In the January issue of Rolling Stone there is a year end wrapup piece on the continuing woes of the ‘music business’.  Readers should note that in the same issue is a piece about how the concert business has suddenly rebounded.  Now even the venerable RS should know that the Music Business is not just the Record Business, and should be able to connect the dots, but…

"It was yet another unhappy New Year for the music industry: Despite
hits by Mariah Carey, 50 Cent and Green Day, 2005 saw album sales
drop 7.2 percent as labels continued to struggle with adapting to
the age of the iPod and the Internet. Overall, consumers bought 48
million fewer albums than in 2004, marking a disastrous twenty-one
percent slide from the industry’s peak in 2000, according to
Nielsen SoundScan. And the holiday season, which typically accounts
for forty percent of annual sales, was a bust. "It was arguably the
worst in the music business’s history," says Steve Bartels, Island
Records president.

In contrast to CD sales, digital-song downloads jumped 150
percent in 2005 as consumers bought 352 million of them. "With
digital technology, everyone’s figured out that a business built
only on the manufacture, distribution and sale of CDs has ended,"
says Dixie Chicks manager Simon Renshaw, echoing many other
industry veterans. "The traditional model can’t continue."

The labels continued to battle piracy, filing hundreds of
lawsuits against peer-to-peer downloaders. But in the month of
November, for instance, twenty-one percent more users traded music
online than in the same period the year before.

The Indie Scene

As the majors stumbled, independent labels gained market share,
accounting for eighteen percent of CD sales in ’05. Indie labels
proved especially adept at Internet marketing via outlets like
MySpace; the emo label Victory Records sold 558,000 copies of
Hawthorne Heights’ album The Silence in Black and White
without radio play. And several hip indie acts — the Arcade Fire,
Interpol and Bright Eyes — sold more than 250,000 copies each. The
indie model of earning profits on a broad range of small-scale
releases, rather than focusing on blockbusters, may offer a new
direction for the majors."

Best quote of the year so far:

"The major labels want to say the glass
is half full," says Gwen Stefani’s manager Jim Guerinot. "I think
everybody’s getting the message: You better get a fucking smaller
glass. The music business is a different game."

Read the Rolling Stone 2005 Record Business recap here.

We Welcome Your Comments


3 replies
  1. Julian Bond says:

    I assume all those stats are for the US market only? Because album sales in the UK had a record year. Go figure.

    “The indie model of earning profits on a broad range of small-scale releases, rather than focusing on blockbusters, may offer a new direction for the majors.”

    Perhaps what we’re really seeing (or at least one factor) is the death of the US approach of reducing choice, aggregating outlets and homogenisation. What you might call the “ClearChannel” approach. Very “long tail”!

  2. David Knight says:

    In response to your quote: “The indie model of earning profits on a broad range of small-scale releases, rather than focusing on blockbusters, may offer a new direction for the majors.”… I agree that the majors will have to change their ways of thinking. But, the majors are still owned by share holders. I think that the direction that they take will be more like what you are seeing in the Robbie Williams deal and the Korn deal. Sign less artists, focus on all revenue streams (touring, merchandise, licensing, and music sales) and take a bigger overall chunk of the money coming in for signed artists. Not necessarily a bad thing, since this will force labels to pay more attention to the bands they sign. Also, with companies like Ingenious putting money into bands like they were horses, I think that rosters are bound to get smaller, not bigger.

  3. JoBuzz says:

    2006 its definitly teh worst year of music industry…maybe al over the world. there a hugh catalog of expected albums this year and the most of them just commercialy failed. its not about commercial music only, some good albums are being rejected by music listeners, somo good songs are just not being listened and i dont think its just a matter of quality and creativity. It just looks like a battle without a special preference about one artist, people is bagging for good songs, thats why full albums are not being buying, for not completing expectations.

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