End of the Music Business As We Know It, Part XVI
One of the themes of this blog is how technology is changing our society. Unbeknownst to most people, a life-and-death struggle for the future of an industry is occurring in the area of the audio-visual arts businesses. The ability to digitize their products changed forever the face of the huge book, music, television and movie industries. The conglomerates who largely run those industries are having some very difficult times coming to grips with the changed realities of their circumstances.
Last week came two new benchmarks in their changing worlds. One, Country Star and former American Idol winner, Carrie Underwood, became the first artist to debut a song in the Top 10 of the Billboard Hot 100 with no physical CD sales. Her cover of the Pretenders' "I'll Stand By You," is an Apple iTunes exclusive download and hit the chart at number 6 last week.
Secondly, Warner Music, one of the "Big Four" studios, announced losses of $27M last quarter. The company announced a restructuring plan that includes the layoffs of over 400 employees, mostly in the... music sales and distribution area.
All of this comes as retail brick-and-mortar CD sales are down up to 25% in the industry, (Source: Sound Opinions) but while single-song music sales overall (that includes retail downloads, such as iTunes) are UP. But, there is no way the single-song 99¢ sale price of "I'll Stand By You," can ever make up for potential loss of the the $17.00 or more for a physical copy of Underwood's CD, "Before He Cheats."
None of this is going to bottom out for the music industry until they learn that they are no longer in the business of:
They need to come to grips with the fact that they are in the business of distributing bits (not atoms) with (fortunately) very low production costs and (unfortunately) very low margins -- which can be readily copied by people who don't want to actually pay for their product.
Sadly, this leaves very little room for middlemen in the music business, which is being taken back over by... musicians.
Last summer's End of the Music Business As We Know It benchmarks were the debut of the Gnarls Barkley song, "Crazy" as the number one song on the U.K. Charts without a CD released and (now) star Lilly Allen's songs charting without a recording contract.
What this means is that for the first time in a long time, music fans and consumers are making markets in music based on perceived merit as opposed to the dictates of studio execs. Exciting times for music lovers and music makers. Exciting times too for music executives, but only in the Chinese sense.
Last week came two new benchmarks in their changing worlds. One, Country Star and former American Idol winner, Carrie Underwood, became the first artist to debut a song in the Top 10 of the Billboard Hot 100 with no physical CD sales. Her cover of the Pretenders' "I'll Stand By You," is an Apple iTunes exclusive download and hit the chart at number 6 last week.
Secondly, Warner Music, one of the "Big Four" studios, announced losses of $27M last quarter. The company announced a restructuring plan that includes the layoffs of over 400 employees, mostly in the... music sales and distribution area.
All of this comes as retail brick-and-mortar CD sales are down up to 25% in the industry, (Source: Sound Opinions) but while single-song music sales overall (that includes retail downloads, such as iTunes) are UP. But, there is no way the single-song 99¢ sale price of "I'll Stand By You," can ever make up for potential loss of the the $17.00 or more for a physical copy of Underwood's CD, "Before He Cheats."
None of this is going to bottom out for the music industry until they learn that they are no longer in the business of:
- Physically making things that are cheap to manufacture but which produce large margins at retail, e.g. compact disk recordings.
- Controlling the agenda with regards to being able to definitvely pick hits (through control and manipulation of Radio-the traditional music taste-making medium) and thus justify their multi-million dollar investments in such artists as Ms. Underwood and her recordings.
They need to come to grips with the fact that they are in the business of distributing bits (not atoms) with (fortunately) very low production costs and (unfortunately) very low margins -- which can be readily copied by people who don't want to actually pay for their product.
Sadly, this leaves very little room for middlemen in the music business, which is being taken back over by... musicians.
Last summer's End of the Music Business As We Know It benchmarks were the debut of the Gnarls Barkley song, "Crazy" as the number one song on the U.K. Charts without a CD released and (now) star Lilly Allen's songs charting without a recording contract.
What this means is that for the first time in a long time, music fans and consumers are making markets in music based on perceived merit as opposed to the dictates of studio execs. Exciting times for music lovers and music makers. Exciting times too for music executives, but only in the Chinese sense.
Labels: Economics, Music, Technology
posted by -cman- at 5/28/2007 02:19:00 AM
3 Comments:
interesting article. as a chinese though, i must ask, what does 'in the chinese sense' mean????
None of this good news has brought any releif to internet radio yet.
Go to saveinternetradio.org and take action please.
In the context of "Exciting times too for music executives, but only in the Chinese sense," I'm referring to the famous (allegedly) Chinese curse, "May you live in interesting (or exciting) times." That's all.
The problem of Internet radio and the SoundExchange royalty protection racket is bad news, in the short term. But pissing off your customers is not a business plan with a long shelf-life.
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