for quite some time, there's been a ripple effect into the older, warier area of the population, one that will only increase. Thank--or blame--Apple and its iPod, or any of the many other makes selling like hotcakes in the stores.

Comments

Quality over Quantity

[skynetos]

I prefer CD's only as I want quality and freedom. I like to have the right to rip them to FLAC and put them on my iAudio X5. DRM and compressed downloaded music just does not make sense. Quality over Quantity I always say.

Re:Quality over Quantity

[MikeXpop]

You need an original CD to rip into Apple Lossless. And if you rip anything from an original CD, there's no DRM whatsoever.

Re:Quality over Quantity

[O_at_TT]

Quality over Quantity...

While Baby-Boomers are now part of this market it is still dominated by younger people who apparently don't care so much about quality. It seems the way people listen to music is changing parallel to the way the music is being distributed. People can now carry so much music in their pocket that they listen to music while doing anything and everything. Music is in essence background music for their lives. For that reason "quantity" is king for these people and "quality" is very secondary. Gone are the days where "listening to music" meant putting an album on in your living room and sitting through the whole thing while doing little other than enjoying the music.

So for that reason I think your point of view is unfortunately a minority, and a shrinking one.

-Oliver / TreasureTunes.com

It's been a long way coming

[teutonic_leech]

The only thing that surprises me is how long this industry fought teeth and nails against this. Even now, they are only embracing the online distribution of digital media because they are forced to. Steve Jobs kicked open the online music market and he did the same again with online distribution of videos and now full features. It always takes a visionary with capabilities to take that first step - a smaller company would have been squashed early on. In some ways it's discouraging for small entrepreneurs like me because it paints a picture: don't you think I wasn't dreaming about an iTunes like music store a long time ago? Well, along with power and influence Steve also brought along the iPod, which was another puzzle needed to that piece. He basically had to put all the pieces together, singlehandedly (is that a word?). That's his genius and his vision and that's why he's cleaning up right now. Had I gone to Sony with a software just like iTunes on my laptop 5 years ago they would have just laughed at it. It sometimes takes a lot more than vision and talent to realize a business opportunity, some are tougher to crack than others.
The same can be said about the video distribution business - without Jobs and iTunes we'd still be in the dark ages - just look at the ridiculous blunder of Sony and the PSP - talking about not being able to see the forest before the trees! And in the case of Sony - they even had a content library they could have thrown into the equation. Well, I guess those higher rank managers must get paid those multi-million for their smashing good looks - can't be the types of decision they make or their vision...

When did CDs become analog?

[caenorhabditas]

I always thought that CDs were digital. Now I hear that digital music only accounts for six percent of music sales? I knew LPs were making a bit of a comeback, but I didn't know it was that big. Everyone must be really enjoying that "warmer" sound.

Re:When did CDs become analog?

[Beryllium Sphere(tm)]

Wait, the salesman at Definitive Audio told me that I needed to buy dampening rings to put on my CDs to "clean up the waveform". If CDs were digital, for example with 16 bit samples at 44.1kHz with 6 bits of Reed-Solomon error correction for every 8 bits of data and some interleaving to mitigate scratches, then a sales rep at a High End retailer would have been talking nonsense!

For all you DRM neysayers

[7Prime]

Remember that 30 years ago, we had vinyl and cassette tapes. Vinyl was easily rippable, although "ripping" one meant something a little different back then. Cassette tapes sounded like total crap. If you think about it, even *with* DRM, we've come a long way in quality and ease of copying. And don't worry about compression for the moment, this is just a passing phase while non-lossy algorythms become more streamlined and connection speeds get faster. DRM is a neccessary evil, unfortunately, because no record company, in their right mind, would agree to selling media without it. Thankfully, there are many quick, and fairly painless ways of getting past Apple's DRM if you're really worried about it (I'm amazed that record companies agreed to FairPlay, it's so easy to bypass).

Apple is one step in the right direction.

[twitter]

My mom is a good example of where things are going. I showed her my cheap Ilo player from Walmart ($50 baby) and an Ari Hest Concert from archive.org and suddenly "digital music" made sense to her. If she was not hoplessly hooked on Windoze, I'd set her up with Amarok and the usb-device script and that would be that. That's not the case, so I recommended an Ipod. Even she knows that music+windoze= crashed computer, so the free software may come later to her old laptop which still runs WinME! If she can get it, anyone can.

