As we can see in this data from the UK music industry album sales are slowing and singles are booming as customer tastes fragment into unit sales and away from purchasing wholesale bundles of songs.
This of course suggests that the music industry is suffering from the same Analog Dollars = Digital Pennies problem that currently plagues all sectors of the media online. You no longer need to buy the whole newspaper or magazine to read the one or two stories you are interested in so why buy a whole album of songs when you just want to listen to the 1 or 2 hit singles?
Industry commentators are now talking about 2009 being the year that digital singles over took album sales. What few observers understand is that historically singles are the preferred economic unit of the recorded music industry.
“We are seeing a surge in the focus on single songs like we had in the ’50s and early ’60s with pop music – and for that matter the five decades prior when hits were released on 78s.” – Bruce Elder Business must do more than extract the digital
So in many ways the Music industry trend is about going “back to the future”.
The clearest illustration of this trend can be seen by graphing the number of singles that held the top position for more than 6 consecutive weeks. Today the charts are dominated by a very small number of very popular artists while in the 60’s, 70’s and 80’s we witnessed a robust, vibrant and competitive market in which an abundance of talent made sure that even in the era of the Beatles and other the mega music brands (Think among others: Elton John, Queen, U2, Michael Jackson, The Police and David Bowie) very few if any singles held top spot for more than 1 or 2 weeks.
Contrast that trend with the Album market from the same period and we discover something very interesting. Unlike singles, the best-selling albums continued to hold top position for extended periods throughout the 60’s, 70’s and 80’s. However this long established model changed rapidly after the mid 1990’s and today albums rarely sits in the top spot on the charts for more than a few weeks.
So, although the singles market has reverted back to the old norm the album market is trending downwards as no single artist has emerged to dominate the charts in the same way popular artists have done in the past.
The question is: Is this trend a reflection of the digital technologies (i.e. a preference for singles due to the short attention span of the internet generation) or is it symptomatic of a deeper problem industry wide problem?
Could it be the real problem is the industry has lost the managerial talent that allowed the industry to blossom in the 60’s and 70’s? After all, while the 60’s and 70’s were best remembered for the emergence of new talent the 90’s and o0’s are probably best remembered for the new digital technologies (Think CD and MP3) that allowed the distributors to repackage old songs as new.
Could it be that after 20 years of profiting from a low risk high margin model the current crop of managerial talent are more attune to leveraging the back catalogue than nurturing new talent? Perhaps what they really need is a new high definition technology format (Think a 3-D for Music) to help them re-release their back catalogue one more time.
There is also speculation that we may be living in a post-audio world. Many industry commentators have noted that in the Post-MTV of You-Tube that page views don’t translate into music sales.
Why bother buying a song when you can watch it for free on YouTube? – Bruce Elder Business must do more than extract the digital
This suggests that consumers are more interested today in the complete audio visual package. Why settle for the song when you can watch the dance as well?
Or could it simply be internet piracy is “killing” the industry?
2009 was a record year for unit sales. People bought more music than ever before – even after factoring in the much quoted industry figure that 98% of all music is now downloaded illegally – the problem was, because they bought singles rather than albums the industry’s revenues have fallen dramatically. (See Paidcontent Digital Drives UK Music Sales To 10-Year High, But Look Deeper)
The answer of course is in a Crtl OCVZXS world consumers now build their own long play album experiences on their iPods and Mobile Phones and these albums do not consist of 12-14 songs but 1000’s of songs. The music publishers face the same problem the newspaper industry faces. Who need professional editors to select the stories for you when you can choose and pick the best stories from around the world with the help of Google?
The drop off in album sales is simply because the iPod and the other MP3 players that have become the new album format.
The record labels are counting on Google rescuing them from Apple’s death grip. Not going to happen. Google may suck up some market share, but not at Apple’s expense.- Paidcontent The Dream Is Over: Music Labels Have Killed Their Digital Future
As I have said elsewhere iTunes didn’t save the music industry. But it has made Apple a market leader in the music publishing and distribution industry. Just like the iPad will allow Apple to become a market leader in the book, magazine and news publishing industries (See Will the iPad save the Newspapers and Magazines?)
The only real interest moving forward will be when the major recording artists begin dealing with Apple and the other online music stores directly(Think Amazon) to negotiate a more lucrative royalty model than the one they have with their record company because once the music industry fully embraces the long tail of app store’s shared revenue model we will really see just how effectively digital technology can revolutionise the whole industry value chain.
“The sad truth is that almost everything almost every artist tries to earn money will fail. This has nothing to do with the internet, of course. Consider the remarkable statement from Alanis Morissette’s attorney at the Future of Music Conference: 97% of the artists signed to a major label before Napster earned $600 or less a year from it. And these were the lucky lotto winners, the tiny fraction of 1% who made it to a record deal” - Cory Doctorow
Despite all the publicity surrounding the problems of the music industry the reality is the internet and mobile devices are helping to create a healthier and more lucrative market for musicians. Yes the old music industry is in decline, and yes the new model will suffer from a very long tail, but at least the new publishing and distribution model should deliver a far greater share of the sales revenue into the hands of the artists and that can only be a good thing.
[updated 27-10-2010]
“As far as the Internet goes, the music industry is basically organized around litigation on one side, and extracting maximum licensing fees from music startups that try to play by the rules on the other.” TechCrunch – After Ten Years, LimeWire Capitulates To The Music Industry
[updated 18-2-2011]
Chart displaying US Music Industry Revenue per Capita by Technology from 1973-2010 adjusted for inflation by Business Insider. See the original Bain and Co chart here on the SMH .
[updated 22-3-2011]
A detailed re-examination of the Bain and Co data by Michael DeGusta (Highly Recommended)
May 4th, 2011 → 1:47 am
[...] Mobcon 2010, The New Economics of Music, accessed 20 March 2011, <http://excapite.wordpress.com/2010/10/17/the-new-economics-of-music/>. [...]