Music Sales Fall for 7th Consecutive Year

We now enter the 7th year of CD sale declines, and nary a person in the industry is willing to speaketh the truth (‘cepting Lefsetz the pariah).

Forthwith, an outsider from the East was compelled to do so. He seeth what the pros do not, for they art dumbeth beyond their years, and yeah, have shite for whence there should be brains, and know not the difference between thine own arse and thine elbow:

Hence, from outside the industry, he removeth the scales from thine eyes, and he said unto thee — GO FORTH AND SLASH PRICES BEFORETH ITS TOO LATE, YOU STUPID BASTARDS. 

And lo, they heard but the did not understand. Instead, they chose to lobby for copyright extensions and engage in pederasty, but only on the weekends.

Sayeth unto me the truth, oh wise ass from the East, from outside the industry, so we may find redemption and rejoice once again in the land of profitability and unit sales growth.

Nay, sayeth the wise ass. Your products are over-priced, your clients have lost interest, your promotional machinary hath groundeth unto dust. Ye are like the elder woman, unable to conceive, yet unaware that your time hath past. I say unto thee like the Lord said unto Adam and Abraham and Moses: You best find a way to sell your product for half of what you are charging now — $6.99-9.99 retail at mosteth — or else you will continue your slide into oblivion, where you will be forced to walk the dusty earth, lost, hungry, with unslaked thirst, unable to get a good table at The Foundry on Melrose . . .

~~~

I have been saying this for more than a decade, but what the hell, let’s repeat it one more time: CDs as a product are not competitively priced. People with limited attention and other interests simply no longer care about buying music all that much.

It is not just that DVDs are so much a better value — that is
merely the starter issue. CDs are competing with multi-player games,
with blogs, with social networking sites, with online games, Wiis, YouTube, and the rest of the tubes on the internet.

That’s before we even get to the issue of free downloads, which are
not a legitimate business model in the eyes of the labels. As to the 1000s upon 1000s of artists freely streaming their music on
MySpace to fans, well, they will give you a different answer as to what sort of a business model free is.

A few excerpts:

Variety:

"Despite a massive surge in digital music sales last year, the
popularity of the fledgling market is still not making up for the slide
in physical products, such as CDs.

According to figures released by
the International Federation of the Phonographic Industry, the global
recorded music market in 2006 slipped by 5% year on year to $19.6
billion last year, down from $20.7 billion in 2005.

The gloomy
news marks the recorded music industry’s seventh consecutive year of
falling sales, according to IFPI’s annual Recording Industry in Numbers
publication, as piracy continues to ravage the business around the
world.

Sales of physical product fell 11% to $17.5 billion in
2006 as consumers turn away from purchasing CDs in favor of getting
their music through other means."

The 85% increase in digital downloads (to $2.1 billion), plus mobile phone ringtone revenues, failed to make up the difference.

I love this line  "The results reflect an industry in transition,"  said IFPI
chairman and nitwit John Kennedy. An industry in transition. Kinda like VHS tapes are.

Billboard noted:

"Despite the global decline, 12 countries — Japan, Russia, South
Africa, South Korea, Ireland, Argentina, Indonesia, Hungary, Malaysia,
India, China and Venezuela — posted growth in their respective
recorded music markets during the year.

The top 10 respective recorded music markets in the world last year
were the U.S., Japan, the U.K., Germany, France, Canada, Australia,
Italy, Spain and Mexico.

On digital value alone, the top 10 markets were the U.S., Japan, the
U.K., South Korea, France, Germany, Canada, China, Italy and Australia."

Sadly amusing . . .

>

Sources:
Music biz sales off for a seventh year: study
Lars Brandle
Billboard, Thu Jul 5, 1:45 AM

http://tinyurl.com/2rv4ax

Music sales continue to fall
Digital fails to replace lost CD revenue
GORDON MASSON
Variety, Wed., Jul. 4, 2007, 6:54am PT
http://www.variety.com/article/VR1117968039.html?categoryid=19&cs=1

Universal in Dispute With Apple Over iTunes
JEFF LEEDS
NYT, July 2, 2007
http://www.nytimes.com/2007/07/02/business/media/02universal.html

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What's been said:

Discussions found on the web:
  1. brion commented on Jul 5

    add, of course, the Looooong awaited death of Rap….
    Kids seem to have finally had their fill after hundreds of scowly self involved creeps with “Lil” in front of their names have come and gone over the last 20 (gulp) years….

