Friday, January 06, 2006

Not-So-Instant Karma Gonna Get You

Front page story on Tennessean yesterday: CD sales are down. Album sales across the board are down 7.2%. Legal digital downloads are up. Does this surprise anyone other than the record companies? From the story:

One downside to the digital bonanza, though, is that the sale of single tracks generally brings only a few pennies compared with CDs that sell for $15 to $20.

With album sales down and digital sales way up, what is Music Row and the rest of the music industry to make of this news?

"Bottom line: It was a down year," said Geoff Mayfield, director of charts and senior analyst for Billboard magazine.

"Spinning it as anything but that would be like gift wrapping the garbage," he said.

While sales of digital tracks — downloaded from pay sites — shot up 150% to 352.7 million units in 2005, and digital album sales went up 194% to 16.2 million, Mayfield pointed out that compared with the rest of the industry's sales, digital remains a drop in the bucket in terms of revenue for the overall music market.

"Not to diminish digital sales, but what tends to get forgotten is that CDs still comprise the vast majority of the money that's being made for record companies," he said.

The mainstream music industy needs to change or all those middle management guys who don't know a Telecaster from a television who spend happy hour at Virago are going to wind up out of work. If CD sales are making the vast majority of money for your record company, you better be addressing the fact that CDs are going away. And when there are no more Napsters or Kazaas to sue, you are still going to have to make your Lexus payments.

The main reason record companies exist is because they've had the deep pockets necessary to record artists in state-of-the art studios, then press and distribute the records. Now, I know about ten guys I could call with home studios where we could record for very little money, and the end result would sound just as good on an iPod as that million-dollar JLo record. And it can be uploaded to a website and available worldwide in seconds.

The big record companies need to make a major change in their business practices to survive. They've had their day. They killed us for years with CD prices. They were charged with illegally colluding with each other to keep prices high. The FTC estimates that U.S. consumers may have paid as much as $480 million more than they should have for CDs and other music because of these policies over the period of 1997 - 2000. That's a lot of Lexuses. The days of the boys on 16th Avenue putting a hat on a hack and shoving him down the throats of Country Radio stations, and illegally pricing his records at $20 buck at Wal Marts are over. Karma time, folks.

Now the record companies are whining that the de facto $.99 per song price should be changed, that new songs should cost more and older songs should cost less. Listen guys, just be glad you're getting anything. As more musicians record and distrubute their own music, you are going to be less relevant. The major record companies have had a stranglehold on our listening options for decades. With the internet and satellite radio, we are finally able to easily find and support some of the great music that comes out of this town (not to mention the rest of the world) that isn't about sexy tractors.


At 8:56 PM , Blogger Wintermute said...

Bravo, dude. The majors still have the resources (bread) to control the concentrated taste-making apparatus that works on the kids, but you do point to the new alternatives.


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