“With CD sales dismal and Internet music sites such as iTunes soaring in popularity, major record labels have been forced to rethink their traditional and once-profitable business plans as they scramble to hold on to a diminishing consumer base and straying A-list artists,” Emily Friedman reports or ABC News.
“‘The sweet spot that the record labels have inhabited for the last 50 years or so has dried up,’ said Aram Sinnreich, media professor at New York University. ‘Making records and distributing them has no business anymore,'” Friedman reports.
“Russ Crupnick, vice president and senior industry analyst of entertainment at NPD Group, which conducts market research on music industry sales, agreed and told ABCNEWS.com that the record companies are going to have to come up with a solution to their profit woes, and fast,” Friedman reports. “‘[Record companies] have got to do more and more different things to make up for the loss CD revenue,’ Crupnick said. ‘A few years ago it was a really easy industry to understand — you had radio and you sold CDs — there was an order to the world.’
“‘Now that order has broken down,’ he said,” Friedman reports.
Full article here.
Interesting how the word “cartel” never appears in the article itself.
The big labels are toast; let’s hope they don’t take the music with them.
Sucks to be them. It’s not like this wasn’t being anticipated for the last several years. As the adage goes: “failing to plan, is planning to fail”. They didn’t plan, so guess what?
indeed… dried up… like stuff that dries up.
When the iTunes Store (then Music Store) was opened up, I told my friends and parents that the music companies should sell their old back catalogs of music on their websites to compete (and maybe even their new songs). But, they twiddled their thumbs.
You snooze, you lose.
Mmmmm, toast.
“like stuff that dries up”
Is that stuff that was once wet or stuff that was already dry and just gets more dry as it ages?
Actually there was a time when record companies sold one song at a time. They were called “45” records.
I used to buy them when I was a kid. They were even $.99 if I recall.
Still don’t understand why music labels don’t sell DRM free music on their respectable web sites but hey, that’s why they make the big bucks…
I think what is going to happen is that singles and albums, from a business sense, are going to turn into a way to sell tickets to live shows and not be seen or expected to be a primary source of revenue. You can’t download a good live show experience – even a DVD doesn’t match being there. I think deals like those between Live Nation and Madonna and U2 are going to become the standard.
Just my guess.
The record cartel looks back and thinks that if they originally said NO to Apple as they were introducing the ITMS that they would not be in the trouble they are in today.
This would have happened with or without Apple, (with internet pirates taking a bigger chunk) and they would be in the same mess.
The cartels have wasted too much effort going after Apple and undercutting their own value by offering their music to Apple’s competitors for even less money!
They are cutting their own throats.
They need to spend some of their accumulated billions on merchandising and concert-organising companies, and redefine themselves.
The puck has already moved to the ‘Live Nation’ model, so they’d better hurry.
Sidenote-
the ad at the top of the MDN page ….
Frank Caliendo does a mean Bush impression.
Too bad his show sucks (bad writing)
Can’t wait to hear from the MDN posters around here (few as they are) who espouse the “album/CD as immutable artform” argument. They must hate Apple and iTunes like the plague. As for me, give me singles–and the choice thereof–or give me death. (Oooh, didn’t mean that literally, of course.)
We’re at a very interesting crossroads right now. iTunes is terribly successful and is bringing more and more money to the music labels and by extension the TV and movie studios. But the labels and studios are terrified of an iTunes virtual monopoly so they are doing everything possible to sabotage iTunes. Some studios have pulled out of iTunes. The Studios promised rentals but have been dragging their feet in delivering them. The studios have created Hulu as an iTunes alternative while the labels are denying DRMless music to iTunes and simultaneously using it to promote download sites such as Amazon.
I think ultimately Apple is going to win this struggle for two reasons. First, the labels and studios are literally passing up income in their attempts to cripple iTunes. Their resolve will probably break down as their losses increase. Second, with the transition to the iPhone and the Touch devices Apple appears set to be the dominate provider of portable music/video hardware long into the future (5 years is an eternity in this industry.) And regardless of what the labels and studios would wish, if iPods remain the dominant player the integration with iTunes will insure it’s continued dominance too.
I’m still going to buy my music on CD thank you (as long as CDs are being made). Until the music on iTunes becomes good quality (256kbps or better) then that what I’ll do. Yes some artist are on “iTunes Plus” but no even close to enough. Also some artist or some albums or certain artists are not on the iTunes store here in Canada. My greatest wish is for Apple to amalgamate all iTunes stores into one big store which offers everything iTunes offers. All it’s music, movies, TV shows etc. on one big store. It shouldn’t matter what country you’re from. Anyways that’s my thoughts on that.
Bottom line is the Cartels could have had it all some years ago. Buy Napster, charge .99 for DRM free watertmarked downloads, develop a decent jukebox and iTunes would have dried up and croaked. DRM killed the record companies.
There is a way to combat Limewire, etc… and the Music Goons should have figured this out a decade ago… it’s probably too late now but if they LOWERED the price of music substantially then the Napsters, Limewires, Torrents, etc of the world would have had a much harder time getting off the ground.
Well, now look…
@ The Other Steve,
Methinks you’ve already forgotten Napster and BitTorrent. Apple provided a legal alternative to them, but I think it’s fair to say that there’s NO way the music cartel could have stopped Napster & BitTorrent all on their own. Without iTunes Music Store, ALL the people seeking digital music would be obtaining it without paying for it. And they no doubt would feel entitled to free music, too. The end result, of course, would still be the same: Big Four Fire Sale. IMHO, the big 4 dinosaurs could have done digital themselves, left Apple out of the loop, and still been dominant. But they couldn’t get past their own perceptions of control and entitlement.
MDN magic word: “season”, as in “To everything, there is a season…”
@Big Mac!
I would love that, I’ve been given several MP3’s by friends overseas that I can’t get here, to be able to find them on iTunes would be awesome!
“In a manner of speaking” by Marc Collin is one, I love that song but can’t get it anywhere but the MP3 a friend sent me.
For me, CDs remain completely and forever relevant for one genre only — classical. Because a classical CD package includes liner notes about the history of the music and bios of the artists (plus some nice photography if you buy from the Big Three), I find paying for the discs entirely worth it. But for any other kind of music, iTunes or Amazon mp3 is the only way to go.
iTunes has really made music much more consumer and user friendly and I’ll be loyal to Apple for that if nothing else.
Mixed Metaphor Alert:
The “sweet spot” has “dried up.”
Stupid.
I’ve written about this on my blog extensively over the last few months so I’ve spare putting in my detailed comments about it.
@mas, “Actually there was a time when record companies sold one song at a time. They were called “45” records.
I used to buy them when I was a kid. They were even $.99 if I recall.”
You’re just a kid mas, I used to buy 78 rpm platters (the really were platters). I used to sharpen the needles in my gramophone also.
The record cartel lets Amazon sell inferior MP3 music without DRM and cripples Apple (excepting EMI) with DRM. At the same time MySpace is going into the music business with Universal, Warner, et al.
How effing knuckle-headed can these buggy whip makers be?
The record company has virtually no cost associated with digital revenue. They simply cash the check from Apple and the other online sellers.
Yes, CD sales are down…. so is the cost of packaging, printing, shipping, and often deystroying or marking down unsold inventory.
With digital you put the file out there and take the profit.
I really think the music companies problems may be exagerated a bit.