At Atlantic Records, Digital Sales Surpass CDs 273
The NYTimes reports that Atlantic is the first major label to report getting a majority of its revenue from digital sales, not CDs. Analysts say that Atlantic is out in front — the industry as a whole isn't expected to hit the 50% mark until 2011. By 2013, music industry revenues will be 37% down from their 1999 levels (when Napster arrived on the scene), according to Forrester. "'It's not at all clear that digital economics can make up for the drop in physical,' said John Rose, a former executive at EMI ... Instead, the music industry is now hoping to find growth from a variety of other revenue streams it has not always had access to, like concert ticket sales and merchandise from artist tours. ... In virtually all... corners of the media world, executives are fighting to hold onto as much of their old business as possible while transitioning to digital — a difficult process that NBC Universal's chief executive ... has described as 'trading analog dollars for digital pennies.'"
True in the DJ world, too. (Score:5, Interesting)
This happened very suddenly, and it's a bit startling for those of us who have invested in actual vinyl turntables...
Re:Tough shit. (Score:5, Interesting)
"'It's not at all clear that digital economics can make up for the drop in physical,'
Jeez, you don't have to physically make anything anymore and you don't actually have to ship anything anymore. All you have to do is put up a web site and let people send you money...lots of money.
But you're not sure if this incredible change in your cost-of-goods-sold structure is going to make up for your astonishing incompetence as an marketing executive?
I don't know, guy, maybe you ought to be exploring career opportunities in fast-food-service industry. And let some unemployed electronics tech have a shot at your present so-called job.
I couldn't do any worse than you are.
Re:Tough shit. (Score:2, Interesting)
What the industry should have done in the first place is provide music customers actually wanted to buy. I have continued to buy CDs over the years, just not RIAA crap. (How many CD's did you buy in the late 90's that was complete crap besides the one song they played on the radio 3-times an hour?)
I buy non-DRM independent label stuff from the "local" artist scene around the U.S. and World. I can listen to their stuff live or on the net, heck sometimes even download the entire album... If it is good, I'll buy the actual CD quality hardcopy. Or at least support them by grabbing a t-shirt or other item off their site, etc...
How long before the RIAA want's a piece of the bailout too? (had to stick that in there. )
Re:The Labels Want More Money... (Score:4, Interesting)
Or just replace "fairer" with "fairer for us" - fairer doesn't really mean much in business anyways. It's not that they think the artists owe them more money. It's that they want to find a way to get more money out of the whole system. Honestly, if they weren't doing that, they probably wouldn't be doing their jobs. Sure, it's easy to look at the industry and say it's outdated, say they don't provide value anymore, and should die. But is it reasonable to expect them to just roll over and die? I know if it were me, I wouldn't. If I needed to make a certain amount of money to consider the venture "successful", and the total pie got smaller, then my option is to try and get a larger piece of the pie. The counter to them actually getting that larger piece isn't to have them ask for less...it's for the other people providing value to the business to say no.
Sure, they're probably going about it the wrong way. I have to say, I think they're eventually going to fail. But that doesn't mean we should expect them to just give up. And we certainly shouldn't be surprised, or even appalled, when we hear about them attempting to stay alive.
Re:Tough shit. (Score:5, Interesting)
because in the scale of record companies CDs are nearly free anyway. They're paid for as soon as they ship by record stores... then the stores have to worry about stock. The number of releases has cut way more than 37% as they only cater to the very large stores like Walmart and Best Buy... independent record stores that sold new bands went away long before napster came on the scene.
Re:Can someone help me figure out the ethics of th (Score:3, Interesting)
Re:The Labels Want More Money... (Score:2, Interesting)
Actually, they do think they are paying the artists too much. They tried to reduce the mandatory amount of money per song they had to pay for royalties this summer as part of 'negotiations',
And it's not like the labels looked at digital downloads and said, well, this gets rid of pretty much all distribution, transportation and 'loss' from the ledger, so we can just divvy up that money between us, the songwriter and the performers. They did the opposite. They are keeping all the extra money. They continue to charge artists for so-called 'losses' (as a fixed percentage). They went over all their contracts, and picked out all the ones that were poorly worded, and then decided to pay those bands ZERO for digital downloads (songwriters still were paid, but not the performers).
And they still are dicking around with the most successful, fastest growing online music store in the world, namely the iTunes Music Store, by intentionally trying to cripple it w.r.t. other online stores by forcing Apple to retain DRM on their songs (except for EMI).
The real question (Score:5, Interesting)
âoeThe real question,â Mr. Rose said, âoeis how does the record industry change its rights structure so it captures a fairer percent of the value it creates in funding, marketing and managing the launch of artists?â
Arguably, when the record industry lost their stranglehold on the various ways that the public could be introduced to new acts, their marketing and launch management value creation was significantly reduced. Furthermore, competing in the much larger pool of availble unlimited digital stock, one would naturally expect prices to compete downward.
