How To Kill The Music Industry
Written by Jens Roland on February 27, 2009

During The Pirate Bay trial, the music industry placed the blame for the decline in their revenues squarely on the shoulders of file-sharers. Their logic is clearly flawed, but it could sway the verdict if no alternative explanation is presented. So, if piracy isn’t to blame, then what is *actually* killing the music industry?

According to Per Sundin, CEO of Universal Music, the decline in music revenues in the past 8 years can be fully attributed to (read: blamed on) illegal file sharing. If this were actually true, many of us might even respect his decision to go after pirates as fiercely as the music industry is doing right now. However, the past 8 years have seen a lot more changes in the landscape of home entertainment than Per Sundin would like to admit, and some of those changes have had a massive impact on music profitability — much more so than any amount of piracy.

Let us refresh our memories and take a look at what actually happened during and just before the past 8 years:

1. First, the explosive rise of computer and console gaming. This competitive ‘third element’ has appeared in the entertainment landscape, beaten both music and movies to the curb and taken a huge cut out of the music industry’s revenues. Consumers don’t have infinitely-deep pockets, and billions of ‘recreation dollars’ that used to go almost exclusively to music, are now going into gaming.

2. International trade agreements have allowed consumers to buy their music across borders, rather than accepting local prices on music based on the ‘relative wealth’ of nations, rather than the actual value of the product.

3. New forms of distributable media, most notably MP3s but also CDs, have become mainstream. These new media don’t degrade over time and rarely break at all, making music rebuys a thing of the past, and allowing the second-hand market for music to thrive and expand - both of which take a cut out of the music industry’s former revenues.

4. Radical technological innovation has taken place in the field of music creation, processing, mixing, and mastering. Recording hardware, CD burners, music software, and media encoders have evolved to the point where most artists can actually afford decent-quality equipment to do their own recording and producing. Furthermore, this has fostered literally thousands of smaller, specialized studios that are challenging the ‘Big 4′ with lower prices, better terms for artists, genre-specific expertise, etc. Successful artists can now leave the big labels and start their own recording outfits on relatively modest budgets. Naturally, super stars like The Beatles or Frank Sinatra have always had this option, but the recent technological advances have lowered the bar drastically. This development is depriving the ‘Big 4′ of many of their former cash cows, who now use the major labels for their advertising and distribution infrastructure alone.

5. The World Wide Web has become an omnipresent force in the world, allowing cheap, end-to-end distribution of digital music, increasingly cutting out the corporate music distributors, who deal in trucks and CD covers, rather than bytes and bandwidth. With iTunes leading the way (very successfully ‘competing with free’, I might add), billions of songs are now purchased digitally rather than physically, no longer necessitating the big labels’ distribution networks.

6. The total number of radio stations, music television networks and other ’streaming’ sources of music has grown exponentially, giving music fans a huge selection of free (and legal) music options. Satellite radio, DAB, and internet radio broadcasts have made it trivial for consumers to simply tune into a channel broadcasting the exact sub-genre of music that they feel like listening to (they can even have a stream created for them dynamically, e.g. on Pandora), making the *purchase* of music entirely optional for the casual listener.

7. A massive selection of entertainment alternatives (home computing, console gaming, mobile devices, etc.) have appeared in the home, effectively marginalizing music as an activity. 15-20 years ago, youths would regularly visit each other just to listen to music together; today, that is virtually unthinkable without some form of activity involved, such as playing Guitar Hero or Rock Band, or dancing at a concert.

8. And finally, the music industry itself has embraced the opportunities of digital media, at last letting consumers buy *single* tracks at a time rather than forcing entire albums full of ‘fillers’ on them. Looking at the RIAA’s own sales figures for the past 10 years, there is a *direct* correlation between the break-off in album sales and the introduction and increase in single track digital sales. Looking at the actual numbers, it is abundantly clear that the vast majority of consumers never wanted to buy full albums in the first place, but were merely forced to by the lack of affordable single-track media. Now that the digital revolution has arrived, countless millions of 16-track album sales are being turned into 1- or 2-track sales, *decimating* the former revenues on music. THIS is the real reason why the music industry is hurting.

In other words: The “it’s common sense” argument that the music industry is peddling in their attempt to tie the declining revenues to piracy, simply doesn’t hold. It is not as clear-cut as the industry believes; the true reason for the decline is something they are still unwilling to face, but will have to face sooner or later:

The fact is that the music industry’s revenues have been artificially inflated for decades because of limited consumer options. The last 15 years of innovation have lifted those limitations, effectively leaving the music industry with an obsolete, defective business model of monopolized production technology, forced album bundling, and almost nonexistent competition in the realm of home entertainment. What is happening now - the decline of music profits and the piracy witch hunt by the music industry - is merely the panicked struggle of a dying business model, a complacent industry’s refusal to accept its diminishing role in a digital world. The pirates are not the reason, and the decline is the not the disease. It is the cure.

