|
|
|
|
Music Industry Attempts Suicide By Richard Weddle and Eric Mankin I wrote this week’s update with Richard Weddle, President of Weddle Consulting. He can be reached at riwed@yahoo.com. As you’ll see in the update, he’s passionate about the problems of the music industry, because he sees so many straightforward solutions that the industry is not pursuing. …………….. Nearly a century ago, the music industry argued that its future was threatened by a new method of creating and distributing multiple copies of a performed song. The new technology was the player piano roll.
In 1908, the Supreme Court ruled in the infringement case of White-Smith Music Publishing Co. (publishers of sheet music) v. Apollo Co. (maker of piano scrolls). At issue was whether the scrolls -- long rolls of paper with holes that activated the keys of a player piano to duplicate the performance of a song -- constituted a copy of the music itself.
The Supreme Court ruled that the scrolls were not copies and did not infringe on sheet music.
With more player pianos, sheet music sales rose. More exposure to music led to more sheet music sales in the early 1900s.
Throughout the history of the music business, the availability of free alternatives for music, from player pianos to radios to jukeboxes to music videos, has resulted in increasing awareness and increasing sales.
This experience – that more exposure leads to more sales – has been demonstrated in movies as well, where the VCR and now the DVD have contributed to a robust movie industry. Hal Varian, Dean of Haas’ School of Information Management at the University of California, wrote about it in his book Information Rules (1999).
The MP3 story is no different. Downloaded music is not the problem with the music business. Recent research indicates that sales of CDs might actually be lower if there were no downloaded music.
Apple’s recent experience with its downloadable service shows that a simple and straightforward pay and sample service can be very successful. Information leaked from a Steve Jobs presentation during mid-May shows that Apple’s iTunes Music store is selling about 500,000 songs a week.
The piracy obsession is blinding the music industry to much more serious problems. These include:
Ø Competition from more engaging entertainment technology like DVDs and Videogames,
Ø Lack of exposure for new music -- 75% of fans of a particular band do not know they have a new release; and
Ø A 19th century mindset that seeks to protect technology and fix prices. The music industry’s actions show an unwillingness to learn the obvious lessons from music industry technology history. In an environment as dynamic as this one, fighting change is akin to attempting suicide.
In the last several years, the overall value of entertainment spending has risen, although music is taking a smaller share.
DVD and videogame sales broke records. U.S. videogame sales grew 10% during 2002 - for a total of $10.3 billion in hardware, software and accessories and DVD sales rose 61% to $8.7 billion or about $3.3 billion more than in 2001.
The value of United States music shipments in 2002 dropped by about $1.02 billion to $12.6 billion, according to the Recording Industry Association of America trade group. Globally, music sales dropped 7% in 2002, according to the International Federation of the Phonographic Industry.
Demand for music isn’t declining. Concert ticket sales are soaring. Videogames now come with soundtracks by established bands, as do movies on DVDs.
Over the last 12 months, Elton John and Billy Joel have been playing concerts together earning about $65 million in ticket sales. Billy Joel has not written a new pop-song in a decade. Their album sales rise with every show.
U2's 50-date tour of North America was the No. 1 grossing concert tour with ticket sales of $69 million.
Could every John/Joel concert be sold as a pay-per-view event? Yes. Could every concert be burned as a DVD and sold? Yes. Could a live album be released for each concert night? Yes. Could a camera crew be documenting the entire back stage goings on and even musicians tuning up? Yes. Could the arena rent digital cameras to the audience members and turn them into additional sources for the whole show? Yes. Are their customers for all these offerings? Yes - fan is short for fanatic: an ardent devotee or enthusiast.
Are music firms doing this? No. Do music firms use direct response to get their acts on remnant cable to create promotions for just a few hundred dollars? No.
The Grateful Dead gave away music. At a concert, you could walk up to the stage and jack-into the sound engineer's systems and record the show and sell that tape later. The Dead were giving away the show. One reason that they may have given away so much music is they needed the promotional value of a lot of music out in the market. They had only one top 10 hit in their careers. Also, none of their 10 albums went any higher than number 24 on the charts.
But the Dead routinely racked up $50 million a year in ticket sales and $70 million in merchandise in their last years. They still earn $5 million a year and Jerry Garcia has been dead for eight years.
Broadcast networks have been attacked by new competitive threats consistently for several decades, from Cable to VCRs to TiVo. They’ve responded by modifying their offerings, creating shows, for example, where sponsorship is embedded in the programming rather than appearing as a commercial.
Demand for music isn’t declining. What’s declining is demand for music embodied in the one form that the industry is comfortable producing – the CD.
The music industry has been slow to innovate. Music demand is still there, but the industry provides neither the right products to meet the demand nor the right promotions to generate more business. By focusing on a nonexistent piracy threat, they continue to lose revenues and waste resources.
================================= For more information ---
That Lays the Golden Egg http://www.bricklin.com/recordsales.htm
4. The confidential details on demand for Apple’s iTunes service are no longer on the internet. They were leaked by accident by folks at UK firm CD Baby. Drop one of us a note if you want more information. |
|
All content on this site licensed under a Creative Commons License.
|
