A terrible thing is happening to the recorded music business as we know it. It is literally going away. For years now many of us have been predicting the demise of the record labels, falling CD sales, the erosion of radio as a promotional channel, lack of barriers to entry into music making – and all the rest. Well now it seems like the worst possible future is happening right before our eyes.
CD sales are falling off a cliff as we speak. Sales of CDs in the US were down over 20% in the first quarter of 2007 according to Soundscan, yes folks, down 20% – and we have 9 months left to go. The same report shows sales of digital downloads up 52%, but that is not nearly enough to offset the free-fall in CD sales. More telling is the fact that the increase in paid digital downloads is slowing from the unsustainable rates of the last couple of years (87% for the first quarter of 2006). While all this is happening, illegal downloading of songs and albums and the wholesale trading of files continues to skyrocket. It will soon be impossible to make a significant profit from the sales of recorded music.
The brain trust that represents the recorded music industry has successfully lobbied the Copyright Royalty Board in the US to effectively strangle Internet Radio, the last hope for the marketing machine that once was the record label combine. If these new regulations stand, not only will it be nearly impossible to make a profit selling CDS, it will be nearly impossible to promote new music or run a fledling online streaming service. See this excellent article from Salon on the subject.
Just last week, the mini-major label EMI agreed to release unprotected, DRM free music from it’s catalog via the Apple iTunes store. This is scheduled to happen soon, at a premium price of $1.29 vs $.99 for the chastity belt wrapped files. Do you see anything wrong with that pricing model? Charge more for the unprotected file when you can get them for free practically everywhere else? Who is in charge here?
As we have been saying for years, it is quickly coming to a time when being a musician means finding ways to make money that do not include the sales of recordings. This has never been more true in the last 50 years than today, and will become more true with the passing of each week as we move forward.