CHART OF THE DAY- The Death Of The Music Industry
This has been burning up my inbox all day. It’s a viral sensation.
First thought is the music business is screwed. Second thought is LOOK AT THAT GIANT CD MOUNTAIN!
I’m not privy to the original Bain report, I’d like to see the inflation rate factored in, for all I know this graph is a hoax, but it feels right.
In other words, the CD was the greatest invention in the history of recorded music.
And it was fueled by high prices, vinyl replacement and television, MTV built acts whose music the public wanted to own.
We’re never going back to high prices, that paradigm is dead. At the advent of the CD era a VCR cost almost a grand and you fixed it if it broke, now VCRs don’t even exist and their replacement, the DVD player, which is almost extinct itself, goes for under a hundred bucks and if it breaks you throw it away. We’re still dazzled by technology, but we expect it to be cheap soon, if not immediately. Now it’s all about mass adoption out of the box, and then the price goes down to commodity level. The odds of a new expensive music format coming down the pike are nil. But we can learn from the computer and mobile phone industries, everyone needs to consume/pay for music, it’s just about making the proposition attractive and cheap enough. In other words, we shouldn’t be talking about driving the price up, but down, to gain instant and mass acceptance. As for MTV breaking acts… Ratings were always horrific, but the cumulative audience and the channel’s monopoly in a limited music universe are not easy to replicate, but not impossible. It’s about building a music exhibition/discovery site that features thrilling music. At the advent of the eighties, the dawn of the MTV era, music was exciting, as it was at the dawn of the twenty first century, with Napster, everybody was talking about music, it was on the cover of "Newsweek", now everybody’s on Facebook and young kids want to grow up to be Mark Zuckerberg instead of Boy George or Simon Le Bon, because Zuckerberg does it his way, by inventing something new we didn’t know we wanted. How long has it been since music has delivered this?
In other words, the CD era was an anomaly, not to be replicated, and to continue to try to prop up this paradigm is economic death. Labels still make 74% of their revenue from CDs
They just have to look at Kodak to see the fallacy in this game. Everybody said digital photography was coming, and finally it did, killing the film business, killing Kodak. But people are shooting more images than ever, we’re living in the midst of a photographic explosion, we’re living in the midst of a music explosion, just because there’s presently less money in the sale of recorded music than previously doesn’t mean there’s not a ton of money to be made in music.
Note: Subscription has to win, otherwise recorded music revenues go flat and never recover. We’re moving to the cloud. If people can listen to their MP3s anywhere there’s no incentive to buy a subscription. That’s why we need free subscription before digital lockers take hold, to inure people to paying VERY LITTLE for ALL THE MUSIC. We’ve got to get everybody paying for music, get the price extremely low, it can always go up, like cable, but if it doesn’t start out low, adoption rates will be limited. I’m behind Spotify because it presently has the best functionality. It’s not beholden to the browser, it’s its own app, and this is a good thing. Because of P2P technology functionality is equivalent to ownership. But unless it launches free, it’s dead on arrival and we go to digital lockers and economic death. Rhapsody and Napster proved long ago people don’t want to pay for subscriptions out of the box. But don’t think this means people won’t rent music. They rented movies then paid for them and are now renting them again. The public is malleable!
