A Bleak Future For Physical Media Purchases?

KevReedUK writes "The folks at ZDNet are eulogising over the upcoming death of physical media music sales. They refer to the noticeable drop in physical sales of albums whilst digital sales continue climbing (albeit at a reduced rate). Their central argument is that 'the music industry was pillaged by piracy and competition from other forms of entertainment such as video games ... [2007] marked the lowest tally and the steepest decline since Nielsen began publishing estimates based on point-of-sales data in 1993, a Nielsen representative said. The peak year in that time was 2000, when sales reached 785 million units.'"

Comments

Decesions, decesions

[ArchieBunker]

Spend $18.99 on a cd or spend all of 18 minutes on bittorrent. Hmmm wonder what a young person of today would choose?

Re:Decesions, decesions

[huckamania]

Ya'd think they would drop the price to something reasonable, like $9.99. The cost of the disk is almost nothing. Still, you can join their stupid clubs and get 8 albums for a penny. I don't think you even need to use your real.

I think the real cause for the drop in sales is that the music stinks and the same artists keep pumping out the same crud.

Re:Decesions, decesions

[shark72]

"Ya'd think they would drop the price to something reasonable, like $9.99. The cost of the disk is almost nothing."

As I covered in another post, the going rate for CDs is about $9.99. Prices have indeed dropped. They were in the $18 range about five years ago, but due to piracy, competition from other forms of entertainment, etc. etc. they've dropped significantly.

Despite material costs being below $1.50, it's still the case that record companies make pretty thin margins on CD sales relative to margins in other industries. I know this will probably boggle many people who read this, but there's a huge gulf between BOM cost and cost of sale. All of the record companies' expenses (salaries, promotions, overhead, etc. etc.) must come out of the sale of that CD. The biggest piece of the pie, believe it or not, is usually the royalties.

There are plenty of reasons to justify piracy. Actually, it's my long-held belief that you need no justification... if you'd rather have something for free than pay for it, then go for it. It's not like you need to make somebody else a bad guy to justify your actions. But "CDs cost $18" certainly isn't a good justification (as it is a lie), nor is "a CD costs almost nothing to produce" -- another lie. As covered in my other post, we don't like it when the record companies lie about pirates to demonize their behavior... so why stoop to their level?

"I think the real cause for the drop in sales is that the music stinks and the same artists keep pumping out the same crud."

Another common belief, but the sad reality is that most music has always stunk. Browsing the historical Billboard charts will quickly reveal this. Record companies have always pushed what will sell, with actual quality being an afterthought. The big difference between today and, say, 1973 (when the year's #1 single was Tony Orlando and Dawn's "Tie A Yellow Ribbon") is that today, with just a few clicks, we can get just about anything we want for free.

The top five most pirated tracks last week were from Alicia Keys, Fergie, Soulja Boy, Daughtry and somebody called "Baby Bash." The ability to get music for free has not improved our collective taste in music -- we still want that cruddy music; the difference is that we no longer have to pay for it.

Re:Decesions, decesions

[shark72]

"While that might be true, I feel it's unfortunate that consumers are bearing the blunt of the bloat that exists in the record industry. It seems to me as if record industry executives are getting wealthy off of content that they, frankly, do not create. Having read about how the industry actually works, it strikes me as a system where everyone's taking a cut away from the artists, leaving the consumer to suffer due to higher prices. Is it unreasonable to hope that the industry can find a business model where artists can make more while consumers lose less?"

The big record labels will never be able to do it. The more overhead, the more hands there are grabbing at the money. I've met a few folks who've run indie labels who've told me that they pay their artists higher royalties than the big labels. So, artists can choose to sign with smaller labels and potentially get a larger piece of a smaller pie. Or, go the self-distribution route and get all of the pie... minus the part they have to give to the bank.

It's like that in any industry. Work for a big company and you'll just be a cog in a wheel -- you might have a higher level of job security and other benefits. But if you go to work for that startup, it might be a hell of a ride, but you'll have a bigger share of the company's success.

Re:Decesions, decesions

[ubrgeek]

It seems to me as if record industry executives are getting wealthy off of content that they, frankly, do not create.

Sorry, but that's the same argument made over and over that comes across as nothing more than a self-justification for pirating music. Did Hiroshi Okuda personally build Toyota cars? Did he design them? Doubtful, yet he made a huge salary when Toyota's profits climbed to their highest ever. Think IBM's Palmisano writes code or personally oversees the production of each PC? Not likely, but he also takes home a decent salary. That's the way the business world works. Want the artists to make more money? Support ones that manage, promote, etc. their own material. That's not always possible. I'm a fan of Mandy Patinkin, but I doubt he's going to leave the Nonesuch label to promote his own stuff. So do I not buy his stuff because the heads of Nonesuch get, "wealthy off of content that they, frankly, do not create"?