    good riddance… to them, the short sighted industry that spawned/marketed them and the lure of the “guaranteed” revenue stream that helped keep america “stuck on stupid” for so long.

  2. Trainwreck commented on Jul 6

    Well, I am still finding songs to download from Itunes. Nice that I don’t have to buy an entire crappy album just to own that one song I like. I guess the major record labels are finding it harder to rip me off.

    From a consumer perspective, true capitalism is about being able to buy what you want and reject what you want. Caveat venditor.

  3. Eclectic commented on Jul 6

    Is that from First or Second Labelonians that you’re quoting?

    …I seem to recall a verse from II Labelonians. It’s chap 4, verses 6-7:

    Verse 6:

    “For thou art wiser than thine ass, and thus thou shouldest not sit on thine ass and rideth it to Labelonia without due recompense.”

    Verse 7:

    “In Labelonia, after thou hast riden thine ass hard, thou shouldest give it oats and brush it, and in no ways shoudest thou putteth thine ass up wet.”

  4. Winston Munn commented on Jul 6

    Don’t you know scripture, Eclectic? It from First Thelonius Monk, Chapter 2, verses 18-22: “I say unto thee like the Lord said unto Adam and Abraham and Moses: You best find a way to sell your product for half of what you are charging now — $6.99-9.99 retail at mosteth — or else you will continue your slide into oblivion, where you will be forced to walk the dusty earth, lost, hungry with unslaked thirst, unable to get a good table at The Foundry on Melrose . . .”

    Jeez…the pagans around today….

  5. muckdog commented on Jul 6

    One thing rarely mentioned is the availability of commercial-free music via TV, XM and Sirius sat radio, streaming via the web, etc.

    You can pick genres. You don’t own the music, but these services offer quite a variety of tunes.

    FM radio blows. Commercials every few minutes. The same top 10 list (top 5?) played over and over. Forget it.

    You can stream it on the PC, notebook or via smartphone these days.

    Why buy?

  6. Winston Munn commented on Jul 6

    II Labelonians. It’s chap 4.

    Verse 8:

    Verily I say to thee, upon thy ass shalt thou never place a chapeau lest ye be banished into the land of 8-track along with all the other asshats.

  7. speedlet commented on Jul 6

    Barry,

    Stop assuming people in the music business are stupid. They are no stupider than people who work on Wall Street. Everyone in the industry knows exactly what’s happening, and they have for a long time.

    Cutting prices in half won’t do a thing, because the consumer is already getting the product for %100 off. There’s no way to “compete” with that. As Ian Copeland once said, “if you could download a Mercedes for free, Daimler-Benz would have a hard time staying in business.” Charging $9.99 or $6.99 for a CD will not get people rushing back into record stores.

    Barry, I’m sure that back in the ’80’s you probably lined up like everyone else to shell out $50-75 (in 1980’s dollars) for boxed sets of music that you couldn’t give away today (Eric Clapton’s Crossroads? Please). What’s changed? At the time, you thought you were getting good value — and you were. Music was perceived as having intrinsic value. Now, suddenly, it isn’t, because it’s available for free. The value hasn’t changed — the perception has.

    What the labels are doing is trying to milk the last remaining dollar from the dwindling pool of those still willing to pay for music, before they shut out the lights. It isn’t pretty, but cutting prices won’t change anything.

    ~~~

    BR: Its not that everyone is stupid — I have friends in the industry — lawyers and agents and producers — who are nothing short of brilliant.

    Its that the top of the labels that have engaged in some terrible management decisions over the past 20 years — they have missed opportunity after opportunity, made horrific strategic decisions, and simply eviscerated their franchises.

    Whether they are incompetent or short sighted or dumb is irrelevant — the truth is, they have failed as business managers, and the proof of that is in the sales data . . .

  8. billy commented on Jul 6

    Sure, Speedlet, your analysis is a plausible one. I don’t think it’s right, but it’s plausible. Here’s why:
    1)The public is not “getting product at 100% off.” You need to bear in mind that there are 2 different products. Crap quality for free, top quality at a price There is still a market for quality.
    2) the reduction of intrinsic value is not a function of free music, it’s a function of too much music. (most of it weak). Same with movies. There are many thousands more movies every year than ever make it onto a screen. More supply equals lower price. That’s the way things work.

    People in the music biz are not only stupid, they are greedy and they are lazy. The old model no longer works. But while their, and your, solution is to turn off the lights, the next generation is busy devising a new model that works.

