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The Music Industry's Crisis Writ Large
The NY Times has an opinion piece that makes starkly clear the financial decline of the music industry. It's accompanied by an infographic that cleverly renders the drop-off. The latest culprit accelerating the undoing of the music business is free, legal online music streaming. "Since music sales peaked in 1999, the value of those sales, after adjusting for inflation, has dropped by more than half. At that rate, the industry could be decimated before Madonna's 60th birthday. ... 13- to 17-year-olds acquired 19 percent less music in 2008 than they did in 2007. CD sales among these teenagers were down 26 percent and digital purchases were down 13 percent. ... [T]he percentage of 14- to 18-year-olds who regularly share files dropped by nearly a third from December 2007 to January 2009. On the other hand, two-thirds of those teens now listen to streaming music 'regularly' and nearly a third listen to it every day."
The words 'music' and 'industry' were never meant to go together. Music should come from the heart, not the wallet. This idea that you can become wealthy by being a musician is a new one and we've suffered for it.
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Industry with a track record of charging insane prices for crappy products, ripping off artists who they claim to represent, and developing a business model of suing their own customers in gross abuse of the legal process is experiencing financial difficulties. We'll be providing blow-by-blow coverage.
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An article about an industry that is dying, published by an industry that is dying. Both are being killed by the same new technology.
Somehow the fact that you refer to pirated music as "warez" makes me somewhat skeptical that you have ever actually done so. Warez is the term for cracked software, not music.
That aside, streaming music services are at least as bad as the ITMS and similar services for the music industry. Back prior to all that hogwash you were pretty limited in your ability to buy music in single track increments. Sure you could get a single, but you couldn't buy 8 out of 11 songs, and if you wanted a song which wasn't as popular you were stuck with buying the album.
These days, that's not how it's done, you only have to listen to the songs you like without ever having paid for the rest of the tracks. I'm sure that sounds good in theory. But take a look back at previous albums, I doubt most people would've really appreciated the higher quality of Nirvana's Nevermind over their later In Utero, worse in a sense is that if you clip off the non-music from In Utero it's would seem like a better period of work. As things are done more and more like that there is less and less incentive to spread the effort out, rather than focusing on a quality album experience to justify buying the album, that time and money tends to get funneled into a couple of tracks.
That and the generally poor production quality of so many albums pretty much insures that quality music is going to be much harder to come by than it has been in the past. If we get really lucky, all of this will be largely neutralized by the increasing easy of independent groups getting exposure and producing their own work without the suits.
The artist will win. No more signing away most your rights with shady contracts. No more skimming 99.9 cents on the dollar for CD sales. No more lock in for future albums. Artists are making their money by selling direct to consumers with online distribution channels because it gives the unknown artist a shot. It also promotes better music because when the consumer has better choice, they will choose better music.
The direct sales channels will continue to grow and standardize so I expect the traditional industry losses will accelerate.
Camping on quad since 1996.
The reason why streaming music is taking over is because radio is crap. Seriously, if you don't like hip hop, pop, country or classic rock, there are -no- stations other than that anymore. If you have musical tastes other than that, too bad. You won't find any terrestrial radio that plays that. So because of that people stream more, in general streaming music ends up being better and have a greater variety. If I can't find a terrestrial radio station that plays music I like, I'm going to then listen to streaming music. Because of that, why buy the music when you can with a bit of searching find the streaming music?
Taxation is legalized theft, no more, no less.
If by music industry you mean anything that is distributed in the form of iTunes or mp3's with a useful half life of a month or so, I'm all for its demise and good riddance.
The vast majority of that sort of stuff is dung. If we are talking about taxing cigarettes and sugary carbonated soda and fast food, no reason to not extend that to this sort of "music" as well.
Once this sort of stuff is gone maybe people will get a chance to listen to real music, in person or played back on high-fidelity equipment.
It might be an epiphany.
</pedantry>
Cantankerous old coot since 1957.
