“Last year, CD sales dropped 13%, to $9.2 billion, according to figures from the Recording Industry Association of America. The slump mirrors overall revenues for the Big Four—Sony/BMG, Universal, Warner (WMG), and EMI Group—which have been flat or declining for more than two years,” Justin Bachman reports for BusinessWeek.
“The Internet has wreaked all sorts of havoc on the traditional recorded-music model. For decades labels have been signing bands, paying for their first record and video, moving the music to radio and retailers, organizing concert tours, and helping to peddle merchandise,” Bachman reports. “But for many fans and artists, that model has become grossly anachronistic. If the music is flowing digitally, why allow a corporation to get between an artist and the audience?”
MacDailyNews Take: All together now, “Eliminate the Middlebronfman!”
Bachman reports, “It doesn’t help that the same companies have been antagonizing music consumers for years with pricey CDs, rights-management restrictions, and file-sharing lawsuits.”
Bachman reports, “One of the casualties is the industry’s fundamental economics. A record label used to play an important financial role because it fronted the money to record an album, which could cost tens of thousands or even hundreds of thousands of dollars. Now any 14-year-old can pick up a copy of Apple’s Logic Studio for $499 and make respectable recordings. All that’s needed are generous parents or a babysitting gig.”
Bachman reports, “Digital is the new paradigm. Who needs a record label to handle marketing and public relations anymore? Musicians can just set up a MySpace page and talk directly with their fans. Record labels used to help court radio stations, too, to get music on the air. Now you can zip MP3 copies of your first single via e-mail to anyone in the world.”
It’s hard to see “how the Big Four can boost their sales and income much in this new era. Manufacturing and distribution costs stand to fall in the digital transition, and record companies will handle numerous business and administrative functions for artists. But the profit bonanza of an $18 CD? Those days are gone forever,” Bachman reports.
Full article here.
MacDailyNews Take: The music cartels have ripped off musicians and music consumers for years. It’s time for the labels to feel some real pain.
It’s going to be a painful transition for the recording industry, I think.
I love that they use the word “cartel”.
It should say “Digital Downloads is the new paradigm” as we have been using digital media since the late 70’s with the laserdisc and early 80’s with the music cd.
Until recently, everything has been distributed as physical media.
The distribution model now has changed to digital downloads and not physical media.
$9.2 billion.
That’s how much Ballmer spends on Ho Hos and Ding Dongs in a month. Who needs washboard abs when you can carry a more efficient washer/dryer combo around?
It would be interesting to see the record companies shift into a slightly different sort of role.. since as they stand now, they are pretty much useless.
It’s relatively easy to see five years ahead on this issue. Ubiquitous self-marketing in many forms, more direct correspondence between originator, and consumer.
During the “gold rush” first iteration of internet glee, back in the late 90s, the term “frictionless commerce” was bandied, and its momentum never slowed.
Man has always looked for ways to gain competitive advantage; that mostly means lowering costs.
Many in the music industry are pinning their hopes on new releases from their wild and intoxicated female stars.
And yet, they’ve been warned many times about putting the cartel before the whores.
@Dextroamphetamine:
ROFL
thanks for making my morning
“Man has always looked for ways to gain competitive advantage”
Holy crap, this is spooky! That’s exactly what my fortune cookie said! (And the winning numbers were 3-7-42-18-2-9.) And I think I read that Sen. Craig has that tatooed on his right butt cheek. Probably just a rumor.
Now THAT is funny, Dextroamphetamine! You just made my morning.
The problem with all digital downloads…
…is that the majority of the market is still computer illiterate.
Now Apple finally came out with a device that can download music directly from the iTunes Store, but it’s crippled or not thought out correctly.
1: No hardware dock containing a DSL modem, a auto-backup hard drive, stereo outputs etc.
2: No “squirting” ability between iPods via Wifi.
2: iPod car integration has dropped recently in favor of XM Radio. I can’t find many new cars with a simple frigging stereo input jack either. Some do play MP3 cd’s though. Ok, this might not be Apple’s fault, but cars are the biggest place people will bring their audio content to. A car friendly audio device from Apple that anyone can place in their car to hook thier iPod into daily would be awesome.
3: Storage on the new iPod Touch is almost absolutely worthless. Only 16GB? How about 160 GB please, sure I’ll take a hard drive, and I’ll almost pay the big bucks for flash at that 160GB too.