  9. drtomaso commented on Jul 6

    The success of iTunes speaks volumes- people are willing to pay if you price the product appropriately and package it (or in this case, don’t package it at all) the way they want, wrapped in a convenient and easy-to-use interface.

    The problem with music sales is that the implicit value of a copy of a recording has gone from significant (when it took huge, expensive equipment to produce a copy) to virtually non-existent.

    So why are people purchasing legitimate copies via iTunes when they could just download them for free? The magic word is convenience.

    How long has the business model of selling copies of a musical recording been around, compared to the full and rich history of music? The blink of an eye?

  10. Si commented on Jul 6

    Another problem with the music industry is one of quality and feel. There is too much music being produced that has a manufactured quality about it no matter how they try to glitz it up. Just sticking a long haired singer and a couple of decent guitarists in a tv band does nothing to make it feel more legitimate. People will pay for genuine talent and a genuine story.

  11. Jim commented on Jul 6

    First of all, iTunes works! It is convenient and you don’t have to buy 8 crappy songs to get 2 good ones. You just spend your $2 and life goes on.

    Second, you used to buy 8 good songs and get 2 crappy ones (on average). That is when albums and CDs sold. Would I buy Floyd, Zepp or the Beatles one song at a time? Certainly not …you would buy the CD!

    Third, it is mostly crap these days. I think the only bands I can honestly say I like is Green Day and the Chilli Peppers. It seems everyone else is too worried they might offend part of their fan base (i.e. revenue base) …or they are trying to offend everyone BUT their fan base.

    Conclusion …it went from art to the assembly line. There are a few good artists out there, but they are not saying much that is important …for example could you imagine the following lines in today’s lyrics?

    – You run and you run to catch up with the sun, but it’s sinking.
    – And in the end the love you take is equal to the love you make.
    – And the words of the prophets (profits) are written on the subway (concert) walls (halls)…
    – I will choose free will!
    – I could go on for days here…

    All new music talks about is hoes with big asses, capping someone and bling. It’s inane, it’s foolish, it’s stupid.

    Ozzy said they can’t kill rock and roll, but they seem to really be trying hard!

  12. Robert commented on Jul 6

    Hmm… When’s the last time I bought a CD… About five years ago… How much music do I have now? About 120GB… How did I get that music? From other people, in person… The vast majority of that music was given to me, in digital form, from a friend, NOT downloaded. As time goes on and the price of storage decreases, what is going to be the inevitable result? Accumulation of digital media – And the easy transference of said media IN PERSON, just like I got mine. This isn’t rocket science. The RIAA and MPAA can sue the pants off of people, set up fake download sites to catch people red handed, and generally stomp around and pitch hissy fits like spoiled children all they want, but it’s not going to change the fact that the current business model is simply going to have to change. Every day they continue on with their tirade against a changing world is another day the world leaves them behind, another day of potential revenue lost, another step backwards in a world which is advancing in leaps and bounds.

  13. Michael Donnelly commented on Jul 6

    A very funny post, I love the VHS line. Sounds like the vacation is working its charms on BR.

  14. Pam commented on Jul 6

    So in the middle of all this Universal is “quitting” (well not that exactly) iTunes so they can raise prices and sell albums?

  15. Tom B commented on Jul 6

    “So in the middle of all this Universal is “quitting” (well not that exactly) iTunes so they can raise prices and sell albums?”

    Yea, when they were handing out brains, Universal management wasn’t in line.

  16. Nick commented on Jul 6

    Barry:

    I wonder if another force is at work here. Frankly, the day after I bought my first iPod I started loading up my CD library on my computer, guess what, I too had become lazy, and had forgotten how much great music I had already in my collection.

    Once I finished BTO, David Bowie, and Supertramp, two whole years had passed without my buying a new CD. Also another factors come into play. I’ve now got more than 60 days worth of music on my computer – the question that begs to be answered is how much more do I need!

    As for the kids, they too are discovering the pleasure of Clearwater Revival, Cream and Crosby & Friends – all from their parents’ (Cheap) collection.

    Just a thought

    Nick

  17. Steve commented on Jul 6

    First the best CD marketing site this month:

    Spoon
    http://www.mergerecords.com/gagagajuke/

    Hear every song on the CD streamed, then follow the buy it now link. Merge Records seems to be doing pretty good lately.

