Quote:
Originally Posted by EPrecording  Just some food for thought. Is the music industry profitable? A decline in profit doesn't mean an industry is making a loss. It is merely an indication of a slowing of momentum; |
pretty soon slowing to a halt... YTY YTD #'s are down another 12% first six mos of 2010 vs first six mos 2009...
Can I ask what you actually do in the industry? Do you have a band? Do management? Work at a studio or label?
guess what started happening en mass in 1999...
Music's lost decade: Sales cut in half in 2000s - Feb. 2, 2010 
the promise of the internet is size and scale
this is what the proponents of micro economics and internet flat tax surcharges promote and it should have worked for recorded music.
alot of people have pointed to the transition from albums to individual songs as being the cause of reduced revenue for the record industry
I understand where on the surface one could make this argument, however... it should follow the argument made by the pricing proponents
in 1999 in the USA there were probably 10 thousand retail points of sale for physical music, tower, sam goody, target, walmart, etc.
at the time they were selling $20 dollar physical discs - much of the overhead due to physical packaging, manufacturing, shipping and stocking fees.
these physical retail locations had all the problems of supply side inventory management - a band would be on tour, and no stock would be in that market, a song would be played on the radio and the album would quickly be out of stock, etc. a tv show or commercial features a song and suddenly there is demand, but no availability.
these supply side inventory issues combined with limited points of sale were a massive problem for the record industry. digital distribution has none of these problem.
today someone can walk from their living room to their computer (or it may be on their lap) to order the latest hot song, featured in Gossip Girl.
so today in 2010 there are an estimated 500 million* retail points of sale for prerecorded music via itunes alone.
*
500 Million_Active_Itunes_Users
just stop and think about this for a second... we went from 10 thousand points of sale to 500 Million points of sale in less than a decade and removed all of the supply side inventory issues... wow.
the promise, size and scale of the internet should have seen sales of pre-recorded music increase, massively...
there is frequent argument made that if music cost less, it would sell more... well, we now have 99 cent songs and 9.99 albums and sales have dropped by half in a decade...
so the industry removed inventory problems, made music instantly available, allowed for songs to be sold individually at a price never before possible and dropped the price of the album by half of the retail list price of a decade ago...
but we didn't and haven't seen sales increase (or even flatline) because at the same time, the same product and service is offered for illegally, for free, and without consequence.
this also illustrates these issues:
Quote:
Originally Posted by bilbobaggins In the past 10 years we've had
more computers
more internet access
more iPods (some 225,000,000 of them!)
more phones with memory
more single downloads
more bands with better visibility than ever before more people going to more gigs
an economic boom
cheap credit
more disposable income than ever before The world's economy doubled in size from U.S. $30.21 to U.S. $60.59 trillion Yet revenues are 50% of what they used to be.
As a footnote, the indigenous music of South America, France, Ireland and Spain (those 'niche' markets that you think are not being affected) are being hit the hardest by piracy. Piracy damaging music sales acutely? | Fast Media Magazine.
I for one will feel sad when all those genres will be ousted in lieu of vodaphone-friendly-feel-good-advertising-fodder.
Bilbo |
others would like to make the point that 99 cent songs and 9.99 albums are the cause of reduced revenue - the reasoning being, Lower Prices = Lower Revenue, but this isn't true either...
actually the margin on a 9.99 album download is about the same as a 19.99 CD... due to there being reduced, or removed manufacturing, shipping and distribution fees as well as there being no returns reserves (30% in and of itself on average).
what we're actually seeing is not a drop in revenue from reduced pricing, but more so the decline in overall album unit sales even when factoring album equivalent song downloads.
so in reality it is an overall decline in album unit sales (and again this factoring in album equivalent song downloads).
so these assumptions appear to be incorrect.
even when talking about "singles sales" physical singles contained 2-4 songs depending on format (vinyl, cd, cs) and retailed for about $2 - $4, which like other physical mediums much of that price went off the top to manufacturing, shipping and distribution fees as well as there being no returns reserves (30% in and of itself on average).
So ultimately there is more per unit margin on digital songs, than there ever was on physical "Singles"
2009 Sales Wrap: Transactions Up As Digital Growth Slows Quote:
| Looking at albums, including track equivalent albums - where 10 track downloads equal one album - last year albums w/TEA totaled 489.8 million units, down 8.5% from the previous year's total of 535.4 million units. That the same percentage decline recorded in 2008 over 2007's total of 585 million album units w/TEA.
|
although this decline in over all units is certainly represented in lost revenue... less units, less revenue... simple... and it's been going on that way for about a decade...