Music's lost decade: Sales cut in half

[Sounds Great]

Music's lost decade: Sales cut in half

NEW YORK (CNNMoney.com) -- If you watched the Grammy Awards Sunday night, it would appear all is well in the recording industry. But at the end of last year, the music business was worth half of what it was ten years ago and the decline doesn't look like it will be slowing anytime soon.

[Dean Roddey]

The usual folks will be in later to tell us that sales are actually up, the music industry is lying about all of this, that free downloading is good for the industry, etc...

[AlexK]

Sales are actually up, the music industry is lying about all of this, free downloading is good for the industry, etc...

[haymedic]

weird... that graph looks like my vocal EQ.

s

[Revmen]

The interesting part is not that the sales are down, but why they are down and what the industry in doing about it.

[Dean Roddey]

Originally Posted by Revmen

The interesting part is not that the sales are down, but why they are down and what the industry in doing about it.

Well, as I've pointed out in other threads, if you look at not just the time since the peak, but the decades before the peak, then you'll see that sales were going up consistently since the beginnings of the rock/pop music industry. It went up during various economic crises, including the S&L disaster which was about as big as the recent one.

AND, it peaked in late 1999/early 2000, but the falloff in the rate of growth started in like 1998, then it slid up to the peak about a year to a year and a half later. So, in the middle of one of the biggest economic booms of all time, the growth rate started falling off, and actually peaked before the bubble burst. And it's basically been going downhill ever since.

You can't really blame the economic situation, since the rate continued to rise during previous very bad economic problems, with just one fairly small dip, and it started shallowing out at a point when money was growing on trees basically.

So, what started in 1997 that would have caused a very suddenly change in the number of records being purchased within a year? Even if it had just evened out that would have been a big change relative to what had come before. For growth to come to a halt and then start falling, that was a far larger change.

[Dean Roddey]

Originally Posted by olivia_nb

I'm just curious to know though, was the peak sustainable forever? Or was this falloff inevitable? The consumer market wasn't happy with the delivery method so they went around the industry's methods. Imagine what would happen to Ford and GM sales if they stopped innovating based on consumer's desires?

If they weren't happy with the delivery method, they'd have stopped or slowed down buying CDs before then, and the rate of growth would have dropped off. But, no, it started right when illegal downloading started. So as soon as it became widely and freely available, sales dropped off immediately, and reached their peak within a couple years and have gone down since. If you look at the growth rate, it wasn't like people were out there protesting the CD and going out and buying other things instead. It was going up quite rapidly right up to that point.

[iluvatar]

Originally Posted by Dean Roddey

So, what started in 1997 that would have caused a very suddenly change in the number of records being purchased within a year? Even if it had just evened out that would have been a big change relative to what had come before. For growth to come to a halt and then start falling, that was a far larger change.

Telecommunications Act of 1996 - Wikipedia, the free encyclopedia

-Dan.

[haymedic]

it's a real tragedy that they only earned 6 and a half BILLION dollars when you think of all the high quality, ground breaking, original music that came out last year.

....and they didn't even earn enough for ONE tiny, little aircraft carrier!

s

[Dean Roddey]

Originally Posted by haymedic

it's a real tragedy that they only earned 6 and a half BILLION dollars when you think of all the high quality, ground breaking, original music that came out last year.

....and they didn't even earn enough for ONE tiny, little aircraft carrier!

s

It's not how much you EARN, it's how much you have left over at the end of the year. You can earn far more than that and go bankrupt. If you are a publically held company, then that means that people's retirement funds and such are invested in your company. If your industry's value drops by half in a decade and the reason for it is something like that may never be overcome, your stock holders are likely to bail out and put their money elsewhere, so it can become a death spiral.

And, of course, as I always have to point out, there are SINGLE COMPANIES that make that in PROFIT in a year, much less gross revenues. But no one is ever complaining about those companies, they are always complaining about the record labels, which makes it pretty obvious what it's really about, i.e. a rationalization for theft, not any real concern over profits.

