Thursday, January 24, 2008

The Demise of Music Ownership

It's chicken little time in the music industry. The revenue is falling, the revenue is falling!

CD music sales continue to plummet faster than digital music revenue is increasing, so overall revenue is expected to shrink by 10 percent in 2007. Advertising supported "free services" such as the newly upgraded Last.fm are part of a shift that is forcing the music industry to revisit its marketing strategy.

The good old days of platinum selling albums are over. Back in my day people boasted of their racks of vinyl and fawned over the album art like treasures from the Louvre.

No more. First smaller CDs and now digital downloads has killed the physical connection with an "album." Being able to buy tracks one at a time has slaughtered the cash cow that enabled the music industry to sell entire albums based on 3 or 4 quality tunes.

Many people now prefer access to entire music libraries over racks of CDs in the family room. The music industry must view this as an opportunity instead of a threat. The music industry should embrace advertising and develop new models that harvest as much possible revenue through broad licensing deals. It has worked for the TV industry for decades. Instead of just picking on online services, the music industry needs to get a bigger slice of the revenue from analog (and now digital radio). Last.fm and the other streaming services have a much better shot than the SpiralFrogs of the world in being a part of the music mix.

So goodbye to album collections, the iPod generation has taken over, and there is no turning back. Now where is my Gary Numan album?

By John Gartner at 11:13 AM | Comments (3)

(3) Thoughts on The Demise of Music Ownership

I appreciate this blog. It has highly relevant content that keeps me up with current marketing trends. Thanks!

Comments by Chuck : Thursday, January 24, 2008 at 03:10 PM

Funding by advertising is as anti-consumer as any other form of cross-subsidy. The growth, apparently without bound, in the number of advertisements and in the number of people expecting their lives to be subsidised by it merely leaves the consumer irritated by all the adverts and impoverished he has to pay for the higher prices of the advertised goods in the shops.

One suspects that the end-game for music is a return to patronage. An end-game that has already been reached by The Academy Of Ancient Music, for example.

Comments by Ian Kemmish : Friday, January 25, 2008 at 09:01 AM

"overall revenue is expected to shrink by 10 percent in 2007"
- I believe it did shrink by 10%.

I think a major issue that you miss is not so much the ability to sell an album based on a few quality tunes (selling singles has been a substantial market for some time now). I believe a bigger issue lies withing the concept of an "album" (song sequencing, narrative development, changing instrumentation, etc.) and with the business model of a record label.

Just like with films, most albums bomb, and record labels use the few hits to make up for the losses on the other 90% of artists. With lowering entry costs (digitalization of the medium)musicians don't need a label to sell their music. CDBaby, SnowCap- these are the new music "labels".

Also consider how good it is for the industry. An artist can no longer put a half decent song on album because they have 3 other great songs. There is a lot more pressure to create the best track possible over and over, and I think that will really drive creativity.

Love the discussion this post has created.

Cheers!

Comments by Jake : Friday, January 25, 2008 at 12:30 PM

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