Re:Decesions, decesions

[sammydee]

"Another common belief, but the sad reality is that most music has always stunk."

I disagree with this. I personally tend to listen to a lot of older music (early 90s and before). I'm 18 so nobody can claim it's because I'm just being nostalgic. I have a firmly held belief that what makes modern music so unpalatable to older listeners used to listening in the 70s and 80s is NOT the quality of the actual music itself. The difference lies in the way the music is produced.

If you used to listen to a lot of older music in the 70s and 80s (and sometimes early 90s) you will probably find modern music fatiguing to listen to. It might sound like a wall of noise, with little to no dynamic range or variation - A BLAND SOUND THAT IS JUST A CONTINUOUS ASSAULT ON THE EARS WITH NO BREAKS. This isn't just your imagination - this is due to an actual phenomenon:

Enter the loudness war. Modern music when produced tends to be subjected to the producers desire to make it just as loud or louder than all the other songs on the radio, CD changer or itunes music collection. Human hearing determines loudness by the root mean square value of the sound's power. The PCM format (used in CDs and any music ripped from CDs) has hard limits on how loud a sound can be. Within these limits, the absolute loudest sound you can produce is a square wave. As sound engineers are pushed to master cds at higher and higher volumes, they are forced to resort to using extremely aggressive volume compression and hard clipping techniques to get the perceived volume up. This results in a waveform that starts to approximate a square wave the harder it is pushed. IT IS THE EQUIVALENT OF CONTINUOUSLY BEING SHOUTED AT BY SOMEBODY WITH A MONOTONIC VOICE OF CONSTANT VOLUME THAT DOESN'T NEED TO TAKE ANY BREATHS.

This youtube video can demonstrate the process far better than I can: http://www.youtube.com/watch?v=3Gmex_4hreQ

Unfortunately this technique is rampant in the music production industry - virtually all modern music sounds like this. A lot of younger people just accept that this is the way music always sounds, and when an older or better produced cd comes on they might tend to think that because it sounds much quieter, there is something wrong with it. I think that if the music industry stopped putting so much pressure on sound engineers to MAKE THEIR CDS SO LOUD then they people might actually enjoy listening to the music more, and cd sales might just increase.

Sam

Re:Decesions, decesions

[Anonymous Coward]

6 years ago slashdot was all "I want to pay, but there's nowhere to buy MP3s!! So I've no option but to file-share! The Music Industry just don't get it!" No-one seemed to be overly worried about the poor artists then when that justification was good-to-go. Funny that.

The discussion, if you can call it that, isn't that simple. The MPEG revolution started 10 years ago. Even then, with no mobile players available, CD burning so expensive that buying albums was plain cheaper and residential internet connections unavailable or slow and expensive, everybody knew that a 4MB song file was the future. Two entire rounds of college students have lived with that knowledge and the comfort of music libraries on their computers before legal download services became available, and the industry is still kicking and screaming while reality drags it into the inevitable future. Timing is important and the music business totally blew it. That is the primary driving force behind music piracy and, in its wake, movie piracy.

It is not our job to make sure that the artist gets paid, but if the industry comes complaining how the little people lose their jobs due to piracy, we will point out that the average artist does not get paid good money with or without piracy.

We know what is possible. The pirates show us every day. The legal alternative is a worse product, not just a more expensive product. Where the legal product begins to approach the usefulness of the illegal services, it flourishes despite costing more and even though it is usually still crippled by DRM. But the experience of a decade gone by while the music industry fought such a useful and comfortable technology is hard to erase and they will continue to pay for that mistake. Instead of working on that, they focus on power grabs and insane legislation to make up for a problem which only gets worse that way.

Piracy is wrong and certainly not sustainable, but without it, the consumer would still be shuffling CDs. We'll never forget that.

Re:Decesions, decesions

[Anonymous Coward]

Newsflash: The music you're listening to today is transient crap and 10 years from now you'll be embarrassed to admit that you ever thought it was anything else.

But half of it is already over 20 years old. The other half is experimental and borrows heavily from the first. Ever heard of My Bloody Valentine? Can? Neu? Faust? The Stooges? Boris? The Boredoms? Einsturzende Neubauten? Eric Dolphy? Jimi Hendrix? Jimmy Smith? Kraftwerk? Melt Banana? OOIOO? Okkyung Lee? Randy Newman? Ride? The Talking Heads? The Velvet Underground?