There was once, music tapes cost SGD $8. When CDs hit the market, they cost SGD $30, but it was promised that they would go down to the same price as tapes one day. Isn't it time to sell full albums at SGD $5, considering the volume that the music industry is able to produce? Isn't that what industries do best - to give what the market wants at a cost leveraged by the economics of scale? Given that the packaging that comes with the CD does cost something to make, but essentially, isn't music, as a commodity, like software - make once, and sell it many times over? Given the international market exposed by the internet, is online music, too, overpriced? Or perhaps society needs to rethink the place of musicians - perhaps they could be like open source software authors, who have a day job?
There, fixed that for you. The record industry is the one that makes money on recordings. The music industry is the one that makes money on music in general including concerts. The music industry is fine and will be fine. The record industry is fucked.
These reports all say the same thing: concert ticket sales growth more than makes up for the decline in recorded music sales.
When I was a teen, about 15 years ago, I was also listening to streams. But at the time, it was called ... FM radio!
Hi. I'm the American actor, violinist, ballet dancer, and sculptor. We have little sympathy. Welcome back to having to make art because you love it, and not because you expect it to be a lottery ticket.
These "music industry" people want the equivalent of 250 thou for a 25 grand commuter car. nuts. They wonder why sales are off, whereas a billion music purchasers know exactly why sales are off, they just don't feel like getting price gouged anymore.
I suggest the "music industry" lay off all the coke and booze for a year or two then come back and rethink their stance on pricing, for digital bits down the tubes or the same digital bits on two cents worth of plastic. Their "per unit" pricing is from decades ago, it doesn't come close to anything rational anymore. When it was very expensive to make a copy for sale, sure, it was understandable, but now, today?? Who are they kidding besides themselves?
Tech advances and much cheaper bandwith should have allowed them to both drop prices dramatically, plus increase sales dramatically, instead, they have clung to those old price models like a wino to a jug of t-bird with ten drops left swirling around the bottom. It's pathetic really. I bought music pretty steady from the late 50s until the 90s, that's forty years of being a customer..then...just finally one day got annoyed with the price gouging, quit then, my one guy boycott. I don't pirate, but I won't pay those ludicrous prices either for some digital download copy (a buck for a few megs, who do they thing they are, telco ringtone sellers??), and certainly not a lot of folding dollars for a dime's worth of plastic with some cardboard "liner" nonsense.
OK, maybe the car analogy sucks, how about computers? A decade ago, what did a decent desktop system go for, and what were the specs? Now, today, you can get something much faster, with equivalent increases in installed RAM and larger HDD and better video card etc, and for much less cash. You gets lots more, for less money, because of tech advances. And that's tangible hardware, manufactured stuff.
A decade ago, an album cost how much? And what do they want for it today? Oh ya, the same. And to *download* it they want similar loot? HAHAHAHA
Like I said, "nuts", you lost a good customer for being price gougers. In fact, looks like you lost millions and millions of customers, and the younger folks are starting to not even *be* customers in the first place, because they know even better that those "copies" just aren't worth what you ask.
I'd like to know what titles people were buying as CDs in 1999. New stuff or old?
Could it be that people were replacing their vinyl in 1999 and before, and that the whole peak in 1999 was really an effect of replacing one version of something with another? I'm not saying that the decline isn't real, I'm suggesting that the curve is much less than it seems and the peak is artificially high.
A little bit of common sense is in order for this topic. A lot of people seem to be on the right track, though.
The main consumers of new music tend to be people younger than 30. The average person in that age range, for the most part, grew up with the internet in their home. Napster alone is 10 years old, and how many million people were using that? MP3's were around and traded long before that, too. I myself am a youngin' compared to a lot here on /. and I remember trading .wav files for music swapping before mp3's were the norm.
Let's face it. No one can reasonably believe that the record industry couldn't come up with something better for distribution in the 10 years since Napster. Consumers have become disillusioned and know they're being taken for a ride every time they buy a CD. I have a hard time justifying even walking into a record store, unless it's privately owned. If it's a chain, I laugh at the older people inside as I walk by.
