music revenue slow industry density high and it Ain’t the Pirates Fault


Web music revenue growth stuck in single figures – Yahoo! News.

By Art Menius 1/23/2012

The level of stupidity in this short AP story proves remarkable.

First, in this global economy 8% growth isn’t bad.

Second, and much more troubling, these global brand managers seem to think they can make as much money selling digital albums for $8.99 as with CD’s at $15.99. That is ludicrous.

Third, and most disturbing of all considered the compensation these folks receive, they still seem to have hopes of restoring music industry profits to what they were a decade ago. That is not going to happen any time soon, I’m afraid. The world had fundamentally changed. Digital music sales are not going to replace fully hard copy media sales. Nor will there be a boom of folks buying downloads to replace CDs, like happened with LP to CD. Folks are just going to rip the CDs they purchased. If income  can be fully replaced, it will require sources other than digital music sales

It doesn’t take an MBA to see this much, just simple math skills.

They still blame pirates??

Piracy is only a small part of the story, IMHO. While it has some truth to it, it is mostly an old tired excuse.

There was shrinkage at retail as long as there has been retail.

There is so much more to this than piracy, especially disposable income and the vast difference in price points between mp3s and CDs.

Even that, however, is not the biggest problem. Remember this if you remember nothing else ole Art posts here.

YouTube and Pandora have taken us through the looking glass that is Spotify.

Pirates ain’t nothing compared to people legally listening to music without stealing it.

The real problem is that people no longer need to own music. The Internet has become a free, legal jukebox paying painfully small royalties to the IP owners.

We have moved past instant gratification through an 89 cent download.

People want to hear a new tune. They find it on YouTube and watch, or they listen on Spotify, radio on demand is a jukebox.

Compare the 12,000,000 Spotify users with the number of people stealing music on a daily basis. RIAA estimates the number of tracks stolen from 2004 through 2009 (and this would be the highest reasonable estimate) at 5,000,000,000 per year.

If those Spotify users listened to an average of just 3 tracks per day, that would be 13,140,000,000 tracks per year.

Pandora passed 100,000,000 users (more than 8 times Spotify) last summer and they now enjoy unlimited skips. 100,000,000 listening to an average of 5 tracks a day for ten days hits 5,000,000,000.

Perhaps more important as a legal (some of the time) (and often industry supported) source of free music on demand is YouTube. Adele “Someone Like You” 103,025,245 views.

It is there, to listen whenever you want, for free, almost as convenient as music you have purchased. I can throw it on the big screen and through my best speakers.

Grascals “I Am Strong” 130,993 views

AKUS “Paper Airplane” 584,945 views

This is not being in heavy airplay. This is on demand and free.

The RIAA website says that 13,000,000 different titles are licensed for legal use on 400 different such services worldwide.

These folks have downloaded not an illegal file. They have played by the rules. They used legal means to avoid buying music. And that is the whole where the bulk of the income disappears.

Even if the actual damage from piracy is far greater than I think it was in terms of genuine lost sales, piracy has functioned as a red herring. Piracy has distracted the industry, IMHO, for looking at many other problems that I believe are more pernicious in effect. The RIAA has led this charge in one direction in a multifront war.

If piracy were the primary source of industry problems, as RIAA claims, then why have a decade of efforts not produced the desired results?

-30-

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3 thoughts on “music revenue slow industry density high and it Ain’t the Pirates Fault

  1. Art, you make a lot of sense, though this might also lead to a boom in independant artists who dont depend on internet music sales for sustanance.

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    • Thanks, Michael. You express a valid point of view that has been in circulation for some time. The basic idea is that gig revenues and “airplay” royalties become more important as sources of revenue rather than selling recordings. Yet we all know talented, established musicians who can barely make a living as it is even with income with selling CDs.

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