How iTunes crushed music sales
money.cnn.com
money.cnn.com
"...musicians will have to increasingly rely on touring, merchandise sales and endorsement deals to make up for lost album sales." Yes, yes they will, just like they've always done because of how RIAA members take the large part of the profits from record sales. Again, the only ones for whom anything changes are RIAA members.
I just don't see how a shift wouldn't have happened one way or another. Blame iTunes all you want, but it's a hell of a lot better for profits than torrenting. At 99 cents I won't even bother starting the bit torrent client. At $15US for a CD that consists of the two songs I want, and the rest crap, you can bet I'll look at alternatives. And I have disposable income and am not afraid to spend it. You can forget about extracting money from the teenage market at $15US a pop, which will just torrent it when faced with the choice.
There's a buggy whip analogy here somewhere, but I'm not going to try. It's the way things are, and it's not going to change no matter how many members of congress the RIAA tries to buy.
You could always tape your records, but you couldn't CD your tapes, meaning a lot of re-sales of the same content. Now you can rip your CDs.
Of course, the RIAA probably expects people to re-re-repurchase content for every type of device they're using. How they charge $2 for a ringtone based on a single that sells for $0.99 is beyond me.
Not hard to see why the RIAA is less than jubilant about the situation. Of course $5B of that revenue disappeared before iTunes even got under way, so I don’t think PAID digital downloads are that much to blame for the decline.
No, that was the model they used in the 50s and early 60s--singles were much more expensive than today's 99 cents, and very profitable, and the albums were intentionally designed to get a few more bucks out of a few hits. By the 70s, the decent groups didn't really try to write singles--it was all album-oriented music.
I can't imagine a Thick as a Brick or The Wall in an iTunes pay-by-the-song world.
After that population started to age, and now music has to target your mom (and also teenage girls and boys who "consume" music now), and chances your mom doesn't want to dive into conceptual albums.
That kind of made music stupid.
yes, that’s largely true. and i’d say the extent to which labels profited over artists historically is pretty fucked-up. but, riaa itself aside, labels do serve a real purpose and are a valuable player in the space, like them or not.. and going from having the labels asymmetrically commanding industry profits (largely derived from record sales) to artists now doing the same (largely derived from other streams like touring, merch, …) may feel like ‘justice’ but isn’t an optimal state. they may have excess profits to coast on for a while but, in the long term, if both artists and labels can’t monetize the end result is less good music out there.
this disconnect in the market has hindered progress for too long (and i do blame the labels for it), but the solution should be shifting to a more equitable split of overall profits that reflects the value record companies generate in building-up an artist’s brand..
I have no disagreement with that. The problem is that the RIAA, and by extension the labels, make it really hard to sympathize. I have a long list of things that aren't much individually, but it boils down to not treating customers with contempt. Logically, I know that labels offer value in the market. Emotionally, I view them as greedy bastards looking to screw everyone from artists to end-customers, as long as they get theirs. Emotion overwhelms logic, and the manifestation of that is when I see a chart such as the one in the article, I just can't bring myself to care much.
Do you also consider a novel to be a couple of short stories mixed in with a pile of filler? Or songs to be a couple of choruses surrounded by filler? What you say is true to some extent for pop artists who live and die by the single but there are lots of excellent albums where the different tunes are thematically related, and gain substantial extra depth from their juxtaposition. I much prefer albums, even in electronic music genres.
At $15US for a CD that consists of the two songs I want, and the rest crap
Maybe the problem is that you're listening to inferior music.
As for relying on touring, there are a lot of artists who are excellent musicians but who don't like touring or live performance - Kate Bush springs to mind, as well as many bands in obscure genres that can't build large enough followings to support a tour, and only perform occasionally. And new bands, for whom this is a particular problem. You don't just decide to go on tour and watch the money roll in, it's actually a bit challenging for new bands to find bookings which is why managers still exist. Then there's expenses that go with touring like a vehicle, gas, posters etc (for marketing) and so on, which have to be paid for up front. Add on the cost of hiring session musicians, stagehands, and so on and it starts to mount. Touring around a single US state and playing 20 gigs over the course of a month for a 5-person rock band requires about $10,000 up front. Chances are that if the band is good they'll break even after the first week or two, but people like sessions musicians and roadies have to be paid whether or not anyone shows up to the gig.
One of the things that record labels were good at was providing advance money for such things and doing the marketing required to build an audience outside of a local area that would support the expense of a tour in the first place. Musicians don't usually have much money. A manager will have the contacts and enough seed capital to build a band into local popularity with small tours, but scaling things up generally requires a much larger chunk of capital.
