Good News! CD Music Sales Down 20% from 2006

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1. hornswaggled
   

   March 21st, 2007 at 11:40 am

   I like most of your readers haven’t bought a cd in years. My concern is that the RIAA has pushed the CRB to increase the royalty rate to an extreme. So much so it may kill internet radio as we know it.

   Tim the founder of Pandora describes as much here:
   http://blog.pandora.com/pandor.....royal.html

   I dont care about cd’s going away, I do care about loosing internet radio.

2. alex
   

   March 21st, 2007 at 11:41 am

   Yeah, the old days are definately over.

   My favourite website when it comes to new ways of downloading music :

   http://www.jamendo.com/

   Features bittorrent, Creative Commons, and more!

3. Matt J.
   

   March 21st, 2007 at 11:48 am

   For several thousand years, musicians have always been broke and on the road most of the time. The exception were the handful that were subsidized by wealthy households, royalty, or the church.The last 50 years of record sales has been a weird break from the norm. Now we are correcting. I agree that live performances will become increasingly important.Go see a show this weekend.

4. Sam
   

   March 21st, 2007 at 11:53 am

   I’m confused about the statement “…bands will need to make money elsewhere. Live concerts will become more and more popular, and will be the largest source of revenue for many artists.”

   Why will live concerts become more and more popular simply because recorded music is free? If anything, it would make them less popular because recorded music would lower the need for live music. Before recording, if you wanted to hear music, you had to go to a concert. Now you can stay home.

5. Raj
   

   March 21st, 2007 at 11:55 am

   Live music revenue for 2006 was way up — 35% over 2005. (source: http://www.billboard.com/bbcom...../index.jsp)

   I’d love to see numbers that compares Sony’s sales of CDR media vs. their individual loss per year on music CD sales vs. individual songs downloaded from iTunes.

   People don’t want to be forced into buying full records when most of the record is filler anyway.

   I can’t speak for the majors, but the larger indie labels, like Matador, aren’t convinced that file sharing even hurts CD sales at all. They think the loss in revenue is probably better attributed to people copying whole CDs.

6. alternapop
   

   March 21st, 2007 at 11:56 am

   love silversun pickups! have seen them 5 times in the last year and a half.

7. Jeff K
   

   March 21st, 2007 at 11:57 am

   I agree that the major labels/artists gross revenue will shrink. That appears undeniable.
   The trend will be in favor of indie bands/small venues- that segment will make more money than past not less thanks to more efficient discovery, longtail etc.

8. lemon obrien
   

   March 21st, 2007 at 11:59 am

   Tamago… and music shouldn’t be free; and live shows won’t make up the difference.

9. Jay H
   

   March 21st, 2007 at 12:08 pm

   What a great band to give the attention to . . . I have been listening to them for a few weeks. Their album is great (purchased whole album legally online after a friend “loaned” me a few tracks . . .

10. magnusdopus
    

    March 21st, 2007 at 12:09 pm

    If you look at the top selling CDs released last year, it was pretty lame - http://www.billboard.com/bbcom...../bb200.jsp

    If 2007 sees expected releases from top acts : Linkin Park, Coldplay, Radiohead, etc. I suspect that 20% could be easily erased.

    Honestly, motherhood (ie. Lauryn Hill, Shania Twain, Celine Dion) and musician apathy has impacted the industry more than P2P.

11. Garth
    

    March 21st, 2007 at 12:09 pm

    I have never purchased a single digital track or album, though my media center has over 900 albums ripped to it. I also don’t download illegal music.

    Why would you pay more for DRM encumbered music when amazon sells used CD’s for an average of about ~$7 shipped.

    I did purchase the new shins album new to support Seattle label SubPop, and I buy directly from the artist when I can.

12. Kewtr
    

    March 21st, 2007 at 12:11 pm

    I don’t know what direction the music industry will go, but I’m sure it’ll get less top-heavy than it is now.

    What’s really interesting is the range of justification for doing something morally and legally wrong, something that affects a band that people ostensibly like. The marginal cost going towards zero doesn’t mean the consumer gets to decide to steal it. The creator should have the 100% choice to sell their art for whatever they want. It’ll sell or not sell accordingly, but this is one of the most pathetic things ever.

    I think people must believe they have a right to anyone’s creation at whatever price they decide is fair. They don’t. But people don’t decide NOT to buy a particular piece of music if the price is wrong, they just take it, because there is no replacement, music is unique. But both sides of a transaction have to agree for it to be a transaction, or else it is something else completely.

    I’d love to see someone back me up as I sauntered out of the Nike Company Store with a pair of Air Max 360 after I left a twenty on the counter to cover their marginal cost.

    Reminds me a lot of ATM fees, people get all uppity about CD prices and fair use over something that costs somewhere between $3 and $15. How cheap is that. I don’t know how worthless someone’s time would have to be to be streaming and copying Internet radio to get their music, but it’s pretty pathetic.

    By the way, for all those people that think the music business is overpaid or whatever, go ahead and start up a band, and try promoting it, and producting the album, and then distributing it. There has to be just a pile of cash at the end since the prices are so unfair. Enjoy.

13. Tan The Man
    

    March 21st, 2007 at 12:13 pm

    20% is a vague number. The record heights of the music industry was inflated by the “out-of-nowhere” craze of teen pop. Like the movie industry that had the “out-of-nowhere” success of “The Passion of the Christ”, the music industry is subject to the same with the releases that it has. Music has shifted from the few mega popstars that came from the late 90s like Backstreet Boys and Britney that with their albums sold millions to a shift to more modestly selling artists of high thousands. The audience’s attention just shifted to less broad-appealing artists to more niche-appealing artists.