The radio is being programmed by computers based on how much radio advertising dollars can be generated. There is NO variety in the music whatsoever on terrestrial radio, and you'd know it too if you could catch a few songs back to back. But... when's the last time that's happened?
I haven't been able to go 15 minutes on any given station without hearing 5 minutes of commercials. They even have commercials promoting the station you're already listening to. And, to top it off, some of those commercials advertise how few advertisements the station has as compared to the other station in your town that plays the same songs and to complete the cycle of absurdity, you can bet your ass both stations are owned by the same company... Clear Channel. The people who still listen to terrestrial radio do so only when there is no other option. It's the musical equivalent of public transportation.
It's their own fault no one wants to buy a CD to listen to the same garbage they hear every 30 minutes on the radio, too. Who the hell wants to hear the same garbage on CD's, that they're forced to listen to already on the radio. Nothx.
Americans lost the right to choose what they listen to years ago. The internet is giving it back to them. It seems only natural that this would happen to the recording industry. But hey... the recording industry made a SHITLOAD of money, right?
What I can't figure out is how can they still feel sorry for themselves, and how can they expect consumers to feel sorry for them?
I bought the first Velvet Revolver CD, which installed a rootkit on the computer to prevent you from doing anything other than listening to some shitty WMA files. After that I swore I would never buy a CD again, and I haven't. You only screw me once. So until we have no DRM and a perpetual license (buy the music once, have the rights to any format) I'm done playing their game.
I think a lot of the discussion around this issue ignores the fundamental fact that most of the activity in the music industry for the past twenty years has been due to the need for the music-consuming public to 'catch up' on the music that has been produced in the last 500 years or so. The industry went out of its way to force us to re-acquire this back catalog first on tape (replacing vinyl) and then cd (replacing tape). The bottom line is that the actual amount of salable new music produced each year is tiny compared to the amount of new material being produced.
I view the late 90s as an enormous aberration in history. The back catalogs of western music were basically thrown open to the public and there was just this frenzy of buying as well as looting (piracy). Now the cat is largely out of the bag, and the industry (in whatever form it survives) will have to get back to reality and balance its expenditures with whatever it actually is producing. Unfortunately for them, without some massive disruption in continuity of digital information, they will never have an opportunity to re-sell that many hundred years of human labor again.
(The previous two paragraphs are based on conjecture, anecdotes, and my own reasoning. I think my conclusions are fairly pedestrian, but if anyone has any statistics or studies as to the revenue generated by back catalog, I'd be interested to see them.)
80 percent of all revenue came from about 52,000 songs. That's less than one percent of the songs.
So much for the internets "fat tail".
I am predicting that the book industry will soon find itself in the same boat as devices like the Kindle become more.
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I read in a few of the comments posted here that many of the users here believe that this bodes ill for FM Radio. As someone that was just recently laid off from the interactive portion of a large radio broadcaster here in the states, I can tell you the only thing that will kill FM radio is FM radio.
What I mean by that is that the broadcasters themselves, like the rest of the music industry, have largely been highly resistant to change. Be it the embracing of interactive advertising, or even recognizing that they now have a lot more competitors than just the other radio stations across the street (Hi Internet Radio!!).
The way I see it, this is an amazing opportunity for music in-general to become much more highly diversified and with more emphasis on bands being local/regional sensations rather than the end-goal of national/international sensations (although that possibility will always be there). Anyway, local FM radio stations could very well be positioned to be the thought/taste leaders when it comes to which local/regional bands become "big." A hearkening back to the hay-day Program Directors and DJs had in the 80s where they pretty much ruled the roost in radio stations and had much more weight in determining which bands became popular. It would allow each radio station to become a sort of... mini-label in and of itself.
However, FM radio has been moving away from local largely due to Clear Channel and its crowd-sourcing, cost-cutting efforts of sharing content across stations/regions. But perhaps with how the economy has been kicking CC's butt, this trend could change. But it will take time, and it will take some of the larger broadcasters taking a risk. Will it happen, I don't know. But the opportunity I think definitely exists.
