The Crash in the Music Business

Oct 3 00:17 UTC 2001

Here's one of my hobbyhorses again.  You're probably all bored
with reading about it, but the juxtaposition of the following 
two news stories was too much for me to resist.

(1)  "Music industry seeks to change tune as sales stall"

http://dailynews.yahoo.com/h/nm/20010928/en/music-industry_1.html
 
Two of the major labels, EMI and BMG, came out with very disappointing 
financial reports.

On Friday, the International Federation of the Phonographic Industry
(IFPI -- essentially the global version of the RIAA)
reported sales for the first half of 2001 were down:
   -5%   by value
   -6.7% by units sold

Quotes:
> ``What we're seeing is a serious structural shift in the music 
> industry. It's not a short-term problem --
> on a compound basis over the past five years, music sales have 
> fallen 1.5 percent each year,'' said
> Helen Snell, analyst at ABN Amro.
      note that "over the last five years" means that 
      the start of the slowdown goes back before Napster
      and before CD burners became common.

> ``The industry has to go back to basics and reinvent itself. 
> It needs to look at the whole concept of
> ownership of music.''
      One wonders what that means.  I think what 
      it means is that, like Microsoft, the industry 
      wants us to pay ongoing license fees to rent recordings.

> While the knee-jerk reaction of most music groups is 
> to shave costs back to the bone, analysts say
> they must still pour money into finding hot, new acts 
> and throw themselves more vigorously into
> developing the next format to replace the CD.
      Oh dear.  The success of the CD rollout has the industry 
      thinking it can snap its fingers and everyone will rush
      out and replace their entire library.

      What they miss completely is that the switch to the CD
      was consumer-driven.  Most of my friends were eager to 
      *flee* from their LPs, the cleaning rituals and
      the finicky turntables.  CDs offered a real improvement
      in sound quality for everyone (except maybe the most 
      wealthy analog fans) plus convenience and durability.

      Consumers have already made their choice for the 
      next format:  the Mp3 file.  The industry has no intention
      of accepting the consumer decision.
      
-------------------------------------

The labels made great piles of money re-selling their 60s and 70s 
catalog on CD; this torrent of money obscured the crisis that was  
developing in their new artist sales. 

New artists just weren't selling as well as the old artists did.
The labels tried to hide this crisis when they banished catalog sales to a  
separate chart -- it was too embarrassing to see new hot-selling 
releases intermixed with old dinosaurs like DARK SIDE OF THE MOON
and JOURNEY'S GREATEST HITS.

What the industry doesn't grasp is that the LP-> CD replacement was 
a one-time bonanza.  People replaced LPs because they were worn out.
CDs, on the other hand, are generally in as good shape as the
day they were sold.  

-------------------------------------

(2)  "'O Brother' Soundtrack Is Talk Of Bluegrass Convention."

http://www.vh1.com/thewire/content/news/1449510.html
 
Mercury Records reports that worldwide sales of the O BROTHER album 
are now up to three million copies.  This is astounding for
a fairly traditional folk/bluegrass/old-timey collection with little
promotional push and little radio airplay behind it.

T-Bone Burnett produced the music for the film and the CD.
You probably never heard of him unless you are a certain kind of 
music fan; he played in a great 1970s group called The Alpha Band, 
he played backup for Dylan for a while, he's married to an interesting
pop singer named Sam Phillips, he's done some work with Richard 
Thompson.   

In this article, Burnett is being 
quoted about how the inspiration for the O BROTHER tunes came 
from a conversation 

> ...with the abstract artist Larry Poons, talking about Ralph Stanley.
>
> Burnett said Poons had remarked to him that, "We live in an age 
> of music for people who don't like music."  This set Burnett to 
> thinking about real versus manufactured music.  "What he was saying
> was this: the record business learned years ago that not that many
> people like music.  Some people can do without it, some people are 
> annoyed by it...  The basic record company philosophy has for some
> time been that if you remove the aspects of [a particular form of 
> music] that the audience finds challenging, you have a better 
> chance of selling the stuff. ...    

So I'm starting to get optimistic about the crash in the music business.
It's possible that the public at large is losing interest in music
as mindless entertainment.
I'm hoping that maybe the music which was made solely to provide a 
return on capital will get out of the way, and maybe what's left 
of the music business can be handed back to people who actually 
care about music.

response 2 of 71:

Oct 3 06:47 UTC 2001

Actually, I didn't replace a LP library.  I figured out that LP's were a
losing proposition, waited for CD's to come out, and invested in a CD
library.  I also have a small cassette library, which I accumulated
before CD technology was cheap enough, mostly involving non-mainstream
musicians who were never available via LP's.  My buying patterns may
have matched what Ken describes as a "conversion to CDs", perhaps
preceeded by a "renting music on tape" phase, but my actual reasons are
actually significantly different, and based more on perceived durability
and "per-play" low cost (and accessibility to fringe-market artists)
than the music industry might like to believe.

response 4 of 71:

Oct 3 13:32 UTC 2001

And a lot of those studio execs think the quick fix is to come out with
another format, so people will be encouraged to replace their catalogs
again as happened when cd's came out.  but the problem is that mini-cd's,
dat's, cd-dvd/dvd-audio's .etc are all nice but dont represent enough of
an improvement over cd's for most to want to spend the money to replace
them.

in fact the next step isnt a new format to keep people coming into record
stores, but rather the elimination of record stores.  when you can buy
and store all your music as computer files efficiently, there wont be a
need to even step out of the house.  

response 6 of 71:

Oct 3 14:48 UTC 2001

As was the case in even lp's: once you've a friend owns a copy, the
duplication is trivial.. ANY format they try to impose is gonna' be a royal
pain - to themselves - because "damnfew" are going to buy the new devices
and media, but copies will be available within a day ;->

response 8 of 71:

Oct 3 17:01 UTC 2001

        What of material no longer in distribution?  CDs that have
gone out of print.  LPs that never been released as CDs?   
        When a record company takes existing stock and liquidates it,
marking it as a 'cut-out', they are giving up on selling that album
(regardless of media) at their full price (to distributors), and
instead are just selling the plastic.  The artists do not receive
sales royalities on those units, nor do the liquidated unit count
count as units sold.
        How can I be harming a record company or artist by passing
some of that music along to others?

response 10 of 71:

Oct 3 17:31 UTC 2001

But copyrights don't expire any more.  Any time some get close, Congress
extends the term again.

response 12 of 71:

Oct 3 18:05 UTC 2001

Shakespeare isn't under copyright. ;}
then again, specific audio performances of Shakespeare can be under
copyright...

Copyrights don't really expire, but creators can release items into public
domain.

response 14 of 71:

Oct 3 19:10 UTC 2001

"Happy Birthday" is a lot newer than "Clementine", that's why.

response 16 of 71:

Oct 3 19:13 UTC 2001

Past a certain number of years after the creator's death, material becomes
public domain.  However, new laws are occasionally passed which extend that
certain number of years.  

Conveniently enough, these laws are always timed such that Walt Disney's
copyrights never expire.  Funny how that works...

Really, though, I shouldn't be explaining this, because I'm sure someone who
knows more than me will come along and render this post irrelevant. <g>

response 18 of 71:

Oct 3 19:22 UTC 2001

Here's another page that has an simple message:

Sound Recording Rule of Thumb:
There are NO sound recordings in the Public Domain.

http://www.pdinfo.com/record.htm - The Public Domain Information Project.