Slashdot Mirror
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."
So long Music Industry, and thanks for all the Phish!
There is a war going on for your mind.
Seems to me TFA predicts the end of the album as we know it, not necessarily the music industry. Could we be entering the golden age of the one hit wonder?
My understanding is that, for a $1 iTunes download, the breakdown looks something like this:
$.75 - Label
$.20 - Apple
$.05 - Artist
If the middleman (who provides neither the content nor the bandwidth, and takes 3/4 of the money) can't make a profit here then I think perhaps they're doing something wrong.
Let's not stir that bag of worms...
If the music industry of today goes the way of the dinosaur, it is inevitably their own fault. Rather than adapt and work with technology, they chose to fight it and eventually fought their own customers. Companies that had nothing to do with the music industry (Apple, Amazon, etc.) found an untapped and unexplored way to sell music to people at competitive price using the relative ease afforded by the Internet. The music industry now says that they don't make enough money because they find themselves to be the middleman instead of the people with the product.
You built a wall around yourself and ignored the real problem. Your own costs are too high, you rely more on the popularity of an artist/band rather than the true talent he/she/they possess, and you chose to ignore new technology in how it could bring you new opportunities. Think fast or die slow.
Witness the power of the free market at work. When you've been fixing prices for decades to shore up your profits, you shouldn't be surprised when that system comes crashing down, once an innovation comes along that turns your industry on its head.
This is how OPEC will feel, if ever we get off our asses and start making commercially viable electric cars.
True. I have yet to understand why ClearChannel can get away with almost a complete monopoly of the radio business. I bet you if you looked up every major radio station in your area, (assuming you live in the US) you will find that the vast majority of them are run by this one company. They have openly admitted they play a very strictly regulated playlist on their stations, driven by sales, not by listener demand, or the search for new music. They are generally limited to a very small list of songs as well, both as a means of "playing it safe", playing only songs they think everyone wants to listen to (thereby not taking risks on new music) and as a means of keeping their royalty fees down. It's a sad state of affairs, but unless you have satellite radio, you're stuck with pretty bland choices.
Raging in an online forum won't do anything for the world around you. To see change, you must take action.
The industry isn't going anywhere, it's just changing. Most people don't understand that the labels are basically venture capital for musicians. A VC invests in a start-up and gets stock in return. A label invests in artists and gets (historically) CD sales in return. Large companies can throw their weight around because they had enough starting capital to create good products, make the right partnerships, and grow. Large artists like Radiohead can do a "name your price" promotion because they had enough marking, promotion, and distribution to gain a sizable following. VCs invest in a portfolio of companies because they know 1 in 12 will succeed, and that 1 has to pay for the 11 failures. Labels invest in a portfolio of artists for the same reason.
Small start-ups can self fund, but the largest companies continue to have significant VC backing because it takes a lot of resources to make products and grow. Companies sign with VCs because they want that upfront investment. Unsigned artists can promote/distribute, but the biggest artists continue to have major label backing. Most serious artists continue to want label deals because they want the upfront payment and marketing/distribution muscle that allows them to focus on their artistry and not how they're going to feed themselves tomorrow. As proof, notice that even the big YouTube/MySpace artists are signing label deals.
So what's changing is that the labels will have to provide more services for artists and get things other than CD sales in return. But the need for "venture capital for artists" isn't going anywhere, so long as there are people who want to make music for a living.
3. To act as a filter. Few people have the time to sift out which acts are good and which are not. It is this case where the industry has failed most miserably.