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Media Research Exec Says Music Industry Is On Its Last Legs
Ponca City, We Love You writes "For years, the major record labels have fought a pitched battle against the MP3 format. Although major labels like EMI and the Universal Music Group have embraced MP3s in recent months, a story from the Mercury News says early returns from those moves indicate they've had little impact on the industry's fortunes — for better or for worse. 'These are ailing businesses on their last legs,' said Eric Garland, chief executive of BigChampagne, a market research company focused on digital media. The question of copy protection on song downloads 'matters a whole lot less to them than it once did.' The industry has a bigger problem. Consumers used to buy CDs for $10 or $15 a pop. Increasingly, they're buying songs at about $1 apiece instead. So, even if transactions continue to increase, the industry is seeing far less money each time consumers buy and it's having a difficult time making up the difference."
I guess I'll stick my head in the lion's mouth. Right or wrong major artists spend 5 mill to 20 mill of the label's money just in studio producing the albums with minor artists, we're talking major labels here, costing around 500K give or take a few 100K. Yes it's obscene given the price of studio time but that's what it takes to keeps some of them happy. Some major artists do spend as little as 3 mill cutting an album but they are considered bargins and it's still obscene. Some goes for studio musicians and things that you hear but the bulk goes to the army of people standing around running for lattes and having special food flown in from New York. Another big expense is advertising. It's hard to cover the cost of adverising a maybe hit single that will sell for a $1 compared to a $16 album. One of the biggest expenses is also flop albums. They aren't any cheaper to produce or advertise when they flop so the studio passes on the cost of the flops. Yes factoring all that in albums should probably average $10 retail for major artists and $5 for lesser known so they are reaping huge profits but they aren't a 1000% as some might think. I know less about the music industry but in film the adverising budget is usually 1/3 the cost of making the film as in added on top of the cost. I wouldn't be surprised if some albums had advertising budgets equal or greater than the studio cost. Advertising isn't any cheaper just because production is cheaper. The music industry is hardly the worst offender. Just picture soda pop. The cup costs more than the soda and it's even worse with bottled water. Big business is based on obscene profits. Hey, lobbyist cost money and don't grow on trees ya know.
The record industry does not equal music
.. but not actually do any distribution, that will be handled by iTunes et al ...
...
It's more likely that the current record industry will morph into artist promoters (they do this anyway) so they will handle the booking, advertising, promotion etc
Meanwhile the smaller independent artists will continue to bypass them since they don't need them
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