14. Sandra
    

    March 21st, 2007 at 12:18 pm

    I also disagree. When Napster and P2P was just starting to catch fire was when the highest selling opening week for a CD occured with N Sync’s second album selling 2.4 million CDs! And since then the ticket sales for live concerts have continued to decrease.

    The main problem is not how people are getting their music, it’s the industry overall, people are not passionate about music and running to stores to get the latest album and with the increase of ticket prices and the decrease of interest - ticket sales will continue to fall. And as hornwaggled pointed out above, most people haven’t bought a CD or a single song in years, and continue to listen to the same music, unmotivated by new music.

    The decrease in popularity for rap (and just the decrease in the quality of rap) has hurt the market. Generally a new genre of music emerges to help generate sales - R&B, Rock, Disco, Dance/Techno, Rap, but there hasn’t been a brand new sound to drive young kids out to the stores. Look at High School Musical soundtrack - the kids are dying for a new sound or artist to follow.

15. Kewtr
    

    March 21st, 2007 at 12:30 pm

    If you really like a band and want to support them, you might try CD Baby, they claim to only deal directly with bands themselves, the CDs are cheap, and they’re here in Oregon, so thumbs up.

    Emusic is pretty great too, although at maybe $2 tops for an album I doubt I’m doing Spoon any favors buying there.

    Otherwise, Amazon and Half.

16. Jahbuh
    

    March 21st, 2007 at 12:36 pm

    Amen!
    The music industry for years have been taking advantage of their consumers although the price of CD manufactering has drastically decreased consumers are still paying prices we’ve seen 5 years ago. The music industry must change their business model and come up with a creative way of distributing music and if not reduce revenue expectations. I know artist suffer, but the international artists have used touring and local shows to make up for CD sales. American artists have gotten fat off of CD sales and when they do tour give half @$$ performances. I’m a fan of reggae music and Jamaican artists tour year round doing 2-3 shows in my area a year. I have no pity for the music industry.

17. Sean
    

    March 21st, 2007 at 12:43 pm

    “…industry revenue is still down 25% from a year ago by some estimates.”

    Let me guess - those estimates come from the industry itself?

18. Inner-G
    

    March 21st, 2007 at 12:48 pm

    I personaly find important and exciting buying CDs and music - maybe is that a materialist way to enjoy music.
    I found your post so pessimistic…
    Managing a small label in France, coming from an association, I really worry about the future of our artists, when you see that even “local” CDs are ripped. Our label deals with Psychedelic Goa Trance music ; you said, “Others will have to decide if love of their art is enough to keep going” ; but they won’t have to decide anything, since it is so hard for this kind of music to emerge and go live !
    If they neither can sell music through CDs nor make live acts, this kind of music will slowly but certainly decease. Will we have a world made of commercial and variety music, with no place for other styles ? Worries… :/

19. Bryan K
    

    March 21st, 2007 at 12:50 pm

    Popular mainstream artists have and will always do fine making music as a profession. And I agree that recorded music will increasingly become more a marketing freebie than anything else.

    However, if anything, artists outside of the major label will only benefit from digital distribution. Major labels essentially monopolized distribution in the past, making it virtually impossible for musicians to make it on their own.

    I agree with Jeff K in that digital distribution/longtail will eventually create a “middle-class” of artists who will DIY themselves into a sustainable living making music. While the recording itself might get closer and closer to free, minimally saavy artists will know how to build enough of a fan base to monetize off of licensing, marchandising, video content, and other such revenue sources we haven’t even begun to imagine.

    But that just might be the music lover in me thinking wishfully

20. Don Park
    

    March 21st, 2007 at 12:52 pm

    This is just a replay of what happened in South Korea years ago. With higher connectivity and small music industry, it tipped over fast. Yet korean music industry still stands. As Mike and others have predicted will happen here, korean music industry no longer expects to make money off selling CDs. Instead, they have diversified their revenue sources. And to compete with downloaded music, concerts are evolving from music played live to performances like Broadway shows.

    The good news is that, to consumer, music industry will appear to…more entertaining.

21. Ramon
    

    March 21st, 2007 at 12:53 pm

    I’ve said this before and I’ll say it again. This is what is going to happen:

    1) Internet becomes ubiquitous in wireless form, especially on mobile devices.
    2) Streaming, on-demand music popularity goes up.
    3) Providers of streaming, on-demand music begins signing exclusive contracts with artists (”Shakira, only on Yahoo Music; Dashboard Confessional, only on iTunes”)
    4) Artists get a cut of the profit (from the subscription costs) based on how many individual listeners are playing their music.
    5) Providers of streaming, on-demand music will provide the service that record labels provide now, at a cheaper cost to the consumer, with greater profits to the artist (who is not getting raped on the miniscule % they get off cd sales), and with easier accessibility.

    * puts away crystal ball *

22. hornswaggled
    

    March 21st, 2007 at 12:54 pm

    Let me start off with saying I don’t feel bad for the labels, they have been caught price fixing (I received my 15 bucks out of $67,375,000 that they were forced to pay a few years back).

    Bottom line is I dont want music in CD format, neither do most of the people I surround myself with. I want DRM free music that I can transfer from device to device and take along with me. No one cares that vinyl record sales are down and when was the last time you saw an actual tape in a store (for some reason car makers continue to add them to cars). Cd’s are dying, thats a good thing. Music will be distributed digitally from here on out.

