Friday, January 07, 2011

2010 Music Industry Numbers

The recently released official 2010 music sales numbers have been released, and they continue to paint a picture of a music industry in serious decline. Overall album sales (including digital downloads) are down 12.7% overall. Digital album sales are up 13%, but that is not nearly enough to offset the 19% decline in physical album sales. Meanwhile digital track sales are up a paltry 1%.

Vinyl enthusiasts will likely crow about the massive "vinyl revival" underway due to a 14% rise in LP sales, but with 2.8 million LPs sold, this number still represents less than 1% of all albums sold in 2010. Vinyl remains nothing more than a niche product, and it in no way represents a solution to the music industry's current struggles. Anyone who tells you otherwise is delusional (and this is coming from someone with a collection of over 3,000 LPs).

So what is the solution? For that matter, what is the problem? Most in the music industry will be quick to point to illegal downloads. I suspect they are at least partly right, but the overall picture is more complicated. Illegal downloads have merely contributed to the widespread perception that the music industry no longer produces a product that is worth paying for. Failure to invest in catalog artists in favor of flavor-of-the-moment fluff has also contributed to this perception as well. When a product has a shelf life of two minutes, it's hard to convince people to pay for it.

I will be the first to admit that I do not know how to solve the problems currently facing the music industry. I do, however, think the equation is pretty simple. If the music industry wants to beat illegal downloads, they have to offer consumers something that is more convenient.

If you look at the history of recorded music, convenience has been the driving factor in every major technological or format shift starting with consumers adopting 78s over Edison cylinders, Columbia's 12" LPs over RCA's 7" 45s, compact cassettes over LPs, CDs over cassettes and LPs, and downloads over CDs. In each of these cases, price and sound quality were inevitably secondary to the drive toward greater convenience. Music industry execs need to stop thinking about how to get people to pay for downloads and start seriously considering what they can offer consumers that is more convenient.

One thing that would be more convenient than downloads (as I have suggested in the past) is a cloud based model where consumers pay a monthly subscription fee to access a virtually unlimited amount of music from a variety of devices. There may be other solutions as well. But what the music industry collectively needs to wrap its head around is that fact that if their industry is going to survive (and I don't think that is a given) downloads cannot be the end game. Inevitably something will supplant downloads, and it would be wise to think about what that something will be and (just as importantly) how to make money off it.

2 comments:

Doug said...

Although I imagine the cloud-based option is likely to be the future (not just for music) I do find myself resistant out of a not-entirely-defendable allegiance to owning "my" music (that which I've bought); there's some distinction (as I see it) in what I was willing to actually pay for to have forever as opposed to what I rented this month--even if the latter means I can have access to more.

But I'm sure that I harbor this preference only because it's what I'm accustomed to, with some romanticizing some kind of good ol' days of going to a store. When the cloud becomes prevalent I'm sure I'll adopt it because... well, it will be convenient.

Pete Bilderback said...

Hi Doug. I am totally resistant to this idea myself. However, I always try not to confuse what I want to happen with what I think will happen. This is the valuable lesson that years of being a Baltimore Orioles fan has taught me.

I often read comments on various discussion boards where people predict things like a revival of the music industry based around the return of the LP, or the sudden miraculous mass-adoption of SACDs, etc. I just have to shake my head.

I agree with you that it is important not to get your head stuck in the past too much just because it is what you are comfortable with.