There is more, a lot more.
Apple needs to think OUTSIDE the geek box. For the average computer illiterate user who just wants a radio that plays what they want when they want it.
Can one make playlists on the new iPod Touch? Come on Apple!!!
Er, slumping sales have nothing to do with the myriad of “artists” crammed down our throat who happen to suck terribly, right big four? No no, it’s all them dang intertube pirates and their file-sharing whatchamacalits.
Like Q-Tip said (“Check the Rhyme”, A Tribe Called Quest) – “Industry rule number four thousand and eighty – Record company people are shady!”
Better yet, why don’t the RIAA all have a plate of shoddy prepared Fugu instead?
“They can’t even make a product you can open,” says Brandon Kessler, founder of Messenger Records, a small New York City label. “Can you imagine going to the store and buying a carton of milk you can’t get open? It’s infuriating. There’s such a lack of knowledge of their customer.”
Lack of knowledge? How about lack of giving a fuck?
“For Baek’s record, the company had 416 distinct digital products, including song tracks, ringtones, videos, and album art”
Stop it with the fucking ringones. Let consumers buy the track and then use it how they please.
So what? This is nothing compared to what digital has done to analog photography and printing. Like Albert Einstein said, “Technological progress is like an ax in the hands of a pathological criminal.”
This whole topic has taken a wrong turn over the last few years. The problem is not distribution or DRM or music players or iTunes or piracy. The problem is shitty product. Most of what the labels have offered for a long time has sucked.
And some 14 year old kid with Logic Studio ain’t the answer. Sounds like more of the same problem, actually.
@DRM
I agree with the ringtones statement. However, silly teenagers (or whoever) still buy them in droves. They make millions for the record companies, so you won’t see them going away any time soon. You think the suits want to kill one of the only things that are actually making them money?
ps: I hope the execs die slowly and painfully. Support the new model–buy unDRMed music!
The record companies don’t seem to realize there could be big money in turning A&R;around as a service to new artists instead of gambling on them. That’s what they will eventually be reduced to anyway. Every act that gets big starts calling the shots and takes a bigger cut. The record companies can’t use the cost of recording and distributing as barrier to entry any more. All they have left is promotion.
Yea, hate to admit it, but ‘Jack likes Matte’ hit the nail on the head.
JUST as about to read this article – got a call from a ‘bubba buddy’ who had a friend needing help with gettting music from his computer onto a palm/mp3/something, and wondering how to connect it all, then download free songs from iTunes.
Bless their hearts, they ain’t stupid, just totally clueless. (Did send them on a Google search for WinMx and Vlad44)
If you’re here reading this then you’re WAY ahead of the average schmoe. That’s a fact.
Take the RIAA case in Minnesota – one of the jurors admitted they don’t even own a computer and knows nothing about them. Talk about Blind Justice, and a perfect candidate to buy Windoze.
As a “Collective” we’re getting closer everyday folks, but we’re not there yet.
BC
CD sales dropping over the last … and they blame the internet… Hey Napster and the heady days of music sharing were longer than two years ago. So they are full of BS excuses.
Try bad product. Both in the sense of the yawn generating offerings and the bad delivery mechanisms. Why do the labels cripple there offerings on iTunes, I mean partial albums, few videos (mostly the censored versions) and music divided up so you can buy a bands music in obe country and not in another.
The are the same people that claim they are into neo-liberalism, meaning borders are designed to physically restrict peoples movements (so they can maintain differential labor costs) and individuals from each area can not easily compare and purchase—think region encoding and/or distribution rights.
The invisible hand maintains a strangle hold.
The retrogrades want to maintain their privilege, be it from modern migration patterns to deciding what music can or cannot be offered. The notion of free market has never rung so hollow.
The record labels are the middleman who screws both ends: The music consumer with high cd prices, and the artist with crooked contracts. Now, finally, they getting their long-overdue beating. I hope they are beaten to death.
RIAA Case Juror #3: “Spoofed her IP?
Why the ding dong dangit would some stranger write a parody about her computer thingie? I’m not buying it. What’s for lunch?”
P.S.
Plus, do THIS math, as quoted from above –
“Last year, CD sales dropped 13% …”
And they STILL raked in $9.2 billion ?
Up/Down, Good/Bad, whatever – $9.2B ain’t chump change.