    Sites that promote sharing and discovering new artists will flourish if given the opportunity, this will in turn promote more purchases of tracks and albums. If these services are shut down people will go back to file sharing to find new stuff. The industry will receive nothing.

    Yeah we should all go to a local show this weekend, I like that idea.

23. Jason
    

    March 21st, 2007 at 1:10 pm

    Someone has to fund the new artists (studio time, promotions, etc.). It may now be in the best interest of large concert promoters to start doing this. Find the small acts, record/produce their tracks, promote, and then sign to manage their tours. Sell the music on itunes or another service and make the primary income from touring.

24. Rusty
    

    March 21st, 2007 at 1:22 pm

    Nice going, Silversun Pickups, who’d believe they’re on your playlist Amazing band. Some good points too.

25. BROOKS
    

    March 21st, 2007 at 1:31 pm

    Quit crying about lost rev and get a real job, hippies!

    Wink wink

26. Dillon Thomas
    

    March 21st, 2007 at 1:34 pm

    From an environmental point of view I’m very happy to see this news.

    Millions of tonnes of CO2 that would of been released from the manufacturing and distribution of the CD’s will have been saved.

27. Pud
    

    March 21st, 2007 at 2:04 pm

    that’s a nice song. hadn’t really heard it. thanks for posting.

    (i guess, for me, it’s marketing, and the band should be happy you posted it)

28. Paul King
    

    March 21st, 2007 at 2:10 pm

    Since I’m in the Industry, and own one of the more popular blogs concerning it, I’ll add a couple .02 cents.

    #12, you’re spot on.

    #14, you’re way off on live event sales… PollStar points out it’s going UP… 16% last year!

    Recently there have been some good blog post about this topic…

    Rob Hyndman has one that refrences a really good one by

    #23, you’re right, as this is the model that has a bunch of smaller bands scared to death… Clear Channel, thru their Live Nation subsidiary has begun or is talking about, at some venues, offering a “contract” to play live there … in order to play, you sign recording rights to LN for them to distribute your live album … sounds good to me! on a large scale with a large company like that… the scary part is the mom and pops are trying the same thing - and let me tell ya, signing as an artists to a small mom and pop, even for one night to play in a venue, is a TERRIBLE plan - but it’s happening from what I understand. That one night can cost bands thousands of dollars easily.

    Artists and writers don’t really make money from digital sales - labels do. The best place for an artist to make money is on the road… it’s always been the case. An example? … record companies are paid for every blank cd sold… artists get nothing - equity would say that there should be a formula to split revenue in that regard… it doesn’t happen.

    Labels are even going after the touring market.. there’s a lot of deals recently bandied about where the label enjoys a percentage of ticket sales… I suppose this is better in some ways depending on your contract, as “tour support” was always a recoupable expense (as well as everything else).

    One quick note on the internet radio thing… wrong, wrong, totally wrong! I don’t listen to it, don’t care to - but the RIAA is squeezing the wrong people without doubt… SoundExchange, the RIAA’s puppet organization (the other being Congress) is wrong, wrong, wrong…

29. Paul King
    

    March 21st, 2007 at 2:10 pm

    Closed the link I hope.

30. Calvin
    

    March 21st, 2007 at 2:20 pm

    I’m streaming the Silversun Pickups as I write this… thanks to word of mouth and viral marketing, I’m now on their email list and will pay money to see them play next time they are in SF on April 16.

    Necessity is the mother of invention… I”m looking forward to more and more marketing creativity coming from “slimfast ” version of the labels moving forward… Just at look at Nine Inch Nails has done for the new album! This is the kind of marketing I’m talking about!

    http://en.wikipedia.org/wiki/Year_Zero_%28album%29

31. Berlin
    

    March 21st, 2007 at 2:28 pm

    “Good News! CD Music Sales Down 20% from 2006″

    for a moment, I thought I was reading Perez Hilton’s blog.

32. eelco
    

    March 21st, 2007 at 2:31 pm

    “Live concerts will become more and more popular, and will be the largest source of revenue for many artists. ”

    Don’t forget the sponsor contracts for the popular artists.

    Also, for the starting artists, the good thing about the internet is that they can be heard. These bands don’t necessarily need a label to become popular, which in turn might lead to more gigs, and more income.

33. Jonah
    

    March 21st, 2007 at 2:34 pm

    The marginal cost of manufacturing software, like digital music, is $0. But the retail price of both will never reach that point for all products. There will always be people willing to pay something. As a big fan of emusic, I don’t mind paying a bit for DRM free downloads. The problem is that the labels keep selling music as if it’s a product.

    In the future more and more people will be paying for media services, not products. You don’t own Seinfeld, you only pay a flat rate for the service that brings it into your home.

    Great post and choice of video!

34. Larry Chiang
    

    March 21st, 2007 at 2:34 pm

    I am releasing “Twinkie” in CD before i-Tunes. It should make up the 20% shortfall along with my sophomore release, “You Ain’t Got a Chinaman’s Chance”

35. Lawrence of a USA
    

    March 21st, 2007 at 2:47 pm

    “Good News!”…

    lol, how can that be good news for the people who work in that industry?

    mike is a very pro-music download person

36. Drama 2.0
    

    March 21st, 2007 at 2:54 pm

    I think Don Park has it right. The shift from a CD sales-oriented model to more innovative models will actually benefit the major lables in the long run because of increased margins, while at the same time creating opportunity for nimble smaller lables that can adapt faster than the majors. Nonetheless, there will be people predicting the death of the major labels anyway.