I'm not suggesting you should like these bands. But claiming that the music I listen to can't stand the test of time is absurd.

Re:Decesions, decesions

[tieTYT]

While that's an interesting post you made, it barely touched on the idea that music in the past is better. I personally suspect it wasn't. I like music from the 60-70s too. But when I listen to it on the radio, I'm listening to an aggregation of the best those decades had to offer. When you listen to modern music, you're hearing all the stuff that won't be remembered in the future. That's why most music of today sounds like crap. It hasn't stood the test of time, yet.

Bleak futures.

[palegray.net]

The future is bleak for floppy diskettes, Zip drives, and CRT displays. This is simply the pace of technology; more efficient distribution formats wind up winning out in the long run (with a few exceptions here and there, true, but even these are eventually superseded by something more efficient). Even with all the music industry's "late to the game" problems and legalistic maneuvers, the switch to a majority audio distribution occurring via networks was bound to happen. Not really news to most of us...

Let me correct that for you

[christurkel]

The music buying public was pillaged by greed and lack of competition.

Any other factors than piracy?

[malkavian]

Hang on a sec.. This would be the same 2007 that Oil hit an all time high, a credit crunch of such epic proportions that it's hitting the world wide banking system to the point that Governments are having to bail out financial institutions.. People are losing houses and jobs.. Economies are looking shaky, and unemployment is starting to creep up in a rather scary fashion..
And they blithely put it down to piracy and competition from other entertainments. Don't you think that maybe.. Just maybe.. The fact that people don't have the money to spend on fripperies, and are actually worried about their ability to keep roof over head is also a factor in this?

Stop this "digital" nonsense

[iliketrash]

"They refer to the noticeable drop in physical sales of albums whilst digital sales continue climbing",

This nonsense of describing downloaded music as "digital" to distinguish it from that on CDs needs to stop.

Re:I, for one

[Seumas]

Except for a couple CDs from bands I know via CDBaby or a couple directly from the musicians themselves, I haven't bought a CD (especially at a store) since 1998. I don't need one more poorly manufactured piece of plastic crap sitting around my home and I certainly don't give a damn about liner notes or packaging or the CD cover or how they write their logo on the face of the CD.

Even with bands I know and care about, I prefer to buy their music digitally. If it isn't available that way, I'll go ahead and buy the physical CD from them. For big label artists, I just can't see myself being bothered to go to a store and picking up one of their overpriced pieces of shit - or even via Amazon for that matter.

Same goes for books. While I wouldn't sit reading a stack of novels or tech books on a computer screen, something a couple iterations and generations away from Amazon's kindle (as long as I can be reassured of my life-long access to my purchased content) will be right up my alley. No more tearing, ripping, yellowing pages and being worried about bending the spine of my precious $10 paperback or denting the corner of my precious $50 hard cover. No more room full of books that I could now fit into a tiny memory chip. No more lugging around 20lbs of books everywhere I go.

Give me digital and give it to me now, while I'm still (somewhat) young. It's 2008 for fuck's sake. Just don't fuck me in the ass with DRM and an unreliable archive system that will leave me robbed of the tens of thousands of dollars of stuff I've bought in a decade.

And yet...

[Anonymous Coward]

...I've bought more CDs this year than in any year before. As I did last year, and the year before that.

It's just, they've all been bought straight from independent artists. No tally will catch them. But that doesn't mean the physical media goes away; just that the control over them is finally returning to those who it belongs to.

Re:I, for one

[seaturnip]

Nothing can ever replace picking out your steed's hooves and departing on a horse-drawn carriage. Case in point, a fortnight ago I went to a delightful ball with my dear fiance and our return trip was oh so romantic, snuggling with him as the carriage roughly swayed. There is just something about those snorting, sweaty beasts that a rumbling mechanical carriage can't replace.

As always, blame piracy

[rossz]

Much like a spoiled child, they never look at their own behavior. It's always "some else's fault." I haven't purchased any music CDs in over a year because:

1. It's all crap.
2. I refuse to do business with anyone who considers my fair use as criminal.

Yes, I ripped all my CDs. I do so so I can download tracks onto my digital player. I also have a web interface to access all my music from anywhere I have computer access, but the web page is password protected and I don't give access to anyone. The music industry, however, doesn't want me to do that because they see it as a loss of a dollar for every single track. At the moment I have 1400 tracks on my server. The music industry sees that as over a thousand dollars of lost revenue -- even though I've already paid for every bit of music I possess!