This is a guest post by Jens Roland. Jens is a computer scientist by training, but a technology forecaster by trade. He has worked at international think tanks as a consultant and researcher in emerging technologies and has written more than 300 articles and a book on the subject.

———————————————————————-


Interesting article. Comments?

BlaqueKnight said:

Sort of a side note...no doubt the video game industry has moved to the front, but I saw recently that the movie industry has had a record year so far in 2009. It's only March, but movie ticket sales are setting a record pace in a tough economy.



this one I'm iffy on. We've always been able to buy singles. But maybe where the industry has been hurt is making ALL songs available as singles, not just the actual singles.
[Edited 3/4/09 14:06pm]

Good points all but there seems 2 be something very important missing.....the lack of QUALITY artist 2 even listen 2 these days from the big 4. Most of the music I listen 2, is from independent artist that either don't have record deals or are underground on some level.

The real talent does not seem 2 sell these days. Just my 2 cents.
These cookie cutter artist and producers have KILLED the music along with the points made above.
[Edited 3/4/09 14:23pm]

BlaqueKnight said:

true, since it's a gamble that you will create a package that will appeal to people. A talented artist might not blow up like Hannah Montana, but it's probably a safer bet in the long run.

It kind of makes sense that talented artists should be the industry's bread & butter

Having crappy music played repeatedly coughlilWayneCoughBeyawnceCough

Doesnt help!

it's also the way they *market* music. outside of a few acts (Beyonce, Rhianna, etc.), they don't cultivate acts to be strong sellers over time. and most of the work done cultivating those that have had success over time have put in the time and money themselves, rather than through a push by their label.

errant said:

Yes, it takes a while to become a great artist, much longer than it takes to become a pop confection.

Ya get a gun, load it up and shoot it....seen?

or ya take a knife and stab it to death.....seen?

That....is how ya kill da MUZE-SICK IN-DUST-TREE. Seen.

I don't expect the music industry will ever stop making a shitty product. So instead of buying what's new, I'm reaching back to discover music I've never heard before.

BlaqueKnight, what do you think can save it?

Vendetta1 said:

It's what I've been doing for years now, rather than bitching about how awful particular artists are. Best way not to draw attention to them is to ignore them altogether.

RipHer2Shreds said:

I'm entering a jazz phase. I'll be busy for years.

Graycap23 said:

Agreed! That's the #1 killer of the music industry, right there!

Vendetta1 said:

Amen! If I sorted my iPod to play songs by the year they were made and continuously listened, it'd be a month before I heard anything produced after 1995!

Yes it has to do with a lot of factors including the quality of new music, but the music industry is dead right to believe file sharing is sopping up some of their profits. P2P is the least of their problems.
Think of a song, any song that pops into your head and head on over to popular sites like Youtube or Imeem or Dailymotion and Prince be dammed if you wont find it.
While I'm working at my desk I find it easier to just go to one of these sites and play it, than going to Amazon, or getting out my credit card and waiting a day or so to listen.
Even sites like the itunes are a two edge sword, legal pay downloading has saved the industry by injecting it with much needed cash, but also hurt it because instead of making customers buy a complete album to listen to one song by the artist for $14 bucks, customers pick and choose individual cuts for 99 cents.
Anyone who questions the effects of file sharing is living in an alternate universe.
[Edited 3/4/09 17:42pm]

Graycap23 said:

Exactly. I found some very good artists on myspace believe it or not, who are not signed to labels, or either a friend/family member will recommend independent artists' music to me, who are not signed to a label. I play what I want to hear on my mp3 or will put a cd in my computer at home/work and listen to the music from there.

Sad that the music industry has "manufactured" acts, they seem to keep pushing. Those so-called artists including rappers and many hip-hop artists, if you ask me, killed radio and the music industry as many of us knew it. It became about the "bling-bling", the "cash/money" and "degrading women." and then some of them had the nerve and audacity to sample music from the 70s/80s, then some rappers also started making samples for "club" versions of current artists songs, not too soon after it came out. I do remember quite a few artists from back in the day, going after rappers/hip-hop artists for sampling their material.

Talk about no creativity and originality. People were desperate for real music and finally, in the late 90s, to early 2000s, many radio stations were changing staff members and bringing back the classics from the 70s/80s and making them part of their daily playlist and incorporating the classics from those eras, with new songs from new r&b artists, like Jill Scott, Eryka Badu, which meant you could hear a Chaka Khan classic, Luther Vandross, and a current Badu song all on the same day.

In the mid 80s through the 90s there was definitely a lack of "musicianship" and "originality", from new artists and very few new artists knew how to play an instrument. In my opinion, it wasn't until Prince did the Musicology tour, that all of a sudden, you saw some r&b acts starting to pick up instruments and include actual musicians in their shows.
[Edited 3/4/09 17:58pm]

Vendetta1 said:

You'll never need to go back to your Ashlee Simpson albums.