    I disagree with Michael’s assertion that zero is the “natural price” of recorded music. That’s like saying that the natural price of a book or piece of software is zero. Regardless of whether you subscribe to Classical economics or Marginalist economics, I think it’d be hard to make the argument that either the costs of production of music are zero or that the demand for the final music is zero. The marginal cost of reproducing a digital copy of a piece of music might be close to zero but that’s not taking into account the fact that it does cost something to produce and market the music in the first place. Production costs of the final product (whether a physical CD or a digital copy) are only one factor.

37. MikeA
    

    March 21st, 2007 at 2:56 pm

    I believe the record companies and artists will recover. They are notoriously behind with the times, and with good reason. They will wait for the pioneers to adapt a policy that works, and then steel it and claim it as their own. Until then, they will continue to make hordes of money in the publishing world. Everything will be right for all, including the artists. The thing that sucks is that the music corporations will not learn their recent lesson and will continue to try and trick the public by putting garbage out instead of the rock solid practices of artist development a few decades back.

38. SFGary
    

    March 21st, 2007 at 2:56 pm

    I agree with #32, I don’t get your marginal cost theory as it applies to music sales. Carried to the extreme for other digital goods, all software, video, etc sold after the first CD/DVD copy should be close to replication and distribution costs.

    How about digital content over the Internet where costs are even lower? Why can’t all digital content, music, software, video, written content be free or close to $0. The creator/developer/author can make up the perceived difference in value by appearing at local malls, performances, readings, software support.

39. Sean
    

    March 21st, 2007 at 2:56 pm

    I disagree that the natural cost of digital music is zero. The same claim could be made for software, but that ignores the cost associated in creating the digital form in the first place. Anyone who has picked up a guitar and tried to learn will attest that generating good music does come at a cost - the same way programmers need to work hard to create the content people download.

    The cost is much lower than the artifical pricing of the current industry, but it’s definitely not zero unless you consider musicians to be unpaid workers.

40. Wes
    

    March 21st, 2007 at 3:06 pm

    Its not exactly good news because some of the artists need the money to simply survive and live shows will not fully compensate for CD sales as the musicians can’t be everywhere all the time.

41. Mick Liubinskas
    

    March 21st, 2007 at 3:07 pm

    The critical moment which is changing everything is when a new band or artist is offered a record contract and turns it down. There are more options then ever to make a living as an artist without selling your soul to corporations who don’t care about art or the customer.

    It will take another 5 years before it really starts to shape up, but I’m really happy with where it’s going and very proud of the role I played at Kazaa.

    Mick

    http://wheel.blogs.com/kesho/2.....music.html

42. Drama 2.0
    

    March 21st, 2007 at 3:15 pm

    “They will wait for the pioneers to adapt a policy that works, and then steel it and claim it as their own.”

    MikeA: That’s not underhanded, sleazy or “stealing” - it’s smart business. You can often gain an economic advantage in many developing markets by allowing others to serve as the guinea pigs. Let them validate a model or market on their dime and learn from it.

    I’d recommend the following article:

    strategy-business.com/press/freearticle/07102

    There’s a section called “First-Mover Fallacy” on page 2 that is a worthwhile read for anybody starting a company, particularly in the online space, where first-mover advantage is considered so important. Key points:

    “Rigorous academic research has shown that early movers may achieve a market share advantage, but they do not systematically achieve greater profits or a higher survival rate.”

    “First movers do not necessarily find the most fertile ground. Those who wait to explore later, or more patiently, benefit from the experiences of earlier settlers. They can bypass the hulking shells of unsustainable structures built by the first-generation pioneers and salvage the best ideas buried in the wreckage.”

    Look at Napster. It was the hottest thing on the Internet, put digital music on the map in the mainstream in a way that hadn’t been done before to a large extent and tens of millions of dollars were thrown at it, but today iTunes dominates digital music sales. Napster validated the demand in the market and Apple came along with a better strategy. Napster prepped the market and most likely gave Apple some ideas on a better strategy and the rest is history.

43. Brian Laks
    

    March 21st, 2007 at 3:22 pm

    I sold all of my CDs at the end of 2005… It was my first propheciography. I recently sold most of my DVDs, the average price of used has been steadily dropping on Amazon, and are especially low for popular discs. Everything is going digital. Don’t fight the trends.

44. bob leisure
    

    March 21st, 2007 at 3:24 pm

    Michael - I am disappointed with your title that this is “Good News”. I went to the Hillsdale Mall this week and I could not find a store that sells CDs - this is a drag.

    CDs sound way better in my car CD player - on top of that there is too much fiddling around and moving files around - Suppose I want to give the CD to my friend to crank it up in his car - dealing with iPods and iTunes is a big pai in the Ass!

45. Stanley Miller
    

    March 21st, 2007 at 3:36 pm

    The majority of musicians have always been poor, no? And only a handful each year through luck or whatever good fortune (American Idol) actually enjoy commercial success.

    Pop-music as a creative art changed with the coming of the spreadsheet and real-time metrics. Since then it’s been about as formula as a can of Pringles, croutons, or baco bits.

    No surprise that revenue continues to tank. How can any business compete with the free market?

    Live music rock on! Looking forward to catch’n The Police.

46. Colin C.
    

    March 21st, 2007 at 3:41 pm

    One thing that I can’t stand is how artists charge $200 a ticket to see them live. Why should I pay that much to see a show? What happened to paying $50 dollars for good seats? I used to see about 5 concerts a year but I’ve cut that down to about 1 a year because its just not worth the price any more.

    Why are cd’s still costing more than 10 dollars? If the labels dropped the price of cd’s down, more people would buy them.