The RIAA is over. Apple makes it easy for people to spend their money on music but the RIAA way is not the future. Sales are only a small piece of the picture. More and more, reputations are not going to be built on radio play but on web play. Bands that understand this are going to be here tomorrow and the rest are going to look like slaves to greedy pigs. Portable music devices can hold more songs than the average radio station can afford to broadcast. To the user, it's all killer and no annoying adverts. The "Industry" is fighting back with satellite radio and FM crap flooding but it's not good enough. Players like Apple are going to help transition the industry to it's less centralized and less parasitic future. The free market forces and free software will move in and make life better for everyone, especially the artists.

The tipping point is near

[tentimestwenty]

As a record store owner and the webmaster for RecordStoreReview.com I have a pretty good read on where things are going. This gradual decline in physical sales is about to reach the tipping point where the distribution model crumbles and downloads increase exponentially. It might not happen in 2006 but 2007 is very likely. At the store level, there just isn't sustainable profit from physical sales.

Works better?

[neoshroom]

A couple more might join the fray, but the lines have essentially already been drawn, with everyone gunning for iTunes to take chunks out of its share. That could well happen; the ongoing supremacy of Steve Jobs's baby is far from guaranteed. Once someone else figures out a model that works better for the consumer, actually listening to and providing what customers really want, all bets will be off. And, sure as eggs is eggs, it'll happen.

I don't buy that. What the consumers want is 95% of what Apple is already delivering. Consumers prefer ala carte music tracks to forced albums or subscription models by far. Consumers want ease of use and they want simplicity. They want an all-in-one solution. The only way you can beat Apple now is on price or on freedom (no DRM portability-type freedom). Apple probably has enough clout to beat most competitors on price and the RIAA simply isn't going to agree to any less restrictive DRM or DRM free solutions.

Its too bad "all bets will be off." Apple keeping their dominance is a bet I'd gladly take.

--
Elephant Essays - Custom Ivy-league papers at community college prices.

Re:MP3 Blogs and Netlabels

[dilvie]

Exactly my point. It's really a whole different ball-game now. I've been playing ball with a bunch of indie labels and artists, and we're achieving some pretty stunning distribution numbers. Some of the top features on my MP3 blog have been downloaded over 60,000 times each. My own music had a quarter-million downloads last month -- and this is for electronic music, where 10,000 record sales is considered a hit.

My friends in Taxi Doll are just an indie group going it alone (as of this writing), and they've managed to got their music into films staring J-Lo and Harrison Ford. They're taking advantage of digital distribution and free downloads to help them get the word out, and they've got plans to expand the strategy in the future.

Why are people still talking about the music industry like it's 1997? Whole genres have broken off from the major outlets, and started hacking it alone. There are tons of indies on sites like Beatport and CD Baby selling digital downloads and CDs with no DRM. Imagine that -- music producers giving people what they want, rather than force feeding them crippled songs.

There's a huge undercurrent in the music industry right now, and the storm is brewing. The old industry is a sinking ship. Some of us have been saying it for years, but the day of reckoning is coming quickly, now.

Re:And no OGG support

[Firehed]

What do you expect? OGG is barely popular even among geeks, let alone in the mainstream. I'm sure that if you asked 95% of iTMS users, they'd be sure they're downloading MP3s. After all, the iPod isn't advertised as an AAC player, is it? They don't care what extension the file is provided it's not distorted (not to be confused with lossy - often times, you won't notice anything missing with lower bitrate versions unless you've heard the original) and it plays on their player. While I'd love to have all of my music in FLAC, few players support it (and more importantly, not mine) and the files are huge with a generally negligably boost in audio quality, and I'm not yet willing to drop a decent chunk of change to get better headphones. Plus the fact that I no longer buy CDs (partly due to availability, partly due to price and mostly because I refuse to give money to my oppressors) means that any lossless codec isn't an option for me. I don't feel *as* guilty buying from iTMS as somewhat more of the money goes to the artist, but if it were up to me (which it half-is), I'd pirate a flac version and then paypal the artist five bucks if I liked it. It's a lot more than they'd get per album regardless.

Smart artists would do something like an oscommerce store (or whatever) where you can buy a flac/mp3 download for, say, 40 or 25 cents, two downloads allowed in case your hard drive dies and you're in the 99% of the world that sucks at backups. Cheaper for us, more profit for them, world+dog-riaa is happy.