Recent year-end reviews have commented on the continued slide of the compact disc into oblivion, much like the vinyl LP, the analog cassette, the 8-track, a curious little thing-a-ma-jig Philips Electronics was pushing back when it still owned PolyGram called the digital compact cassette (“DCC”), the mini-disc, and the CD-in-the-long box. See, e.g., “Album sales plunge in ’07 as digital growth slows,” Los Angeles Times (Jan. 3, 2008); Veiga, A., “Falling CD sales portend more changes,” Los Angeles Times (Jan. 8, 2008); and Eliscu, J., “Labels’ Unhappy Holiday,” Rolling Stone (Jan. 24, 2008).
In the meanwhile, commentators like David Byrne, formerly of the band Talking Heads, continue to make sense as they trace the evolution of the music business and its current dysfunctional mechanics, Byrne, D., “ David Byrne’s Survival Strategies for Emerging Artists — and Megastars,” Wired Magazine (Dec. 18, 2007). Mr. Byrne cites recent trend-setting precedents such as Madonna’s deal with Live Nation, and the Radiohead digital album giveaway.
Then of course there’s Warner Music Group, trading at an all-time low ($4.69/share at today’s date); if it hits any much lower, I’m definitely “in” on a consortium to buy it. Not to worry, EMI – my former home – is headed in the same direction.
This trend is much descried by the gatekeepers such as Edgar Bronfman, Jr., Guy Hands (who seems to have a bad case of busy fingers), and Doug Morris (one of my former bosses, whom I admire very much).
A lot of the hue and cry is based on faulty expectations. That is, people who own (or manage) record companies believe they have an entitlement that the business should continue on as it always has, and that it should experience the same levels of growth and rates of return. Historically, this has not been true for any industry, much less one based on consumer preferences.
Another misconception is that P2P file sharing somehow is “piracy,” when in fact vinyl records were not encoded to prevent people from taping them, nor are CDs encoded to prevent people from transferring them to iPods, etc., short-lived (and illegal) experiments from Sony-BMG and Warner Bros. notwithstanding. These product handling characteristics of recorded music have created a paradigm, or a set of expectations, particularly for consumers. Those are the people who actually purchase and listen to recorded music. Nobody has presented a case, much less a compelling one, why this template needs to change.
It is totally unlike the paradigm for, say, movies, or even videos (DVDs), which people are used to renting, or buying, or taping off-the-air (now, via DVR). The movie business has its own problems, but they are different from those facing the record business.
In the meanwhile, as Mr. Byrne (among other commentators) has observed, people still enjoy listening to music, attending concerts, turning on the radio, etc. While of course it isn’t a representative case, the recent Led Zeppelin reunion concert in the UK had something like 20 million applications for 16,000 tickets, Fricke, D., “Renunited Zeppelin Plot Their Future,” Rolling Stone (Jan. 24, 2008). People traveled from all over the world to see it, and unquestionably there will be CDs, DVDs, etc. to purchase at some point in the near future. I cite this example only as one instance where people still can get excited about music.
So what the industry should do is just be smaller and stop complaining so much. It surely needs to arrive at a new template, but this isn’t so much a matter of “changing its message,” as the presidential hopefuls are wont to do in an effort to appeal to voters. That approach assumes that demand is there, and that it’s simply a matter of figuring out how to communicate (or enforce) the dynamics of the marketplace to (upon) its participants. Rather, the fact of the matter is that the reality of the marketplace has changed. No amount of message-attenuation (message-tampering) will alter that fact.