47. Kim
    

    March 21st, 2007 at 3:42 pm

    I saw Silversun Pickups a few weeks ago… I had never heard of them before I saw them opening for Snow Patrol and OK GO… both of whom I had become aware of online. I assume that these bands got a fair % of the $200 I paid for the 4 tickets and the $50 for the 2 t-shirts. Essentially, if it hadn’t been for various artists being online and for live shows… these bands would have received $0… from me.

48. Ryan
    

    March 21st, 2007 at 3:45 pm

    It will be interesting to see if this shift in the industry increases or decreases the supply of musicians. The profession will become less lucrative, but also the previously large barrier of entry is being removed now that musicians can use a computer to produce their own music.

49. Steve Turner
    

    March 21st, 2007 at 3:45 pm

    I both agree and disagree with you Mike. It’s true that manufacturing and distribution costs for music are essentially at or heading towards zero, but it still doesn’t mean that music should cost nothing.

    I mean — “Others will have to decide if love of their art is enough to keep going.” — is that argument supposed to work for software programmers or anyone else that produces digital content? I don’t see you or anyone else arguing it for them, so why musicians? I think that live music now is still the biggest revenue earner for huge acts, but there’s no reason why their recorded music should be free.

    I don’t care about record labels or the industry they spawn, but I don’t want to get my music for nothing. I want to pay musicians for their work, and believe they deserve to get paid for their work. Sure, CDs can be too expensive, and DRM is a pain, but by judicious choice of CD retailers and using eMusic, I pay for my music, and would always like to see artists getting their cut.

    Further moves to cut out the middle men and making sure the artists get a bigger cut of what I pay would be even better of course. Digital distribution of music should cut out the overheads of the industry, but it shouldn’t cut out just compensation for the artists.

50. Linda
    

    March 21st, 2007 at 3:54 pm

    The album may be dead, and to the extent that the CD = the album, it too is dead. Single songs = micro transactions, which we are constantly being told is the new economic model in e-commerce. A 99cent song, or t.v. show episode…yeah baby, that’s an impulse buy you don’t feel bad about.

    I hope you got a Silversun t-shirt out of this.

51. kaiju
    

    March 21st, 2007 at 4:13 pm

    Thanks to sites like youtube it makes it easier to find unknown artist and then go to the newsgroups and get the album.

52. chris
    

    March 21st, 2007 at 4:13 pm

    The main problem is that the product (CDs) sucks. Take the example of a book. Despite facing competition from online media, the book as a product is actualy quite attractive. You can take it with you, read whenever you want, highlight it, and the way it is organised (from beginning to end) is valuable.

    But what is a CD? What is the value of a bulky, easily scratchable, disc? What is the benefit of having the songs ordered in a certain way? What is the benefit of not being able to pick and choose different tracks?

    The product sucks.

    This history of economic progress is littered with examples of superior products beating our crappy ones. In the process, some people lose, some people win. It is not our job to feel sorry for an industry that cannot adapt to change, and feel compelled to use lawsuits to defend an untenable business model.

53. snocap_old_school
    

    March 21st, 2007 at 4:19 pm

    this is another bs blog. Mike, you really are a Fox News guy now - wait, that is right - you officially hired someone from Fox Interactive Media to lead TechCrunch.

    So, the idea is to serve bs that makes intelligent people go WTF!! and get them to submit comments rebutting your asinine analysis…btw, I would fire you in one second (that is, if I hired you in the first place) as a business analyst.

    1) 20% down this week from a year ago - what makes this week a particularly good representation of the entire year? does this week represent the entire year?

    2) Recorded music does not have a zero cost to produce. It has a “near zero cost to REPRODUCE”. Major labels still have to find good artists (that takes $$), create good quality copies (that takes some $$’s as well) and then have a good marketing/distribution arm to promote and sell the music. So, you are wrong!

    3) Live concerts are…..: that is a statement that’s perfectly out of the mouth of an associate at a bad consulting firm. It is not going to make it up. If you can’t freaking get people to pay for your music, you are not going to get them to come to your concert and pay a lot more for your music.

    There’s a lot more in your blog that’s worth hammering, but I am tired. Just like I can’t make Wolf Blitzer and O’Reilly shut up with their lies and shouting, I can’t do the same with you.

    All I can do is hope that you will see the light.

54. Jan L.
    

    March 21st, 2007 at 4:29 pm

    Music industry will simply go back to what it was before the LP/CD-album came along and changed the rules. So we will reenter the 30’s and the 40’s.

    I.e. the artist will be “owned” by a management company and probably dependent on a sponsor.

    Type of music being made will be determined by the sponsors - not by album sales (i.e. the actual listeners). Remember that the musicians has to please the management companies sponsors - not the record buyer as it has been the last years.

55. Doug Lay
    

    March 21st, 2007 at 4:37 pm

    The record industry provides a case study in what a cpntent company should NOT do when faced with an Internet that drops transmission and storage costs to virtually zero. DON’T use DRM schemes to try to artificially recreate scarcities that have been obliterated by technology. You’ll only end up with a product that is inferior to what your (former) customers can get for free, easily, and with very little risk, through grey-black-market file sharing networks. And DON’T sue your (former) customers for sharing their music on said networks. Such litigation has no effect in the availablity of unauthorized product, generates tremendous ill-will (I see that “RIAA” just beat out Halliburton for title of “America’s Worst Company” in a consumerist.com poll), and no one is going to buy more music because they’re scared of the record companies.

56. alan jones
    

    March 21st, 2007 at 4:45 pm

    It’s not ‘good’ news or ‘bad’ news, it’s just inevitable.