Think of a band like a startup, the manager like the lead angel investor, and a record deal like the series A. Some companies are well suited to slow but steady organic growth, others need that injection of VC money at the right stage in order to succeed. Companies like Twitter or Instagram can't necessarily rely on organic growth because their value derives from network effects at scale, and they could never afford to do that if they tried to extract money from their first 1000 users.
It's one thing not to like the RIAA, but most criticisms of arts industries on HN are severely uninformed about the economic facts of life in those industries. Musicians don't automatically make income from touring any more than programmers automatically get rich from stock options.
How did iTunes kill music sales if the downward trend started before iTunes was even available (which is plainly on that chart)? What would an honest trendline from the CD sales peak to the trough say about iTunes' impact?
iTunes charges a dollar per song, about the same cost/song as Walmart used to charge for a CD in Nebraska back when everyone got in trouble for price gouging, and iTunes takes less of a % than Walmart ever did. If that chart is even close to accurate, Steve Jobs is about 90% of the reason the music industry still exists.
Every time I follow a link to CNN I get more convinced that they've given up, and I'm starting to wonder why people bother linking back to these news organizations at all.
Whose revenue? RIAA? What about the artists revenue? It'd be interesting to see that broken down.
Here's an interesting infographic showing how much artists make from various sources: http://www.informationisbeautiful.net/2010/how-much-do-music... iTunes is actually less profitable than retail, but only if you're on a label that takes a lions share of what's left after Apple. It'd be interesting to see what independent artists' revenues on iTunes are like.
The music industry is as profitable as it ever was. They just don't need to spend money creating CD's and shipping them all over the world. Direct to consumer (or through a service like Apple) is the future.
And more artists won't need a record label at all. Like Macklemore.
macklemore (and ryan lewis! - no love for the production, ever!) are the exception, not the norm, and i don't think represent the beginning of larger some trend..
i think the music industry is very analogous to startups in the tech space.. most fail, some make it alright, and some make it big. the difference between them usually comes-down to the right combination of talent, luck, and external support (from people who know the industry, have capital, and have been there before). in the startup world vc fills the support gap, in the music one it’s the labels..
as an aside: i genuinely do wish it were true though.. i could easily put together a really good case study charting the composition of a growing artist’s fanbase before and after signing to a major label. in the case of hip-hop, i’ve encountered countless data points where sentiment among an artist’s early fans takes a sharp nosedive down once signed and under the pressure from labels; this usually tracks song quality very closely and is a perfect inverse of trendlines for radio plays and itunes sales..
Sure.
Remove iTunes from the graph, and what you'll see is a big gaping hole where the next generation music industry product should have been.
But more importantly, it shows that said next gen product should have already been in place well before piracy even became a factor and iTunes was just Steve Jobs' wet dream. If anything, it illustrates the utter failure of an industry coasting on the unprecedented success of the CD when everyone else could see that physical carriers were already on the way out.
The industry had the time, means and opportunity to shape the download culture. Instead Napster and iTunes did. Not because technology moved so fast, but because the industry stopped moving.
A different way of looking at it is that there's a pattern of format changes: vinyl to cassettes to CDs to digital. With the move to digital, unlike the others, there was sigificant downward pressure on prices. So more music is being consumed (on the units chart) at a cheaper prices. From a consumer perspective, this looks like market economics doing what they should :)
All iTunes did, was let people easily and economically acquire only the tracks they cared about.
That those people turned out to not be interested in the 'other 8 songs' or the CD single b-sides is hardly iTunes fault.
If the industry promoted albums and bands, maybe they'd get different results.
However, a lot of the cost reductions come from increased efficiency.
Apart from the fact that record companies don't have to produce and ship physical goods, which is huge in itself, we also got rid of the need for humans to search, pick and curate new artists. Artists or their managers can now publish directly in the digital stores and a ranking algorithm is all that is needed to decide if it becomes visible or not.
In the past, the human curators kind of ended up in a position of natural monopoly where they would get to pick winners and pocket most of the profits at the expense of artists who were forced to sign unfavorable contracts to get visibility.
The fact that there is less money and lower 'sales numbers' in certain parts of the industry might be a sign of success of its most innovative side, the ability to provide more music at lower prices.
What would be interesting to see is the effect on artists in all of this. When I buy music I would like to not be paying for a huge and inefficient, production, distribution, curation and marketing layer. I want the money to go as much as possible to the artist.
