South Korean Music Retailers Dying

terrymaster69 writes "According to this Reuters feature, 95% of South Korean music retail businesses have failed in the last year. 'While South Korea is not alone in seeing a downturn, the drop has been greatly accentuated and particularly deep because of the country's high-speed Internet access and a youth culture that uses some of the most sophisticated gadgets available.' Is this really a problem or just a natural progression?"

Why this is happening...

[JimMarch(equalccw)]

I used to work for Personics.

Late 1980s they worked out a way to allow people to have professionally made audio tapes made up out of whatever single tracks they wanted from a large catalog. It involved a CD jukebox with compression that allowed cutting audio tapes at 8x or so - a 60 minute tape would run out in 10 minutes or less and all the gear to do this was at the record shop.

Detailed auditing tracked per-song revenue and royalties.

The music business deliberately killed this off in order to max out full album sales.

http://www.cnn.com/TECH/computing/9805/26/intern et .music.idg/

http://www.betagroupllc.com/1st-personics.html

In this and a ton of other ways, they crippled innovation.

They're now paying the price.

Give the people what they want.

[Doc Ruby]

"CD sales at Jang's Mihwadang Records, once one of the 10 biggest music retail chains in the country, dropped by two-thirds in just two years. Jang now devotes more shelf space to digital appliances, including MP3 players or mobile phones."

I bet Jang isn't forcing his customers to buy the vinyl that they used to need to replace after scratching them, either. If only the record labels would stop fighting voluntary blanket licenses for song sharing, that they allow for lucrative radio royalties, they might survive to distribute content to Jang's new wares. But it looks like instead they're just roadkill on the Infobahn.

only bad music will die...

[rsidd]

Serious music won't. I don't know anyone who uses downloading/P2P for classical or jazz. There are a lot of smaller labels out there that do a very good, serious, professional job of packaging their CDs for a discerning audience; and a lot of discerning people who buy their stuff. That's why chains like Harmonia Mundi [harmoniamundi.com] in France are doing fine. As Harmonia Mundi's founder Bernard Coutaz points out [nepalnews.com.np] (scroll to bottom), the audience is there and growing, and concert goers regularly buy CDs: it's the big labels who are failing to reach out to such customers. Me, I'm happy if the generic Tower Records crashes and burns, give me the small guy who actually knows his stuff. As for South Korea, dunno -- maybe they don't have enough of a market for that kind of thing, they're dominated by the MTV crowd?

Add no value? Excuse me?

[Viol8]

I don't know about you but I *LIKE* going around a music store and browsing. Whats the alternative , driving for an hour to the warehouse and climbing over the shelves? Not everyone likes mailorder and lets face it , online retail is nothing more than an electronic sears catalogue that my granny used to buy her knickers from 3 decades ago. I *LIKE* shops , and for some geek like you to say they add no value shows how out of touch you are with a large percentage of humanity.

The economic picture

[Anonymous Coward]

Just to point out, the article said 95% failure in the last FIVE years, not the last ONE year as the intro says. [Though I am sure the RIAA types will conveniently make the same mistake.]

For comparison, don't about 80% of all businesses fail within five years of startup?? Since youre talking economics, I hope you might know where to look up general failure rates. Let alone failure rates in Luddite industries.

Re:perhaps this is good

[cinemabaroque]

there are a lot of things that artists can do to get paid other than sign their souls over to a major label.

1. play a show
2. sell t shirts
3. sell CDs or LPs to truly loyal fans
4. be as creative as possible, remember you ARE an artist

as a side benefit the artist gets to keep a much larger portion of the wealth that they create.

Re:Natural

[Anonymous Coward]

You take pedantry to a whole new level.

In Korea,

[bugbeak]

basically every company out there that involves itself in electronics is trying to incorporate music into their devices. Case in point: cellphones.

The Samsung SPH-S2300 [anycall.com] comes with a built-in MP3 player, along with a mini-SD card, and its adapter for use as a regular SD card. Same goes with the Samsung SCH-V420 [anycall.com], only with a Memory Stick Duo.

There is an on-demand cellphone-only portal called June [nate.com] by SK Telecom [sktelecom.co.kr], the biggest carrier in Korea. June is host to numerous music files that subscribers can download to their cellphons for X number of days, and then watch it vanish. Hence, you see a lot of people with headphones that sprout from the phone as opposed to a different player.

In the end, it's all about the comfort level, having something when, where and how you want it. Some like to hold it in an iPod or some other capacity music player while others just want to listen to what the want, only for the time being.

Re:Well I'm not korean but...

[dhoonlee]

Last time I was there, the price of an average cd was 10 bucks (I noticed, much cheaper than the average music CD from the US).

I think the primary reason for the death of this business strategy is not the price of the CD, but the CD itself. As has been mentioned in countless posts, the CD is becoming quite an inconvienent and restrictive medium (relative to MP3s of course, the CD hasn't changed, MP3s have simply changed how we evaluate such things).

Re:Natural

[autophile]

None of the guys who I know who are downloading music from internet is doing it as an expression of the desire for the free speech. They do it because they don't want to pay for it.

I think there's a proportion of downloaders who would pay, but just not to the RIAA. I'd certainly want to pay the artist directly.

--Rob

Re:let's see...

[ronfar]

It's in the article referenced here, second page:

South Korea's music industry and state prosecutors have filed lawsuits against Soribada and its users since 2002. But with courts still reviewing the cases, most sites are still operating.

Music industry executives' hopes were raised recently when copyright violation lawsuits forced Bugsmusic to stop its free download service. It agreed to do so from November.

But while this cheered the recording industry, music retailers have seen few benefits.

"Now recording companies are trying to make more profit through a streaming service or mobile phones service, and the Internet is a mainstream music market," said Min Soon-sung, president of the Korean Records Retailers' Association.