RipHer2Shreds said:

Who?

Sanctimonious arguments about the "Quality" of the music is rubbish.

Today it is much easier than in any time in history to find cool indie bands of whatever flavor you want.

To say that the majors should cater to you in a silver platter whatever you think is "quality music" is ridiculous.

lets get real, popular acts of the day like Lil Wayne Beyonce, Rhianna are the artist making the labels money, not a once in a lifetime artist like "insert you favorite artist here"
A "popular" artist like Mariah, has made more money for a lable than a "serious" artist such as "Lou Reed" or "Springsteen"

Like in any business, money talks bullshit walks.

If i can download the music i like easier and "cheaper" online, why would anybody buy. That is the problem with the music industry.
[Edited 3/4/09 18:00pm]

RipHer2Shreds said:

Now youse are gettin' it. (in my best Joe Pesci).

If you haven't heard it before, it's NEW music regardless of its chronology.


tA

Tribal Disorder

http://www.soundclick.com...dID=182431

Ugot2shakesumthin said:

I don't think it sanctimonious to think the quality of today's music is not so good. It's an opinion and a matter of taste. I do not expect the music industry to cater to me. I seek out what i consider to be quality music. i think it's unfortunate that the music execs miss a whole market by not catering to us though.

theAudience said:

Vendetta1 said:

My point is that the quality music is there, just look for it. Don't expect in this day and age to get "Quality" cuisine from McDonalds.
The music business is just that, a business. Music for the masses
You can hold your nose at the music of Lil Wayne Beyonce Rhianna, but they are the ones generating revenue.
People dont line up at McDonalds for a fine chower in a vinegrette, they want a Big Mac fries and a coke.
Most of the music i love, most of the music i have ever bought since i was a kid never entered the bilboard top 20 or made daily rotation on the local pop station. You have always had to dig for gems.
[Edited 3/4/09 19:33pm]

bboy87 said:

I don't want to see it saved. Call me a musical anarchist. I want to see it destroyed. Its far too corrupt at this point to be saved.
The internet is its instrument of destruction.

Ugot2shakesumthin said:

Most music that the radio stations push these days are 3:20 long 2 bar loops with no changes. Labels dissolved their A&R departments. Do you understand that their primary function at one point was to develop acts into better artists? Now they simply "market" the shit out of an artist because the current generation of music listeners are more interested in "hype". Because of the internet there is far more music available but the industry itself is doing very little to encourage consumers to look for it. They want to sell the public exactly what they push. If it were up to them, I'm sure they would rather wish the internet away. For the past decade, they have pushed harder and harder for control over what people are exposed to. At this point, the industry in its current form is useless. It needs to crumble. It IS crumbling.

BlaqueKnight said:

C'mon this same basic argument was used when the Beatles and Elvis came along, every generation has the music they like.

If kids like the Jonas Bros, they like the Jonas Bros, what you gonna do.
[Edited 3/4/09 18:39pm]

BlaqueKnight said:

You and vainandy.

Heres the thing and Chuck D called it about a 4 years ago. The Industry is going to survive, because its morphing into something else, I mean artists for the most part, the ones that have been around, are still getting paid, its just not charting and bullshit like that, but lets be real all that crap went out the window the day SOUNDSCAN took over. That was the drug that everyone got high on, everyone talking these bullshit week one numbers and day one numbers, as if this crap mattered. The reason you will hear newer artists complain or talk on things like the "industry" not being a place to make money, its because the way they are signed, as PRINCE would say do the math.....

Take a new artist, just signed, a HIT right out the box (just the way it has to be now) say they sell 500,000 overall of their cd (and thats pushing it), on average a NEW artist is getting about .50-.75 cents a cd, but lets be generous and give them a dollar, OK they have made 500,000. Next they have a single, one of them .99 cent jams on iTunes, lets say they have a HUGE hit, sells 2million, on average, a new artist gets about a nickel (and thats kind) per download, so they have another 100,000 made. Ok now youre thinking, well shit they just made 600,000. Well not so fast, you know those music videos that peeps make, well thats coming out of their pockets, be it their advance, or their profit, so baically on average a music video can cost 100,000-500,000 and some we all know in the millions, depending on what has to be rented, so basically that new artist just lost more than half their profit, so lets say they have about 200,000 left, well, they also pay for alot of their travel, security, and whatever people they have around them to make them look good or whatever, so you now have made just about nothing on your Gold Album and double platnum single that broke download records.

So the Industry is getting paid still, just in different ways, all different forms of MEDIA are the industry, which will live on, WHAT WILL DIE is the record business, thats the thing that is just about gone now.

lastdecember said:

It seems like, nothing's gonna change