How many times must I buy an album before I can use it as I please? Let's take one example, Pink Floyd's "Dark Side of the Moon". I went through three vinyl albums way back before digital music was invented. I also owned a cassette of it (store bought, not copied). I might even have owned an eight-track version of it during a brief period of insanity. At the moment, I own two CD copies, the regular version and a "special remastered" version. That's seven copies of one album I have paid for. And you want to sue me because I ripped the CD onto my computer? FUCK YOU!

I know what the problem is. The music industry is very unhappy with CDs because they never wear out. Back during vinyl days you had to repurchase an album because they wore out, no matter how careful you were. They weren't too pleased with cassettes because you could record an album onto it and greatly extend the life of your music, but even cassettes wore out and pre-recoreded cassettes were purposely made cheaper to shorten their lifespan. These days, CDs don't wear out so replacement revenue is from the rare event of physical damage. And digital music never wears out.

So the music industry has seen their revenue from replacement purchases completely disappear. This leaves only one option to them, make the consumer purchase a different copy for every single device, but we're not going along with their plan, and they're now in panic mode. A panicked animal attacks anything and everything within reach, without thought, the music industry is no different. So they attack what is most convenient, their customers. We just need to stay out of reach until they bleed to death.

Re:it's the music

[Hub_City]

That's an easy charge (and in the case of Ms. Spears, absolutely correct, even though Fountains Of Wayne prove that "Baby, One More Time" is actually a well-crafted pop song as written) but I'd have to say Timberlake's voice is of a significantly higher quality, and he does occasionally do something interesting with it.

Really, though, the music industry's woes can be summed up in the following:

"Gee, I've got $50 in my pocket - will I buy three CDs with one decent song each totalling maybe 20 minutes of entertainment, a couple of DVDs featuing movies and features I'll watch all the way through, or a video game I'll play for hours? Hm...."

It's all about value for money spent, and most of the major labels' output just ain't got it, when compared to the other stuff that's competing for the dwindling supply of disposable cash.

Plus, this is an industry that:

- insists on treating its customers as criminals rather than trying to figure out what they need to do "right" in order to give their business a future.

- insists on treating its contributors as mere cogs in the machine, rather than its actual driving force...and those cogs are catching on. The industry's been in overdrive trying to spin Radiohead's online release of "In Rainbows" as a boneheaded move, when in fact it's very much the opposite.

Even investor reports are now coming to the conclusion that giving the music industry another leg to stand on only gives them another foot to shoot themselves in.

Re:Lossless Formats

[amyhughes]

CDs will go away when it is no longer profitable to sell them, whether there's an adequate replacement available or not.

Death of the RIAA monopoly, not the physical media

[AnalogDiehard]

I do not p2p so the industry cannot easily blame piracy.

I stopped buying CDs because I refuse to patronize a greedy industry that was convicted of selling overpriced media, that maintains an iron grip on their distribution channels and seeks to eliminate any threat to that control, that uses "Hollywood accounting" to defer royalty payments to their artists, that litigates against their customers using shoddy legal practices and bypasses required steps in the legal process, that uses endentured slavery contracts to strip profits from their artists and enslaves them to provide content, that exploits their political connections to force alternate distribution channels (IE internet radio) out of business through retroactive copyright fees, and lastly fails to provide decent value for our dollar due to poor content ratio - one good song, the other nineteen disposable.

When the RIAA cartel collapses, then the distribution channels may finally open to better music from better talent.

Re:I, for one

[jlarocco]

I don't care about the case artwork or the liner notes. I buy CDs because:

• I can rip them to any format I want, with any bitrate I want
• I can easily lend them to my friends
• I can sell them when I'm done with them
• I can buy any music player I want and know I'll be able to play my music on it
• I don't have to worry about DRM
• I don't have to worry about the particular store I bought it from going out of business
• I don't have to worry about having particular software to play it
• I don't have to worry about playing it on other equipment/computers in my house
• I don't have to worry about it getting deleted and having to pay for it again

It's just a lot more flexible IMO. If I'm going to pay for something, I have to get my money's worth, and I just don't with digital music.

And if PC Mag did not exaggerate piracy...

[Jane Q. Public]

They ARE thuggish criminals. And apparently not very bright. So how could they appear otherwise?

But back to the main subject: there is a genuine problem caused by this continued exaggeration of the real damage done by piracy. Piracy is only a symptom. The music and movie industries have not been keeping up with technology and social change, and so have consistently failed to deliver quality goods at what consumers feel is a reasonable price. THAT is the true problem.

Blaming their failing business model on piracy is like blaming the blood from your cut for causing the pain...

Corporate Greed

[Captain Apocalypse]

Good to know its still thriving. If they really want to stop piracy they will not start stupid crap like telling us that ripping CDs we legally own is illegal. They get that passed, and piracy will skyrocket.