Thursday, January 18, 2007

Music sales fall again, industry blames file sharers, again

Maybe it's just me, but I coulda sworn they shut down Napster in its original form as a P2P file sharing site around 2002. I ask because it seems that whenever the music industry has had disappointing music sales since then, they continue to blame it on those damned illegal music downloads.

The International Federation of the Phonographic Industry (IFPI) has released its 2007 Digital Music Report, where it said digital music sales almost doubled in 2006, and were expected to account for a quarter of all sales worldwide by 2010.

But it also reported that overall music sales fell by 4 percent in the first half of 2006. Reason? The report says it's due to illegal music downloads, and 'competition for consumer spending'.

As always with the music industry, this is a control issue. In an era where customers are more empowered than ever to communicate online, thanks to social media, the industry continues to fight giving them the ability to share and promote music. Sales of digital music through iTunes continues to surge, but songs on iTunes still come with DRM, which is designed to 'stop piracy', but really stops users from listening to, and sharing their music with others as they would like. And as we all know, word of mouth is one of the most powerful forms of promotion, and DRM puts a serious damper on the ability of music fans to promote their favorite music to others.

Likewise, artists themselves can't control how their own music is distributed unless they own their own music, which many artists do not. This is another reason why I like what Terry McBride is doing with Nettwerk with his artists such as Barenaked Ladies. Terry is attempting to move as many of his artists as possible to their own label, which gives the artist complete control over their music, and how it is distributed. Artists like the Barenaked Ladies can then let fans promote their music via peer to peer methods such as email and IMs, or via podcasts like Mind The Gap.

But until the music industry realizes that the average music fan isn't the enemy, and instead could be a marketing partner to help grow music sales, we'll continue to wonder how digital sales can boom, while overall sales are flat. This is another reason why I love following music marketing/distribution, because I believe that eventually, a light-bulb will go off somewhere and the industry will suddenly realize that LESS control over how music is distributed equals MORE sales. I think it's going to be pretty exciting to be a music fan when that day finally arrives.

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gianandrea said...

it's incredible how the most creative, or the supposed most creative, markets such as music and movie markets act as they were the landlord of the coalmines in the 18th century. i understand that an artist has the right to make money on his/her creation but for what i know the money to them comes from the live act while from the records comes most of the money for the labels. hmm, maybe this is the problem?

Anonymous said...

As a 47 year old baby boomer myself, I know that I am not consuming as much music as I did when I was "young and single with no family overhead to support." The big music executives, in their Beverly Hills mansions, might benefit from doing some demographic and lifestyles analysis.

Anonymous said...


Just another thought I had on file sharing... the technology around us has also made file sharing easier - think tapes, CDs, Windows live messenger where you can share a folder with a friend who accesses your computer remotely to get the files AND external hard-drives! I 'gave' my friend something like 30 albums the other day.

Surely this also has an impact on music sales.

Also the UK itunes is the most expensive in Europe - why would I get it my music on a British site when I get it from another European site?

Bob G said...

Excellent comment gianadrea - 18th century coalmines! And great points Mack - I listened to more music in 2006 AND purchased more than in a very long time. Never got into the napster thing - but I do enjoy sharing music form bands that welcome it. Imagine what I'd do if the record companies did something other than snivel?

Anonymous said...

I'm an old rocker, meaning most of my music experiences come from the '60s and '70s, when not only did I listen to music most of my waking hours but also traveled with a band.

The scenario you describe did not start with Napster. Long before digital downloads, we used tape to share music. My tape collection held hundreds of "free" albums (remember those round things). My album collection--about two records. Obviously, digital consumerizes the process, enlarging distribution, but the results are otherwise the same.

As for starting labels, more than a few bands from the classic rock era did, and guess what? Most of those labels became part of CBS, Warner and other large corporations, once the small labels became successful. It's part of the continuing cycle of deep pockets beat small ones everyting.

I don't think that starting small labels is the solution. In fact, if we are waiting for business suits to stop complaining, at the end of the day we likely will be disappointed. There will never be enough revenue to stuff those deep pockets full.

Mack Collier said...

Lewis I think that in the past many labels went the indie route because they had no choice, the big labels wouldn't sign them. Then they made it big on their label, and got the big-money contract. With Nettwerk artists such as Barenaked Ladies, they first went the big-label route, and are now starting their own label to reclaim control over their own music. I would not be a bit surprised to see Sarah McLachlan do the same thing once her current contract with Arista expires. It allows artists to literally distribute their music in any form they like.

Mack Collier said...

"it's incredible how the most creative, or the supposed most creative, markets such as music and movie markets act as they were the landlord of the coalmines in the 18th century."

Nice analogy ;)