The graph is indeed pretty illustrative, but to suggest the CD is being killed off by streaming is misleading, because they don't graph the main competitor to the CD.
That's right, the minidisc.
The records labels screw EVERYONE over, including themselves. If this wasn't the case, why do SO many artists start their own labels or fight long legal battles to get out of the constricting contracts they signed when young?
Why has the music industry not leapt on digital distribution from the beginning? They could have totally controlled the market by just creating iTunes before iTunes.
But they don't because the music industry is NOT about promoting artists or giving customers the best value for their money. it is about making the maximum amount of money for the least amount of work. Now you might call that sensible business, but it isn't.
McD sells you mayo for your fries as an extra, that is sensible. Selling you the salt as extra isn't and would just turn customers away.
The music industry would wish that you had to buy a CD for your stereo, a seperate MP3 for your portable, another CD for your car, a ringtone for your phone and then also pay them a fee for any blank CD's, hard-disks and media players you buy. That has nothing to do with promiting music anymore, that is pure and simple greed and comes bloody close to strip-mining the industry. Getting the last money out before it all collapses.
Record labels support the artists. My god man, read a book, just once.
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You may solo them, I prefer them in a group.
I have cash to burn, but I am definitively too old. The stuff which they put out for sale, DO NOT interest me. What I like is stuff like electrical music vangelis/Jean michel Jarre , classic from funeral march for a marionette to tocatta in c minor, and a few rock/hard rock group and strange stuff (queen, megadeth, smashing pumpkins, and a few other less known ; commercial stuff like e-nomine, and a few other like in-extremo). For the first group, there isn't much which was put to sale recently and has got the quality of an oxygen, or heaven and hell. For the second group you can own so many version of them until nothing new comes out, for the third group, i search and search but rarely find stuff of interrest.
So what bring us this long rambling on my taste ? I started buying a lot of CD end on 90. Then by 2002 it dwindled down. Because my classic collection was complete, and for electronic music I did not find anything new, except a few rare stuff coming from Japan (Idea/eufonius). Sure, I would wish to see much more new stuff, but my exposure (university) has dwindled only to friend and colleague. So now a day I try pirate stuff in hope of finding something to buy which please me , and I throw everything away after trying. The bottom line is that I buy no CD , not because of the crise, but because nothing cater to my taste.. Yeah my taste are eclectic.But hey nobody is perfect.
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If we assume average teenager has 100 Euros per month to spend ...
20 years ago, they mainly spend it on music, beer and cigarettes.
Today they spend it on mobile, internet, DVDs, computer games and some for music.
There are so many options beside CDs.
Music industry simply lost entertainment money share.
Few years ago a pool was made in London: kids prefer to stop going out for beer in order to spend last pounds on their mobile phone.
There's a general misunderstanding I see here anytime record companies are discussed. Time after time, people say that the label pays for all sorts of things to help artists. The truth is that all of that stuff isn't given to the artists, it's an advance on future royalties.
The artist has to repay the label for the cost of recording an album. The labels charge artists for promotion, too. It's a universal practice to include a "breakage" fee, which means the artist only receives royalties on 90% of sales. Concert touring expenses are also recoupable, paid for by the artist. Royalties are calculated on wholesale prices, not retail prices, so deals with record clubs can be based on deeply discounted wholesale prices and lower royalties
The industry is geared to produce a few smash hit artists. Those who aren't given preferential treatment are generally stuck with big debt to the label. If the label decides not to release an artist's music, the artist can't release it on his own - and this happens quite a lot. The label can insist that the artist remain under contract for 7 years or more, while never releasing any recordings, so the artist is essentially silenced
There is no hope of getting a song on a commercial radio station without the influence of "independent promoters," who have a lock on what stations will play and only promote songs after receiving huge payments. Radio airtime has nothing to do with the merits of the music. No song gets played on commercial radio without a payment to an independent promoter
Most people who have very strong opinions against the music industry have little idea of exactly how bad the industry is. It's a rotten and corrupt industry.
Read what Janis Ian has to say. Read The Truth about the Music Industry."