    The cost of producing music will continue to drop, because the cost of purchasing music will continue to drop, and the share of our total entertainment budget spent on major-label music each year will continue to drop.

    As an indie label I already seek to share more profit sooner with artists, and I’m looking to help them build an audience and promote their live performance. We sell more physical CDs at gigs than at shows already.

    In the near future we will begin investing directly and indirectly in the provision and management of live performance venues, because that’s where the biggest new revenue stream will be.

57. David Gratton
    

    March 21st, 2007 at 4:52 pm

    I agree that music will be priced at the margins. I and others have been saying it for some time:
    http://www.davidrdgratton.com/.....of_dr.html
    http://www.davidrdgratton.com/.....ews_f.html

    There are other avenues than simply saying give the song for free and get them to the show. Are you really happy with the recorded music experience? If not, I and others believe there are opportunities to be explored there to bring value back to the recorded music experience:
    http://dylan.projectopus.com/
    http://tech.groups.yahoo.com/group/xipf-talk/

58. KeVroN
    

    March 21st, 2007 at 5:15 pm

    Wow, everyone’s comments have encapsulated the best (and worst) idioms of this debate. Yes, fat will come from the backs of industry idiots and the artists will have to tour and !!work!! for their money.
    Bands I respect and pay to see are better than their recordings. eg. Arcade Fire, Spearhead, Phish, Flaming Lips, Tony Bennet, Soulive, Buckethead, Radiohead.
    Musicianship is coming back into vogue. Viva TALENT!!

59. Julie Gomoll
    

    March 21st, 2007 at 5:21 pm

    Thanks for making this available illegally. Never heard of them, but I went and bought “Carnavas” on iTunes. It’s a win-win. If only…

60. david
    

    March 21st, 2007 at 6:04 pm

    I wonder if performing live becomes the primary revenue stream.. will there will be less incentive for releasing one off collaborations which aren’t usually associated with a tour. Think of the countless jazz records that wouldn’t exist or something like Ian Mackaye and the Ministry guys in Pailhead or Jello and the Melvins. The fact that there was a market for their project meant that the project was feasible. Though costs have dropped, it can still be pricey to put out a well promoted and produced album.

61. Fabian Schonholz
    

    March 21st, 2007 at 6:09 pm

    I am not sure that recorded music will bring no revenue. But I am sure it will not bring revenue to the labels. Bands will record at a “home” studio - equipment is getting better and better forgoing the need of “professional” studios - and they will sell them through some internet storefront. And yes, I think live music will be big ticket item.

    Revenue models keep on changing; adapt or perish and the music industry does not seem to be adapting. Same goes for most of the entertainment industry.

62. Jason
    

    March 21st, 2007 at 6:12 pm

    I will buy a cd when I see it on sale sub $10. I also like buying used cds on Amazon of ‘chance’ bands- bands I may or may not like. I have found some nice ones!

63. a real professional
    

    March 21st, 2007 at 6:13 pm

    “Millions of tonnes of CO2 that would of been released from the manufacturing and distribution of the CD’s will have been saved.”

    And if Mike is correct (Which I doubt) then millions more tons of Co2 will be created by all those people driving to shows, and artists forced to constantly tour so they can eat.

    “I did purchase the new shins album new to support Seattle label SubPop, and I buy directly from the artist when I can.”

    You know SubPop is owned by a major, right? No? oh well, never mind.

    “And to compete with downloaded music, concerts are evolving from music played live to performances like Broadway shows.”

    And this is supposed to be a good thing? Anyways, you are wrong there. Despite people like you, there will always be people who care about music for music’s sake. Thank god…

    “In the near future we will begin investing directly and indirectly in the provision and management of live performance venues, because that’s where the biggest new revenue stream will be.”

    This was the last post, so I’m using it, but it might as well be Mike’s assertion that live music will gain in popularity or value somehow.
    I, as both a professional musician, and somebody who owns a successful business that deals directly with touring musicians every single day, do not see any evidence, anecdotal or otherwise, that live music is any more popular then it was ten or even twenty years ago. I see pretty much the same percentage of clubs to population that has been around for quite a while, and I see the same amount of clubs opening and closing that I have for as long as I have been around.
    Ticket prices haven’t changed much either and from what I can tell are barely keeping up with, or in many cases are lagging behind inflation. Yeah yeah, I know all about the Madonna’s, Eagles, and Who’s of the world that can get away with charging $200+ a ticket. But I hope most of you understand that these artists represent less then 1,000,000th of the industry. While they can drag overall touring revenues upwards, they doesn’t translate in the trenches where the vast majority of artists are trying to make a living.
    Sure there are some acts who can command $50/ticket… this is the equivalent of seeing U2 in 1987 for $30. So while ticket prices have almost doubled over the past 20 years has anybody stopped to think what gas/hotel/airfare/rent prices have done over the same time period?
    Oh if only my rent had merely doubled since 1987….
    Hell, the club down the street is charging the same $10/show it was charging when I first played there in 1991. How’s that for tciket price inflation?
    The bottom line is that revenue for 99.999% of most professional musicians has not come close to keeping up with the rising cost of expenses. Clubs aren’t making any more money then they ever did, and the bottleneck for live music was never the cost of CD’s. If anything they helped out tremendously, since a great deal of the artist’s revenue came from merch sales. The death of the CD has just ended another revenue stream for them. No, the bottleneck for live music was always *time*, which is why your best shows were always on a Friday or a Saturday - because that’s when people had time to go to a show. While the technology age is fun and wonderful, I don’t see any evidence that it has produced more leisure time, and I think most people can agree that the reverse is true.
    Less leisure time equals less time to go see shows. That means making a real living as some sort of DIY act is going to be a very tough proposition.

