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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.
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.
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...
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.
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).
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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.
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.
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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.
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