Can Music Sales Get Any Worse? Just Watch.
by Peter Kafka
Posted on January 30, 2009 at 9:33 AM PT
Earlier this month, the music business got a rare piece of good news: Apple announced that it had posted “record” sales at its iTunes music store around Christmas.
Now, back to our regularly scheduled programming: I’m seeing more and more evidence that Apple (AAPL) notwithstanding, the industry’s last few months were bad even by the industry’s own terrible standards.
Earlier this week, a music industry exec told me he thinks that the CD sales decline, which started nearly a decade ago, accelerated at the end of 2008: “[Retail] floor space shrank even more, [unsold CDs] came back even faster, everything got worse, faster,” he told me.
The newest data point: Awful results from Sony’s (SNE) third-quarter earnings report, which covers the last three months of 2008. The company’s Sony Music Entertainment label saw sales shrink 22 percent compared to the previous year due to the “accelerated decline in the worldwide physical music market resulting from the worldwide economic slowdown.”
It’s possible that we’ll see a bit of variation in results from the other big music labels–EMI Music Group, Vivendi’s Universal Music Group, and Warner Music Group (WMG)–based on the makeup of their artist rosters, etc. But the worrisome thing is that Sony’s arsenal included three of last year’s biggest stars: AC/DC, Beyoncé and Britney Spears.
So while it’s possible that Warner Music, which reports next Thursday, won’t have equally brutal results, it’s a fair bet that it will.
Sort-of-related point: If you have a couple minutes and are interested at all about what the music business might look like in the near future, check out this New Yorker interview with Muxtape creator Justin Ouellette.
Ouellette achieved a brief bit of Internet celebrity last year when his free music-streaming site caught on with the the Web cognoscenti, but then folded after receiving complaints from the music labels’ trade group. Now he’s back with a legal version of the site, which will have much smaller ambitions.
Comments
this isn’t news. since 1995 and certainly since 2005 it’s no big prediction that the cd is dead
Posted by Sam Harrison at January 31st, 2009 at 1:38 pmin the big picture, music is about live concerts, and songs are ads for the artist
that means the entire music industry as it is now formulated is dead
and good riddance
Posted by Sam Harrison at January 31st, 2009 at 1:39 pmSam, you’re wrong now and you will be wrong in the future. CD sales are down, not dead. A few hundred million sold in 2008. That’s a lot of units of a dead format. In 1995, the CD still had four years until its peak year in terms of units sold in the U.S. These are not difficult statistics to find online. Google can help.
If recorded music is merely an advertisement for an artist, and a way to get people to concerts, then a lot of the population is going to get left out. Those U2 tours don’t exactly stop in Amarillo, do they? And soundtracks…there are no tours behind soundtracks. Or many greatest hits comps. Or EPs.
Every band that releases music would have to tour or play live to support it…what a weird world that would be. Have a family and a full-time job? Tough, go tour. Just a bedroom producer of electronic music? Tough, go tour.
The top fraction of a percentile makes a heap of money from touring. Everybody else does from OK to poorly. So it’s not all about live concerts. But when you’re Madonna and can charge $160 per seat and do a $120 million deal with Live Nation, yes, it’s all about the live concert. For everybody else, it’s about recorded music, publishing and merchandise.
When you think through it, the “songs are just ads” argument should fall apart fairly quickly.
It’s too safe, and too pedestrian, to simply say the way the music industry works today won’t be how it will work in the future. Of course it is going to change. It has already changed a great deal. For starters, it’s a lot smaller.
Posted by Glenn Peoples at January 31st, 2009 at 10:23 pm