Oh, and that 6 billion dollars lost represents jobs lost in this country. That probably represented a fair number of jobs and work for studio people and studio musicians and so forth. But people always want to make it into a class warfare thing so that it's easier to justify the damage being done.

[haymedic]

i wonder how much of that 6.3 bil will go back into the 17 year old hottie born for a career in SUPER-AWESOME-AMAZING-RADICAL-STARDOM! the next greatest thing on earth! buy it! you know you want to BUY IT! BUY IT! you're so uncool if you don't BUY IT!"

s

[Dean Roddey]

Originally Posted by haymedic

i wonder how much of that 6.3 bil will go back into the 17 year old hottie born for a career in SUPER-AWESOME-AMAZING-RADICAL-STARDOM! the next greatest thing on earth! buy it! you know you want to BUY IT! BUY IT! you're so uncool if you don't BUY IT!"

s

When you have no actual facts to put forward, just throwing out a bunch of random cynical incoherence and innuendo is usually the next best thing.

[Never1]

There is just too much free media, today.

I remember even in 2000, you really did have to go out and buy your favorite band's album, because even to find it on the net was a pain in the arse.

Now, excluding illegal downloads, there's still all the websites, myspaces (and similar sites) plus sites like grooveshark where you can listen anytime you want. Why on earth would I go out and buy the new Paramore album when I can punch it in the search engine and listen to it for free, without doing anything illegal?

The industry as we knew it is gone. Doomed. Done.

The problem is, it's hard to put out anything new if there's no real money coming in to develpp and support it.

[Dean Roddey]

Originally Posted by olivia_nb

So those two things are well correlated, I agree, but is it the cause? Is there unlimited potential for growth forever under that model?

It's not, but it's naive in my opinion to think that it just happened to top out at that particular year.

The public wanted to download music and there was no real solution to the demand for quite some time, so a new distribution method took hold before the industry caught up. Why has this only really happened with music? Sure the movie industry is feeling a pinch, so is the publishing industry, but why is it that the music industry fell flat on their faces?

Beause the music industry is the one most exposed. Software has copy protection enough to keep most honest people honest. You have to go out of your way to find cracked software. Movies are still on the edge of practicality because of data size.

Music was both small enough and completely unprotected and their product is highly desired by younger people who have no sense of morality in large part, and there's a vast cottage industry on the internet that tells kids it's ok to steal music because the music industry is run by Hitler, so they have gotten the bulk of the damage.

Once it becomes practical and common place to share movies, we'll discover that the movie industry has also been run by Hitler all that time, we just didn't know that until we were able to download the movies any time we want.

[Dean Roddey]

Originally Posted by olivia_nb

Agreed. My only thought on that though, are the ridiculously huge amounts of money spent in the past required today to develop a product at the same level? The cost and accessibility of gear alone would suggest not. Not to mention the cost of distribution of the product, no more tiers of middle men and expensive physical reproduction, shipping, etc.

There's a difference between making music, and making enough people aware of the music that the artist has any real chance of a career and of making enough revenues to have made it worth investing in. All of us can make music, but we have about zero chance of anything significant coming out of it, because that would require actual marketing and getting people aware of us.

There was this naive belief that the internet would make all that irrelevant and everyone could put out their music. But, it really didn't work that way. Everyone can put out their music, but that just means that there are that many more people who have zero chance of rising above the noise, the level of which their very efforts are increasing.

[gold sounds]

Originally Posted by Never1

There is just too much free media, today.

Why on earth would I go out and buy the new Paramore album when I can punch it in the search engine and listen to it for free, without doing anything illegal?

The industry as we knew it is gone. Doomed. Done.

The problem is, it's hard to put out anything new if there's no real money coming in to develpp and support it.

Why even stream the new Paramore album?