    Next in our area (Raleigh-Durham-Chapel-Hill) the small band live music scene seems to be thriving (the big band high $$$ thing seems to be doing pretty good to). You can check out the venues and see quite a few good acts, you can always find something good between Thursday and Sunday. Here are a few venues:

    http://www.hideawaybbq.com/
    http://www.lincolntheatre.com/
    http://www.catscradle.com/
    http://www.carolinatheatre.org/

    Now RDU is a mid market town, but the last time I was in San Jose/San Fran I was disappointed in the show selection compared to home. My CD purchasing money now goes to live shows and Sirius radio, where I can find music from bands that actually come through these venues.

  18. Greg0658 commented on Jul 6

    you can’t quit iTunes and downloads – might be able to take away the internet for a pop segment

    it’s nice these days to dj and pick via the computer like a jukebox – cd’s are a step and a pain – I miss the box tho, so I buy

    space management and get up and go is becoming a consideration too

    I am having trouble with the kids vibe – I guess thats why I bought, it used to be when it’s gone it was gone, not now

    and bands can’t hit on all tracks – music is an experiment

  19. Kp commented on Jul 6

    Record companies are dying for multiple reasons. First, they are still behaving like “record” companies. The days of bundling are over. Get used to it. Second, the days of doing the deciding for the public is also over. The net allows the consumer the opportunity to choose what they like all by themselves now.

    In conclusion, pull your heads out of your asses, start paying attention to what your customers want and provide it, the money will follow. Not really so tough. But it will require change.

  20. michael schumacher commented on Jul 6

    Part of the problem here is that labels fail to hold on to any act if they fail to sell a gold record first time out. Look at the make-up of bands today…….very little musical craft….put them into a studio with some rap producer and there’s your album.

    Most bands can’t cut it live either…which was another great way to sell records, that has largely gone away as a vehicle.

    One of the best albums of all time (musically and engineering) is Dark Side of The Moon. That album was basically a live performance recorded for release as you did’nt have loops or anything more than 2 track recording. I can’t imagine groups today having the temerity or brain power to even begin to comprehend doing something like that without a computer or 20 sound engineer doing it for them.

    Rock is not dead…..Rock Sales are.

    Ciao
    MS

  21. JAC commented on Jul 6

    The “big three” complaints I hear from my friends who are strongly into music (I confess right away that I am not):

    – ‘Copy Protection’ that prevents them from using their own music in their own devices.

    – Clumsy attempts at ‘bundling’ products. Why pay $20 for two songs off a CD?

    – Lack of new quality music.

    That sort of behavior would sink any industry. Just imagine a car that turns off whenever it feels like it as a ‘theft deterrent’, which is overpriced by several thousand dollars, and sucks to boot. Hmm… maybe there are some similarities between the music industry and Detroit.

  22. Jim Bergsten commented on Jul 6

    The “music business” is going about things completely the wrong way. They should learn from their heritage of racketerring, corruption, payola, extortion, and lobbying.

    They should use these well-honed, time-proven techniques to coerce the government to tax us for their lost revenue, WHETHER WE BUY MUSIC OR NOT. Kind of like the “tape tax” (anybody remember THAT?), minus the tapes — say anyone with a computer or an internet connection.

    This solves a lot of problems. No need to even PRODUCE CD’s. Or music. No more kickbacks to stores, program directors, MTV, etc. No more kissing up to Mr. Jobs.

    Just pure, government-mandated, zero-overhead income. Tax-free, while you’re at it, if you please.

    If anybody should be fired at the majors, it should be the attorneys and lobbyists. Obviously, they aren’t doing their jobs.

    (Disclaimer — the preceding is satire and sarcasm, it is NOT conspiracy to commit).

  23. DavidB commented on Jul 7

    I think they also have to realize a large portion of their market is teenagers with McStarbucks jobs. Although these kids have cash it is not a ton of cash, especially when they get out of home and are suddenly supporting themselves. These companies are competing for those limited dollars and unless they price themselves so that those kids can afford to buy the music on a whim they are probably not going to be patronized by them much. Consumers aren’t stupid. They can see the cost of a cd and how much it costs to put music on it and they are determining that the price is too high so they are choosing to vote the cd companies off of survivor consumer island. Welcome to the REAL world boys where the rest of us live

  24. Greg0658 commented on Jul 7

    me above – ‘having trouble with the kids vibe’

    Watching Live Earth on Bravo (thanks)

    maybe I just don’t get out like I used too

    Happy 7 7 7 and Live Earth Day

  25. rachel commented on Jul 8

    What about the 360 degree contracts record labels are negotiating with up-and-coming artists? I just read about them this weekend so have no idea how successful they might be. Tho they certainly don’t seem to be in the artists’ best interest, only the record label’s…

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