Sep 02, 082. In my blog of April 11, 2007 I quote a Financial Times article on the music business, which had a lot of coverage of one Jeff Kwatinetz.
Jeff Kwatinetz is profiled frequently, including here. He's a talent agent, but wants to hearken back to the good old days where talent agents actually respected the talent they represent.
At any rate, the most interesting part of the FT article is a quotation from Kwatinetz, as follows: "Music is selling. It's just that the people developing it haven't got a proper model. It's important for people to realize that the music business is healthy. It's just the record business that is struggling."
3. Devoting substantial coverage to the declining sales of CDs, in April 9, 2007, the Financial Times quoted extensively from Recorded Music and Music Publishing [2007-29], published by Enders Analysis.
The Enders report forecasts that by 2009 overall music sales will be half their level from the peak of the CD boom: global music sales will fall to $23b in 2009, down 16 per cent from last year and far below the peak of $45b in 1997.
Although the report predicted that CD sales will start stabilizing in 2010 when penetration of MP3 players such as the iPod is expected to reach saturation, the Financial Times paraphrased Enders' concern that the lifespan of any hit album is now shorter and, as a result, revenues from blockbusters are no longer covering the labels' costs and other commercial failures, and quoted the inescapable conclusion: "The labels' business model is at a very uncomfortable juncture."
4. "Death of the Record Store." In a January 18, 2007 article, The Economist pointed to an issue I had overlooked: the music retailing business is falling as fast as the rest of the traditional music industry. HMV, Virgin and other retailers are all pointing to declining financial results. Legal online resellers, like Amazon and CDNow (oops - they're now owned by Amazon!) are siphoning off another chunk of the business. Retailers are pushing DVDs into the prime display racks: how much longer will this be a salve?
5. "Canadian Record Industry Hit Hard by 35 per cent Drop in First Quarter of 2007". It looks like the Canadian record industry may be suffering even more severely than the U.S. or Britain. As Greg Quill reports, "Sales of CDs and music DVDs in Canada in the first quarter of this year fell by an unprecedented 35 per cent - to $68.7 million from $105.6 million in the same period in 2006 - the most drastic decline in "physical" music sales of any country in the world, according to figures released yesterday by the Canadian Record Industry Association... Unit sales for the same period were down 30 per cent, to 7.1 million from 10.2 million in 2006."
6. Hit Albums: In a blog from February, 2006, Erick Schonfeld reports on a presentation by Chris Anderson, the very-well-known author of The Long Tail. Anderson focused on the decline of the big hit albums and included this chart in his presentation:
It's a fascinating sidelight of what the future of publishing might offer. As Schonfeld reports "In the past five years, the number of gold and platinum albums have been cut in half. Part of this no doubt has to do with the rise of illegal file sharing, but part also has to do with the greater variety of music now accessible in digital form, and the ease of searching and discovering that music."
7. Dancing to a New Beat. The ever-upbeat eMarketer is a prognosticator after my own soul. They don't despair. We're in the midst of some huge changes, but that's not the end of the music industry. According to this report "With falling CD sales and single downloads failing to pick up the revenue slack, the music industry worldwide has been singing a sad song for the last few years, but that tune is about to change - along with almost everything else in the music business.
"eMarketer estimates that the worldwide market for recorded music, live music and music licensing will reach $67.6 billion by 2011, up from the 2006 total of $60.7 billion," says Paul Verna, eMarketer Senior Editor and author of the new Global Music: Tuning into New Opportunities report. "Over that period the industry will grow at an average annual rate of 2.19%."
DRM
8. The big news at the beginning of April 2007 was that "EMI, Apple partner on DRM-free premium music". For some reason I foolishly read that as EMI would be giving the stuff away for free, when in fact that are increasing the price of each jingle by 30%. The difference is that the music will not include Apple's DRM scheme (or any other), making it easy to transfer tunes between various digital music players.
This is being touted as brilliant, brave forward thinking by EMI. I call it a long overdue move, but one it will not regret.
9. "The Slow Death of DRM". Columnist Steve Gordon, formerly a lawyer for Sony Music, states emphatically that the "DRM walls are crumbling." He writes, "Moreover, there is mounting pressure by industry players, especially legit distributors, to get rid of it... Calls for discarding DRM are also coming from Rhapsody and Yahoo. He concludes: "Even if the legal attacks against DRM do not prevail, the majors should take note: get rid of DRM, because it's bad for business."