Seriously though, a few thoughts:
- The industry dug it's own freaking grave when the big 4 failed to work with Napster to develop their own downloading/streaming framework ahead of the curve. Most of the disaster happening now in the industry is still a result of every major corporation being hesitant to cut short-term profits to fight off a long-term threat, thus permanently reshifting power of distribution to the masses.
- I'm curious what the industry was valued at before the 80s, and how 5.5B maps to that with inflation. I have a feeling that everything since then has been an inflation of perceived worth via major labels controlling pricing and the sales channel.
- Keep an eye on television for the next decade to see an interesting analogy. The networks have been great about looking into online delivery methods before they became mainstream (and broadband rates were ubiquitous enough to make TV streaming a cinch). I think you'll find that normal TV watching dive-bombs (like CD sales), the industry as a whole shrinks by maybe 25% (due to realization of value inflation due to big corps controlling pricing and material), but lots less jobs will be lost since online monetization will pick up lots of the slack. And unlike the Napster days, everybody knowing and trusting Hulu for free will be a helluva lot easier than everybody becoming used to P2P and then being asked 5 years later to switch to iTunes, where they actually have to pay money.

But seriously, what I care about most is that the music is awesome, and frankly music today is 100x better than it was in 1997, mostly because there's so much of it being released, and thus that 1% art to 99% crap ratio becomes 1% of a much larger pie.

[Never1]

Originally Posted by olivia_nb

Agreed. My only thought on that though, are the ridiculously huge amounts of money spent in the past required today to develop a product at the same level? The cost and accessibility of gear alone would suggest not. Not to mention the cost of distribution of the product, no more tiers of middle men and expensive physical reproduction, shipping, etc.

Agreed.

I guess what I'm referring to is more the old dinosaurs still trying to operate the old way, under the new lay of the land. No interesting artists are being developed as much as they used to be, and the copycat artists are worse than ever.

Good times for savvy indie artists who can do it all. Write, Record, Mix, produce, sell, book, play, self manage....

I guess, if we consider that the scale has been tipped a bit, and less artists fall under the umbrella of the commercial music industry than ever before, then the statistics aren't as severe.

Maybe back in 2000, something like 10% of artists operating were indie and nowadays, it's probably pushing closer to something like 30%. Alot of under the table sales are happening.. direct from websites, more show sales. Plus, the 25$ cd is gone and anyone buying an album off Itunes is probably paying 10$ on average, so even if sales are down, the mere fact that the prices have dropped significantly will affect the result.

I hope I made myself clear with that.

I guess my point is, we're not comparing apples to apples, anymore. 2000 is a long ways off, technologically speaking.

[Dean Roddey]

Originally Posted by gold sounds

:
- The industry dug it's own freaking grave when the big 4 failed to work with Napster to develop their own downloading/streaming framework ahead of the curve. Most of the disaster happening now in the industry is still a result of every major corporation being hesitant to cut short-term profits to fight off a long-term threat, thus permanently reshifting power of distribution to the masses.

That's just so unlikely. People say this as though it's fact, but it's almost certainly wrong. It would have been free no matter what, and it's well proven today that having legal outlets makes no real difference. Free is free. The exactly same thing would have happened no matter what.

- I'm curious what the industry was valued at before the 80s, and how 5.5B maps to that with inflation. I have a feeling that everything since then has been an inflation of perceived worth via major labels controlling pricing and the sales channel.

No the downturn is in term sof units sold, not money. So it is not affected by inflation.

[Dean Roddey]

Originally Posted by olivia_nb

The music industry as a whole feels entitled to our money and that's why it's been such a bitter pill to swallow, the non-artists are getting squeezed out of the equation and they by and far dominated the industry in terms of income and pure body count.

That statement right there is what's completely wrong with so many people. If you WANT TO OWN THEIR PRODUCT, they ARE ENTITLED TO YOUR MONEY. That's FUDAMENTAL to our society, to capitalism, to morality. If you don't want them to have your money, then don't consume their product. If you consume their product and don't play them, then you are wrong, you are immoral, not them.