And since we’re talking about “Entertainment Conglomerates”, keep in mind those numbers are only for their “Music Divisions”
BC
MDN Magic Word – road
As in: It’s “Long and Winding …”
“[…] why allow a corporation to get between an artist and the audience?”
Yeah. Like Apple and iTunes.
It will be interesting to see how well the new album released by UK band Radiohead does, as it’s sold on their website at no fixed cost – at the moment, fans pay what they think the records worth…
http://media.guardian.co.uk/newmedia/story/0,,2186144,00.html
Wonder what sort of impact that would have on the labels..?
justified: This whole topic has taken a wrong turn over the last few years. The problem is not distribution or DRM or music players or iTunes or piracy. The problem is shitty product. Most of what the labels have offered for a long time has sucked.
I disagree. It’s is not an either-or problem, but an and problem. The one you listed all contributes to the decline of CD sales.
And some 14 year old kid with Logic Studio ain’t the answer. Sounds like more of the same problem, actually.
You think so? For a long time, record labels become the gatekeepers and the kingmakers. If an artist want to make it big, they must pass through the record labels. Record labels also pick no-talent nobodies like Britney Spears, doll them up, and make them into stars. They can do it because they have the cash and the clout. A 14 y.o. kid with Logic Studio may not be able to produce great music, but as they say: infinite monkeys typing at random for infinite time may produce a Shakespearean work. Since more kids (and adults too) can afford to play with their music and can access listeners directly, their success may no longer be determined by record labels, but by their own talents and hard work.
“Now any 14-year-old can pick up a copy of Apple’s Logic Studio for $499 and make respectable recordings.”
Totally disagree! If you gave a 14 year a soldering iron, motherboard, etc. is he gonna make an MP3 player too? Of course not. Audio engineering is a science and there are still very legit reasons to use a PROFESSIONAL recording studio. Like $4000 mics, high end preamps, ADVICE!, good sounding and tuned recording and control rooms. This doesn’t even include great instruments and most important… TALENT!!
I’m gonna disagree with most of the posters on here who blame the poor contents put out by the labels.
You’ve seriously got to be kidding me, there is lots and lots of excellent content out there. There is a huge world beyond Top 40 or the latest misogynistic shit from the next angry rapper [they’re ALL angry, have you noticed?]
The issue is the labels business model. They don’t/won’t promote anything that is not considered ‘mainstream’. And, I’m sorry to say, the iTunes store is the damn same. They’re also promoting the same old shit the labels do. Look at the Top Songs sidebar… number 1 is, you guessed it Britney, followed by Soulja and Timbaland.
When oh when are we going to get away from this outmoded model and recognise that ‘World Music’ is another excuse for music that hasn’t been created in the “Good ol’ USA”. iTunes is just as guilty as the labels for ghettoising music other than American. Recognise that business model has failed and we’re half way there to actually seeing all the good music out there.
Some isn’t even sung in English! Shock! Horror!
Finally someone is seeing the light and telling it like it is.
The Music Labels just need to sell all the back catalogs to Apple for iTunes, Return the money to the share holders and close up shop. No one that has any talent will end up on the street, at least for very long. All the over paid executives they’ll just get adsorbed back into the big parent corporations most likely with a fat raise and a huge bonus for getting rid of the business that’s sucking their profits out the door.
Big Oil, Big Drug, Wal-Mart and now Big Music. I wonder why the media does not call them Big Music – 9.2 Billion!!!! – where is the outrage in congress – where are the esteemed members of congress on the nightly news. We demand to know why the US citizens are being screwed.
“The Internet has wreaked all sorts of havoc on the traditional recorded-music model.”
Cowchips. It’s DVDs that have wreaked all sorts of havoc on the traditional recorded-music model. Can it be a coincidence that sales of CDs have declined at a time when consumers are buying expensive video systems and can buy a movie on DVD for not much more than the cost of a CD? When I can buy pre-owned DVDs at Blockbuster for $5 each, $14.99 for a new CD looks pretty inflated.
The prophet says:”Eliminate the Middlebronfman!”, indeed. They could also improve their bottom line if they stopped funding the RIAA and wasting truckloads of money suing their customers. They also need to remember it’s supposed to be about the music.
Hint- someone running their mouth rhythmically over a drum machine does not music make.