    Yes there are musicians who are making good money. And there always will be. But to think that digital music represents some kind of boom for independent artists is pollyannish. For some it will represent real opportunity. But for most it will be a virtual massacre that they will be too inexperienced to realize is happening. They will be excited to make $2k off of digital download sales of nearly a dozen songs in a year and they will never realize that with the same quality of record in 1990 they would have made that much in a single night in CD sales at a decent show.

    Don’t get me wrong: I’m neither bitter nor complaining. Things are what they are, and those of us in the music industry will adjust and either find ways to survive, or die trying. But it really gets my goat when people in the tech industry who live in million dollar homes try and tell music industry lifers that they are going to make it all back on live shows.

    It’s just like when Napster came out and every snot nosed little kid swore that P2P actually helped record sales. It was easy for them to say: they didn’t have to make a living off of them. I knew it was BS then and called them on it. Too bad I can’t personally remind them how wrong they were.

    Finally the music industry had it’s share of evil assholes, but based on what I’ve seen in the business community they don’t have any more evil assholes then any other industry. I love it when some asshole working for Apple/Microsoft/Yahoo wearing nike shoes while getting rich off of cheap labor in Asia tries to wax rhapsodic about how bad the record labels are. What a fucking joke.

64. Naive Musician
    

    March 21st, 2007 at 6:23 pm

    Why is music so different from what you are doing? Why can people justify taking it for free? Because the “natural price” of music is $0.00? That’s bullshit. Even if it costs nothing to RE-produce, the cost in production, equipment, promotion and not to mention devoting your life to the craft of actually writing good music should count for something.

    You don’t make good music picking up a guitar once a week and dicking around for a few minutes. It takes YEARS of hard work. Hard work that no one sees or seems to appreciate anymore. I don’t care if an artist creates all his music on a $500 laptop and distributes it for free over the internet, he should still be compensated for his work and talent.

    “It’s so cheap to make that consumers can actually make it themselves. And they do. A billion songs a month are downloaded, mostly illegally, from P2P networks.”

    I see what you’re getting at but it’s still a bullshit argument. They’re not making the music themselves. They’re just making copies of it. I guess that means the cost of maintaining a tech news blog is zero too. I’ll just copy all your articles onto my own site. Simple as that. Now I’ve “made” my own popular blog!

    You have the benefit of using advertising and corporate sponsorships to make a living while giving away most of your content for free. Bands don’t have that luxury. I’d be interested to see what would happen if all your reeaders decided to to get your news through other channels without having to come to your site at all or subscribe to any of your RSS feeds. basically, leaving you out of the loop. Is the natural price of what you produce $0? If so, your advertisers are being ripped off. They should be allowed to advertise here for free since the content itself isn’t worth anything anyway.

    And I don’t know where you’ve been, but the scenario you’ve “predicted” for the future is exactly what’s been going on… for the last 10-15 years. Bands generally make all of their money on touring, merchandising and publishing. This is nothing new. I sincerely hope that live performances become more and more popular, but I don’t see any reason to believe they will. Just because CD sales are down, doesn’t mean anything is going to change as far as concerts go. Something needs to happen for that shift to take place… whether it’s better performances or more theatrical shows or whatever, who knows? But I don’t see why people will suddenly start having more interest in live shows.

    I just hate to see people who aren’t involved in the industry (including a lot of the people posting comments here) talking about it like they know what it’s like. It’s easy to come down on the major labels and tha RIAA, but it’s not that black and white. As an outsider I can see how easy it would be to say something like “Good News! No one is buying CDs anymore” but as someone who’s been working at it for years, it’s incredibly frustrating to hear.

    I’m not saying everyone should go out and buy CDs if they don’t really want CDs, but you can’t can’t just lump artists and labels into one big pile and go, “ehh serves them right for charging too much” or whatever the argument of the day is.

    Sorry if this comes across the wrong way… I just think when you view recorded music is something that should eventually cost nothing… well, that’s part of the problem.

65. Peter Glyman
    

    March 21st, 2007 at 6:47 pm

    I love this post. My buddy and I read it about four times in the car today from my Treo (using Google reader). We were rockin out to Ra’s album Duality at the time. Anyway, I love the direction digital music is taking. Any song by any artist is available over the web. Music is easy to share and the net makes it easy to find new music and fans more than any time in history. This is good news for musicians and fans. Free the music, free online tabs (another subject) and lets go to more live shows and buy concert tees.

66. Prettynoiselab
    

    March 21st, 2007 at 6:56 pm

    A Real Professional,

    I agree with you 100%. Times are going to be much tougher for smaller independent bands or actually bands in general. Bottom line- Loss of cd= a loss of one of the bands streams of income. Along with much choice of entertainment for the general public all around I would say the music industry will continue to shrink. Time to morph into Music 3.0

67. Anshul
    

    March 21st, 2007 at 7:27 pm

    This is not exactly great news. I am in favor of free music and all but CDs have their own place and sadly they have been losing their value over the years. And also, live concerts might be seeing an increase in revenue but thats only applicable to US. In other countries ticket prices for live concerts are insanely high and as such they r not an option.

68. Jarrod
    

    March 21st, 2007 at 7:43 pm

    This is the best take I have ever read on the digital music trend. Great post, and you are dead on. The industry is shrinking, and there isn’t much they can do about it.

69. Sean
    

    March 21st, 2007 at 8:09 pm

    There are some interesting business models springing up around the industry. For one example, check out http://amiestreet.com.