Also, the number of ways in which the record industry payout structure has been unfairly skewed towards the record labels is well documented. [salon.com] One would expect this to gradually tip downwards back to a more reasonable medium.
In the grand scheme of things, a decent recording can be made at a 10,000 dollar studio, pressed at one of any number of professional CD producers, and distributed by any number of available distributers. Add in a 1,000 dollar HD video camera for youtube promotion, and you have a comparable music system powered by the creator's time. That's a highly efficient alternative that didn't exist ten years ago.
Assuming our cultural music needs are being met, a 25% drop in overall spending on music could easily be because we have become 25% more efficient.
Re:The Labels Want More Money... (Score:4, Interesting)
Possibly, pre-successful musicians need an honest union
A friend of mine once made the mistake of joining a musicians' union. Never did him any good, and now, he can't perform at all without first paying dues to said union. Even before the economy collapsed, he could not get enough money to be worth performing.
Promotion is a mess (Score:3, Interesting)
The problem with the music business is the attempt to use money as the promotion medium. Yes it works. But it does not cater to individual tastes.
There's a number of ways industry promotes itself. Commercial radio, newspapers, On-line - iTunes 'New Featured' albums, etc. There's magazines for Rock, Metal, etc that promote artists and include CDs of sample music - I have to think the labels push artists with $$$$$.
I love music. I've a fine collection, IMO, of Rock, Country, Blues, Jazz and all kinds of other music. I almost always have music playing. The problem is, with my varying tastes its hard for me to find new artists I want to listen to. Without relying on Hit songs being the only measure of whats good (I do a select few of the current hit songs).
My favorite albums though are from artits who don't get a lot of heavy promotion. Sad because the albums are playable tracks 01 to 12 or 15. And there's a quality and consistency to all the tracks. Sad to because they are signed on major labels and there's no backup - and if the album gets a 'bad' review from the press the label doesn't stand behind the artist. I almost feel like its done on purpose so they can focus on the 1 artist that will make them $200 million.
I think the only option is for the labels to collaboratively build a Last.fm site. The 'community' has been building the site/database (I don't know all the ins and outs) for a few years. If the labels really want to keep fans interested, make sure they know about *all* your artists. Otherwise, why blow $200,000 on a new record and hope that it does well w/o any promotion.
'Cause at this point I don't mind buying retail. I love it since I get the pressed CD. Just help guide my way to the register.
With on-line I only wish the catalogs would expand so consumers can buy songs from 20 years ago even on not-so-well selling albums. You can't find them anywhere. And if you can the copy is $500. iTunes still has some major holes in its collection. I'm not talking about bands that sold 10,000 copies either.
Revenue is meaningless. (Score:5, Interesting)
will be 37% down from their 1999 levels" means jack shit because it says nothing about profit. Of course revenue will drop significantly if you don't have to make, package, distribute and find retail shelf space for millions of individual physical items around the globe.
Personal anecdote of physical vs electronic: During the 90's I was the technical lead on a large project with 8000 remote mobile users, and when I say remote I mean Australia wide coverage - GSM, DATATAC, sattelite phones, radio link exchanges, and the like. To upgrade the software for all 8000 users by CD was costing ~$2M/yr (mainly in down time for the user to get the CD and install the upgrade). It took 4 programmers including myself ten minutes of thought and 6 months of work to build an automated upgrade system that did not require any action by (or delay to) the user.
The board of directors were so impressed with the $$$ signs that they wrote a long and flattering letter of appreciation to each of us, but they were a telco at the "bleeding edge", I imagine a record label would have taken us to the basement car park and shot us.
Re:Tough shit. (Score:5, Interesting)
A physical CD plus case and booklet is under a dollar to press in quantity, so the physical disc isn't actually a huge part of the price tag anyway.
I so wish they'd get more into the Long Tail. Imagine record companies reissing their back catalogues as FLAC or Apple Lossless. They could sell them for a couple of bucks under the CD price and market it to record nerds who want obscurities it's infeasible to distribute physically.
It's like they still don't understand they're not competing with paid downloads, they're competing with free.
Re:Tough shit. (Score:3, Interesting)
What's wrong with Top 40? I enjoyed the 1990s-era top 40 artists like Alanis Morisette and.... um, uh, well that's all I can think of right now. ;-) But that point is it's not all crap. There's some real talent hidden between the N'stynks and Britney Spears of the world.
>>>(How many CD's did you buy in the late 90's that was complete crap besides the one song they played on the radio?)
None. I learned my lesson in the 1980s to not buy albums, but instead wait for the "greatest hits" compilation. That way the whole CD is filled with good songs, and you get your money's worth.