This seeming belief that if some company doesn't sell their product in a way you want that somehow it's just their problem if people then steal it is just economically retarded and a side effect of the massive rationalization of theft that exists out there. You DON'T HAVE THAT RIGHT, period. There is NO excuse for stealing anyone's product because it's not at the price you think it should be or provided in the way you want. There never has been such a right.


And the belief that those 'non-music' people were just leaches is just flat out wrong. The ONLY time that artists have really made any significant money is under the label system. Without some organization behind arists, they are forever just lost in the noise, because actuall SELLING the music you make takes money and marketing.

[Dean Roddey]

Originally Posted by olivia_nb

my point here was James Cameron's answer. It'll be a while before you stop going to the theater to experience something like that.

But that movie is far and away the exception. Most movies make no profit at the theater or come out under water. They make most of their profit later in DVD sales (and now Blu-Ray.) So they are no better off than music is once it becomes viable to easily move files that size around and share them.

[Jay-]

I paid ZERO bucks for all modern music out today.

Simply nothing that I like, I thought Chickenfoot was great but I had already quit buying, downloading, pirating, borrowing, ANYTHING.

I have simple just forgotten about the industry.

They really just push the shit out there so any good music its trampled in waves of POO!

Do I look 13 years old?
Go your self record industry, its a huge festering mountain of pop culture.

Kind of reminds me when the movie industry went wild for Disney flicks and it was ALL kids movies and they were suffering bad and I quit absolutely QUIT paying $22 for two at the cinema. I got a big screen and netflicks.

And that was that.

[Revmen]

To me the big issue is not if it's immoral to break the copyright laws or that someone can't make a living from what they do. It's not a human right to make money.

What I find interresting is that the music industry had a product they could control and due to new technology they can't anymore. So now they have to control the buyer instead of the product and that's where it gets scary. The suggestions for new laws has just been so undemocratic and orvellian it makes the moral/immoral part of downloading copyrighted material secondary. And the fact that the entertainment industry in US has so much money and power that they can buy a court victory makes me wonder how far we are willing to go to defend an industy's right to make money.

[bilbobaggins]

Originally Posted by Sounds Great

Music's lost decade: Sales cut in half

NEW YORK (CNNMoney.com) -- If you watched the Grammy Awards Sunday night, it would appear all is well in the recording industry. But at the end of last year, the music business was worth half of what it was ten years ago and the decline doesn't look like it will be slowing anytime soon.

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 online retailers
more single downloads
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 the music industry is effectively halved.
What is missing from this picture?

[Dean Roddey]

Originally Posted by Revmen

To me the big issue is not if it's immoral to break the copyright laws or that someone can't make a living from what they do. It's not a human right to make money.

Huh? It's absolutely a right not to have your product taken without payment. It's not a right that anyone will actually want to consume what you make, but that's not remotely the issue here. HUGE numbers of people want to consume the product. The issue is that people are stealing it. That is a right that you and anyone else has under copyright law to prevent, but it's not being enforced.

What I find interresting is that the music industry had a product they could control and due to new technology they can't anymore. So now they have to control the buyer instead of the product and that's where it gets scary. The suggestions for new laws has just been so undemocratic and orvellian it makes the moral/immoral part of downloading copyrighted material secondary. And the fact that the entertainment industry in US has so much money and power that they can buy a court victory makes me wonder how far we are willing to go to defend an industy's right to make money.

Your logic is what is Orwellian, as in Animal Farm type logic. What exactly new laws, that have actually been remotely seriously considered, do you consider so bad that it's worse than destroying complete industries just so people can get something quite inexpensive for free.

[GearBit]

Originally Posted by olivia_nb

Imagine what would happen to Ford and GM sales if they stopped innovating based on consumer's desires?