70. Drama 2.0
    

    March 21st, 2007 at 8:10 pm

    A Real Professional: great stuff. It’s always refreshing to read a well-written post from somebody who is actually in the trenches and knows what they’re talking about. Insightful.

    “But it really gets my goat when people in the tech industry who live in million dollar homes try and tell music industry lifers that they are going to make it all back on live shows.”

    Amen. A lot of people are not pragmatic. I don’t necessarily like the RIAA and I don’t have a teddy bear with a shirt saying “I Love Big Media” that sleeps next to me, but the bottom line is that anybody making an attempt to look at the situation from an objective perspective is going to realize that technology companies are no less evil than the major record labels and media companies. Technology ideologues believe that technology companies are made up of pioneers and innovators. And of course they’re not evil because they wear jeans and flip flops to work. They speak of things like “digital democracy” so how can they have anything but the consumer’s interest in mind? This isn’t about sticking it to The Man, saving artists from conglomerates or providing a better service for the consumers: technology entrepreneurs want to be in the entertainment business and divert revenues from the companies that produce (or finance the production and distribution of content) to themselves. They’re not asking “How can we make things better for the artist?” They’re asking “How can WE take some of the money that the artist is currently giving to the record label?”

    This is all fine and good. Competition exists but it’s unfortunate that a lot of technology people want to get in on the action without really understanding how the business works. They want to reinvent markets but just as they tried to create a New Economy in Bubble 1.0, most of the time it will fail. In some cases, like that of iTunes, you have a fairly stable marriage between a technology company and the music labels/media companies. Are they entirely happy? No, but if one party in a business relationship gets everything it wants, the other party is almost certainly feeling like it got screwed, which is never good for the long-term success of the relationship. A great piece of advice I was given is “If you sign a deal and feel like you could have gotten more from the other guy, you have a great deal. If you feel like you got every single thing you wanted, you’re going to have problems down the road.” Tidbits aside, more often, however, you have a situation where somebody wants to piggyback on the work and rights of content owners without getting married (Napster, YouTube, etc.). We can convince ourselves that it’s ethical. Big media fat cats have sold their souls to the devil. Content creators can do better without them. Technology pioneers are here to help and even though we do understand that theft of content is taking place, it’s okay because you’re going to make more money from live performances because of all this great free promotion that you should be grateful we’re giving you! If those justifications don’t help you sleep well at night, music is an art and you should be happy that people “digg” your songs anyway!

    Of course, we talk about the death of big media, whose revenues and profits are shrinking in some areas, and cheer with glee, but few people are actually talking about how all the startups that are supposedly responsible for causing this shrinking more often than not have meager revenues and frequently have no profits. Maybe we should focus on the fact that most of these new media startups so eager to reinvent the entire media business, liberating content and helping content producers in the process, haven’t been able to do it at the levels everyone keeps hyping. YouTube’s meager $15 million in gross revenues in 2006 anyone? If the startups that are trying to reinvent the media business don’t succeed, we might be reading a post “Bad News! New Media Deadpool Up 50% from 2007″ a year from now. The last two sentences will state:

    “Successful Internet entrepreneurs will still make a very, very good living. Others will have to decide if love of building nifty web applications that can’t make money is enough to keep going.”

71. Richard
    

    March 21st, 2007 at 8:49 pm

    I absolutely agree. In fact I wrote something in the same vein a year or so ago.

    “In practice this turns the economics of music on its head. In the past, performers made most of their money from recordings and used live performances to promote the recordings. The emerging business model is that performers give away their music to build an audience and then make their money from live performances.”

    http://bandb.blogspot.com/2005.....music.html

72. Jennifer Jenson
    

    March 21st, 2007 at 8:54 pm

    This is nothing new and it is embarrassing this company has not even been mentioned here. There is a startup in your backyard that is doing exactly what you outlined already. The labels and music studios are already wised up to this and using that tool and it is a small startup right under your nose.

    http://www.divinityassets.com

    Sigh

73. Jonas
    

    March 21st, 2007 at 9:32 pm

    Good News! Rebirth of Radio 2010

    People already get tons of free “streaming music” AND artists get paid!

    The issue with CD’s is that owning a physical copy has lost its value.

    Look forward to bundling (e.g. ticket with digital tracks, digital tracks give access to exclusive fan club, etc) a rebirth of ad supported music is also on the way.

74. Paul D
    

    March 21st, 2007 at 9:46 pm

    I concur. Awesome news! The sooner this industry dies, and is replaced by one run by artists with a business strategy that works in the digital age, and concentrates on the product instead of taking away my freedom, the better.

75. nathan
    

    March 21st, 2007 at 9:58 pm

    Speaking as an independent musician who has been following the changing face of the music industry for the last 5-10 years, I think it’s awfully easy for people on the “outside” to say “well, it’s art, you should be prepared to not make money from it anyway”.

    It takes years to hone your craft as a performer or songwriter, and even the cheapest home studios (of any quality - not talking about some guy with garage band here) are going to set you back $5-10 grand in equipment costs, not to mention mastering, artwork, etc. Plus, at least in electronic music I know a great deal of artists who don’t tour extensively- that’s a rock band thing.

    Is the idea of all these people relegated to music being a “hobby” for them with no possible chance of making their money back really a “good thing”? - what about indie labels - I’m not talking Sony/Sub Pop/whatever - I’m talking labels run by one or two guys, that are just aiming to break even. These guys aren’t industry fat cats or whatever, and they’re rapidly losing any ability to stay afloat and keep getting their music out there. Not a g