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

[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

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...

I for 0's and 1's

[frictionless man]

Because I like to have it physically in my collection. There is just something a bunch of 0's and 1's can't replace. 0's and 1's can't replace 0's and 1's? What a world!

Re:I for 0's and 1's

[Jason Levine]

Yes, but these 0's and 1's are on a shiny plastic disk. Never underestimate the power of shiny objects.

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?

Re:Any other factors than piracy?

[VENONA]

Nah, this all due to the same reason oil prices are so high. We've reached Peak Music.

Re:Any other factors than piracy?

[Viceroy Potatohead]

Luckily, scientist are busy working out other solutions, such as bio-sounds, and more efficient ears, so we don't waste as much music. At least all countries signed on to the Kyoto^WYoko Accord during some of the worst years of music consumption. This alone lowered the global Volume by 1.2dB, and gave us several extra years before Peak Music was reached.

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.

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.

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...

Get off my lawn!

[Graftweed]

Distribution of content (music in this case) over the internet, definitely has its advantages from the point of view of the consumer, such as no time wasted going to the store or waiting for goods to arrive, and also a myriad of advantages from the point of view of the content producer.

That being said, there are several tradeoffs that I, personally, am just not ready to make unless I'm forced to by the discontinuation of CDs or by a change in the distribution model. Here are the things we are losing as we move way from CDs:

• Raw CD Audio - I can take the lossless raw cd audio and encode it into my pet format of choice with minimal loss of quality. If I start with a MP3 and assuming that's not my pet audio format, then the loss of quality if I use a lossy codec will be noticeable.
• Used Market - I like how I can turn to the used CD market if I don't want to pay full price for an album, or if for some reason I have a problem giving the producer in question money. It'll be a cold day in hell when the EULAs that each distributor uses allows the resale of a downloaded audio file.
• The Physical Product - A pet peeve of mine to be sure, but I like having the actual object. Not only are some pretty damn cool, they serve as a backup and look good on my CD tower.

I'm willing to overlook the last one if they tweak the distribution model to address the first two as they are the real deal breakers for me. Especially the absence of a used market.

Duh

[saladpuncher]

The older generation that buys music as a physical medium already has purchased everything they want. My mom isn't going to repurchase the White Album no matter what new wacky format it comes out in. The new generation doesn't see those shiny metal discs as storing music. They grew up with everything being digital. Even if they burn everything to an MP3 cd, how many songs will that store? 200-300? Their friggin phones can hold that. Their ipods, zunes, etc can hold thousands or more. Do you think they are going to buy an album for 20 bucks that has ONLY 10 songs? The end of the physical medium is here. Open up a web site and sell all of your stuff online for a good price. Oh wait...Apple already is :)