Tuesday, April 03, 2007

Free Fallin'

The music industry worldwide is in a quandary. The sales have been on a decline for seven continuous years. For the first quarter of this year, the sales are down by 20% q-o-q! This signifies a behavioral shift in The Way Music Is Acquired (TWMIA). A cursory look over the history of music tells you that TWMIA changes every few years. So much so, that one is bound to suspect that the music industry is running a conspiracy of sorts. Every time one gets to accumulate a decent collection in a particular format, the format in which music is stored would change. Of course for the better as they would have us believe - from records to LPs to cassettes to LDs to CDs to the mp format - we have indeed come a long long way.

So every time the format changed, as a music lover you were forced to upgrade - not only the music system but the entire collection of music. A neat way of directing the flow of money from your pockets to the sales ledger kept by that stodgy accountant in the room next to the basement loo. But for the first time, the music companies are eying defeat at their own game. In a way Napster started it all. But the honors in round one were taken by the music companies. Napster was shut down. Few of my friends at IIT were served legal notices in the course of legal process as well. Since then, I have been afraid to use my real address for my online accounts. Anyway, that is beyond the scope of this discussion. Internet did prove to be a difficult medium to control for the companies. In an oblique way it was responsible for the consolidation that happened in the music industry (Sony-BMG, Universal-Vivendi etc). It did redefine the playing ground. The balance of power is now skewed in favour of the consumers for sure. Copying a cassette was cumbersome and an audio CD was next to impossible in the early days (no ubiquitous access to CD burners) and the later days (with the advent of copy protected CD) as well. But Mp format changed it all. One can burn hundreds of songs on a CDs/USB drives. Or conveniently carry thousands of them in that cool device given to you by Steve Job's army of dudes.

A recent Wall Street Journal article highlights the plight of the music industry:

In recent weeks, the music industry has posted some of the weakest sales it has ever recorded. This year has already seen the two lowest-selling No. 1 albums since Nielsen SoundScan, which tracks music sales, was launched in 1991.

One week, "American Idol" runner-up Chris Daughtry's rock band sold just 65,000 copies of its chart-topping album; another week, the "Dreamgirls" movie soundtrack sold a mere 60,000. As recently as 2005, there were many weeks when such tallies wouldn't have been enough to crack the top 30 sellers. In prior years, it wasn't uncommon for a No. 1 record to sell 500,000 or 600,000 copies a week.

In general, even today's big titles are stalling out far earlier than they did a few years ago.

So is that the end of the music industry as we know it? Would the CD turn into a marketing shenanigan to promote tours, merchandise and future brand equity of an artist? I would reckon that it is too early to write an obituary on the structure of music industry. Online sales of music have been rising at an astounding rate of 54%. Even at this rate, the strong decline in CD sales is weighing heavy on industry giants. It would be hard to deny that these are the make or break years for the music industry. It is so easy to download music, videos etc from the ever increasing set of websites, the myspaces, mp3 blogs and the normal data transfer channels. A research report by BigChampagne claims that about a billion songs are traded on illegal file-sharing networks every month! The silver line being the fact that music is reaching more people in smaller time frames. A music lover has never had it this good ;)

However, this would make it difficult for most music companies to invest in budding artists because the risk-return equation on any album has undergone a humungous amount of change over the last decade. Even the best selling artists are finding it difficult to sell more albums. This trend stares you in the eye at the specialty retail chains like MusicWorld, Planet M etc. As late as 2002, I remember crowds thronging these music retail shops. But in 2007, after a gap of about 11 months, I stepped into the Music world at Brigade road. There were exactly 2 customers other than me in the shop – precariously low for the weekend! A walk across the road took me to planet M and the scene was not very different. The shops are not making money and it is evident in the poor quality of the décor, lighting etc – not the signs of a happening retail destination for sure.

While EMI decides to sell without anti-piracy protection in a desperate measure to improve sales, I wonder if the artists and the fans are looking down the barrel as well! If the music marketing companies meet an uncalled-for demise, what would happen for all the good music that is not mass market? What would happen to the marginal artists who are encouraged (?) by the money these companies invest in them? May be, the ‘middle-man’ would die and some internet based music release forum replaces them. May be, it would be better than the present arrangement… may be it would be worse. Only time will tell! Meanwhile let me download that number from Delhi Heights that refuses to leave my consciousness these days!

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