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music industry

Page history last edited by PBworks 15 years, 7 months ago

Table of Contents:


 

Troubles in the Music industry:

 

the record industry's main product, the CD, which in 2006 accounted for over 80% of total global sales, is rapidly fading away.

 

In America, according to Nielsen SoundScan, the volume of physical albums sold dropped by 19% in 2007 from the year before—faster than anyone had expected. For the first half of 2007, sales of music on CD and other physical formats fell by 6% in Britain, by 9% in Japan, France and Spain, by 12% in Italy, 14% in Australia and 21% in Canada. (Sales were flat in Germany.) Paid digital downloads grew rapidly, but did not begin to make up for the loss of revenue from CDs. More worryingly for the industry, the growth of digital downloads appears to be slowing.

 

In 2007 it became clear that the recorded-music industry is contracting

 

The smallest major labels, EMI (EMI's new Private equity owner, Terra Firma, paid a high price for the business in August 2007) and Warner Music, are struggling most visibly.   The two biggest majors—Universal, which is owned by Vivendi, a French conglomerate, and Sony BMG, a joint venture between Sony and Bertelsmann, a German media firm—derive some protection from their parent companies. Universal is the strongest and is gaining market share. But people speculate that Bertelsmann may want to sell out to Sony next year.

 

3 problems:

 

  1. First, because sales of CDs are tumbling, big retailers such as Wal-Mart are cutting the amount of shelf-space they give to music, which in turn accelerates the decline. Richard Greenfield of Pali Research, an independent research firm, reckons that retail floor-space devoted to CDs in America will be cut by 30% or more in 2008.
  2. Because profits are falling, artists are receiving far less marketing and promotional support than before, which could prompt them to seek alternatives
  3. Also because profits are falling, record companies are not spending the sums required to move into the bits of the music industry that are thriving, such as touring and merchandising

 

New Trends:

 

  1. 360-degree contracts - deals with artists to give them a share of the earnings from tourings and merchandising
  2. Growth in (a) concert agencies, and (b) merchandise companies
  3. Cell phones that "comes with music" such as Nokia  - giving the music away fror free, and record company (Universal) taking a cut of the price of each phone....expect similar deals to come 
  4. Subsidized services where peole do not directly pay for music

 

 

 

Pandora & online radio streaming:

 

Pandora made a bold political statement today, saying they’d likely shut down rather than continue to pay exorbitant fees to play music to listeners of its massively popular service.  Radio stations pay different rates depending on how they broadcast music. Terrestrial stations (normal FM/AM stations) pay nothing, a tribute to their powerful corporate parents with limitless lobbying budgets. Satellite stations pay approximately 1.6 cents per hour per listener. By 2010, Pandora and other Internet radio stations, which have few lobbying resources, must pay 2.91 cents.  Pandora says they’re alread paying 70% of their $25 million in yearly revenues in royalty fees, and it is driving them out of business. Other Internet radio stations are even worse off.  source: TechCrunch

 

 

The new way to market music?

 

You’ve got to hand it to those guys at Radiohead. Not only are they great musicians. They are great promoters who are at the forefront of figuring out how to use the culture of free music to sell CDs. On New Year’s Eve, just before their latest album In Rainbows goes on sale in stores on January 1, the band will broadcast a prerecorded concert of all the album’s tracks on Current TV. The concert will also be available on the Web at current.com. While Radiohead and Current are positioning this as a “commercial-free” broadcast, what it amounts to is a free commercial for Radiohead’s album.

 

Radiohead originally released In Rainbows as a pay-as-you-like digital download for a limited time. (Although, that did not stop people from downloading it from BitTorrent networks). If fans were going to download the album for free anyway, at least this way Radiohead could control the way it was distributed somewhat. It also got some karma points from their fans and even more free press than they would have otherwise. Now that all the buzz has propelled the album to No. 1 on many critics’ lists, the band is going to start selling the album in CD form through traditional channels. It is no longer available as a free download from the official Radiohead site. What better way to kick off sales than with a free New Year’s Eve concert on both TV and the Web?

 

Note: These were isolated, unusual deals, by artists whose careers had already brought years of profits to the big music companies. But they made the labels look irrelevant and will no doubt prompt other artists to think about leaving them too.

 

 

 

Interesting News:

Amazon Helping To Change The Business Of Music

Memo To UK: No Pandora For You

A simple strategy for Musicians

 

 

 

 

 

Other links:

 

 

 

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