Yeah. Now imagine what would happen if people were able to clone copies of their cars for their friends.
Something tells me car sales would decrease too.

[Revmen]

Originally Posted by Dean Roddey

Huh? It's absolutely a right not to have your product taken without payment. It's not a right that anyone will actually want to consume what you make, but that's not remotely the issue here. HUGE numbers of people want to consume the product. The issue is that people are stealing it. That is a right that you and anyone else has under copyright law to prevent, but it's not being enforced.

I agree with you but the problem is that their product is like vapor and to controll it you have to be very controlling. It's like if you want to have 0 murders i a country you have to do more damage than the murders would have caused.

Originally Posted by Dean Roddey

Your logic is what is Orwellian, as in Animal Farm type logic. What exactly new laws, that have actually been remotely seriously considered, do you consider so bad that it's worse than destroying complete industries just so people can get something quite inexpensive for free.

In France they are talking about installing monitoring software on all computers so you can't share copyrighted material and tree strikes law. In Sweden the copyright owner can do private policing.

I don't like analogies but this one is funny imo. Let's say that I'm a comedian and you tell a joke that you heard me tell at a show you went to. I could argue that I'm losing money when you tell my jokes. And if your friend finds my jokes funny then he actually wants to consume my jokes and I should have the right to get payed. So I want to bug every person in the world so I'm shure of that no one tells my jokes without me getting payed.

[redvelvetstudios]

[edit] un-pirated/hijacked thread

[Dean Roddey]

Originally Posted by olivia_nb

I could be mistaken here, but I thought copyright was only to protect intellectual property and not physical property, so it protects us from someone else claiming our creations or profiting from reproducing our creations. It really doesn't say a lot about theft of a CD from a store or the theft of an mp3 from a server? (honestly asking here)

Stealing CDs is theft. Stealing MP3s from a server is copyright violation. 'Copy Right' is the right to control copies being made of your intellectual property. It is what it says. When someone makes a copy of your IP, that's copyright violation. You can allow it in specific circumstances. I.e. the RIAA doesn't say you should't be able to rip your own CDs to your own computer. But when you give a copy to another person and keep a copy for yourself, that's copyright violation.

I honestly don't see downloading as a good thing or a bad thing, I see it as a reality that has taken hold (one that could have been mitigated with some foresight, but oh well).

I completely fail to see what foresight could have mitigated it. No matter what happened, it would have become freely shareable, the technology would have been there to do that. We'd have ended up in this same situation no matter what.

[NoVi]

The graph is pretty bad by the way:

• it would be interesting to see data in a longer series from before 1999, something tells me that 1999 was an all time high for the record industry
• the 6 billion from 2009 is presented as if sales have become close to 0
• if you study the graph well you actually see that the sales are holding up pretty well until 2005-2006 (they didn't bother to propely show us the years on the x-axis), after that there is a sharp decline (economic crisis, anyone?)

[Dean Roddey]

Originally Posted by NoVi

The graph is pretty bad by the way:

• it would be interesting to see data in a longer series from before 1999, something tells me that 1999 was an all time high for the record industry
• the 6 billion from 2009 is presented as if sales have become close to 0
• if you study the graph well you actually see that the sales are holding up pretty well until 2005-2006 (they didn't bother to propely show us the years on the x-axis), after that there is a sharp decline (economic crisis, anyone?)

Here is a graph by unit sales, not by dollars, which covers 1975 to 2005. Actually it's probably worse by dollars because the sales price of CDs in 1985 dollars is in and of itself 2.5 times lower now because the price hasn't gone up while inflation has, and the actual prices have come down a lot.

Sales did not continue to do well. If you look, it was going up rapidly and had been for a long time. Just going flat would have been a big drop. To have turned around suddenly was a massive drop.

Swivel | U.S. Music Sales, 1975-2005: Vinyl, cassettes, and CDs

Read my post from earlier in this thread. I'm not going to repeat it all again here.