Wait, who are you to pronounce on the efficiency of this layer? Do you think that production and marketing don't create value? Several of the artists that pioneered the 'pay what you want' approach have come to the conclusion that they were better off with that stuff in place:
http://www.theverge.com/2013/3/4/4054634/musics-pay-what-you...
1. Total number of distinct songs sold. and 2. Total length of distinct music tracks.
If we assume that a CD consists of ten 3 minute songs (30 minutes) we can see how much effort the "artists" put in to recording their songs [that were sold, due to being included on the CDs] to the revenue generated vs single tracks. I wonder this because if artists could focus on playing gigs, finding the popular songs and only spending effort and time recording those songs and digitizing them for sale, then the revenue per hour of effort could result in a drastically better "hourly rate" for recording.
(There's nothing like "doing work" just to do work and have it "thrown away". Many developers know this feeling.)
EDIT: I hope you can see where I am trying to go. I want to compare distinct songs sold to sales and aggregated distinct song length to sales. Perhaps someone can elaborate and better communicate what I'm trying to say.
I was a very happy Lala user until Apple killed it, and am now happy to pay $10/month to Spotify.
If not, shouldn't this be an argument for a reduction in copyright strength?
[1] Occasionally people argue that copyright protects the artists moral rights to the music, regardless of societal impact, but let's ignore that minority opinion.
"The smaller, cheaper "45" record dominated music in the 1950s and '60s, but the music industry wised up in the '70s."
This means, 45's were very popular and then the record industry purposely killed them to sell consumers more expensive full albums just to get a copy of the same song.
So the music industry were ripping people off, and the advent of piracy/digital downloads means they can do longer do that.
Interesting biased article. Needs a proper translation though from RIAA-speak to real English.
I'm no fan of the RIAA, but amount of cognitive bias on this thread is ridiculous. The record industry didn't kill singles at all, I bought plenty of them growing up.
Also, make sure to sort by sales too.
So, as we always say 'correlation doesn't mean causation'. iTunes probably isn't the cause, the severe decline in disposable income was the most likely factor.
How does one look at that and conclude that iTunes "crushed music sales?"
What percentage of a CD sale went to the artist?
It's not really about a change in format but a change in a distribution model. Anything that reduces the amount of middle men is good for the consumer and the artist.
That's stupid. Most music I care about comes in albums where most of tracks fit my tastes and touch my soul.
I wonder how the album:single chart will look like if we subtract "whatever plays on radio" from it.
Spending has shifted, and how people enjoy music has shifted.
It'd be like claiming the VHS killed the drive-in movie business. That'd be wildly confusing what was actually going on in the market at the time by ignoring a lot of other data points.
Tell Madonna her album sales have been decimated. Oh wait, she's busy making tens of millions per tour with $150 tickets. This chart pretends none of that spending is occurring. People have a finite budget for music, as with anything.
you may be right in that growth in other revenue streams (touring, merch, royalties, ...) potentially offset, or maybe even exceed, the decline in media sales when looking at the space in aggregate. however, that shift has major implications for different players in the space, and that shouldn't be ignored.
things may be working out better for superstars like madonna (and that’s not necessarily true; i really don’t know) given their ability to draw massive crowds willing to pay-up for the experience; smaller artists however lose out, as do the record companies..
historically, record companies took the lion share of media sales and artists (frankly speaking) got fucked. while the model has evolved, slowly, that’s still largely the same today, though things have now flipped - where the media sales, that the record companies depend on, have collapsed, and the other streams artists mainly depend on have taken-off.. love em or hate em (likely the latter), record companies do provide real value and remain an essential player in the space, helping discover and get good music out and supporting pre-madonna-level artists early-on, and their losses shouldn't be viewed as a win for the little guy, as it most certainty not.
i'd say this long-standing disconnect in the industry is why it’s taken nearly two decades to adjust to a disruption (digital formats, internet, file sharing) in the market; a ridiculously long amount of time if you think about it..
But of course listeners become very thin. With such enormous choice, every single artist isn't going to have more than several thousand fans on average. But it's just numbers at work.
I think that aggregators are going to surpass majors and then we'll live in a new and interesting world. I think this is coming to Europe first.
...and this is why going to a concert is so much more expensive than a generation ago. Which has the awkward side effect that young people in particular don't go to as many concerts.
http://www.nytimes.com/2010/12/26/business/26excerpt.html?pa...
http://www.attackmagazine.com/features/the-truth-about-recor...
I don't know why you'd want to bring back cassettes - total pain in the ass. I still like them for recording because analog tape distorts in a pleasing fashion. But for listening, nope.