Industry Problems continue in '08

[felser]

From the Associated Press, found on MSNBC.com:

NASHVILLE, Tenn. - Music sales have continued to slump in 2008 as the increased number of downloads of digital tracks failed to make up for a plunge in the sale of compact discs.

Year-end sales figures released Wednesday by The Nielsen Co. show total album sales, including album equivalents made up of single digital tracks, fell to 428.4 million units, down 8.5 percent from 500.5 million in 2007.

Physical album sales fell 20 percent to 362.6 million from 450.5 million, while digital album sales rose 32 percent to a record 65.8 million units.

Digital track sales, such as those conducted in Apple Inc.'s iTunes Music Store, were up 27 percent from last year, breaking the 1 billion mark for the first time at 1.07 billion.

The report continues a troubling trend for the recording industry, which has a harder time maintaining profits when consumers buy single songs instead of albums. The number of transactions rose 10.5 percent to 1.5 billion, although the figure treats single track and whole album purchases the same.

"You can see the overall unit sales as a positive, but their model is really built on album sales and that just continues to decline," said Silvio Pietroluongo, director of charts for Billboard magazine.

[A Lark Ascending]

Clearly this all means bad news for lots of people whose jobs depend on the traditional way of circulating music; and to those who like to buy a physical product and/or feel that download quality can never equal the quality of a physical CD (in much the way some feel a CD can never equal the quality of a vinyl LP).

But there is so much opportunity lying here, once we've got past our loyalty to the old model. Two examples:

a) I stumbled upon an argument somewhere on a rock site arguing that the new model might inaugerate a return of the single song. Now that a band does not need to pad out an entire album they can spend more effort getting a limited number of things right and then put it out. Might not have much meaning for jazz where we think in longer stretches (be it LP, CD sides or live sets) but could help other areas.

b) Once people have really got their head around these changes it should allow a much swifter access to new music. On the old model a new piece of classical might get a premiere and then disappear from sight. With orchestras now recording much of their own work and releasing it through their own websites it shouldn't be too hard to sort out the liscensing and when a new composer gets his/her work performed it can also get out there for the people at the concert and a wider listening public to hear it again very soon after creation. And without the burden of some coupling they might not require. I downloaded Thomas Ades Violin Concerto off iTunes last week - just that. No need to hang about waiting for him to write a clarinet concerto. In that case there seems to have been a 2 year gap between premiere and release as a download. I'm sure that margin can be significantly cut, greatly helping newer music find an audience.

I think we have to be careful about mixing up the current economic downturn with the transfer from CD to electronic distribution. To my mind the new technology offers fantastic possibilities - although the big players seem too obsessed with protecting their existing assets rather than looking to the potential in the changes. We could be entering one of those phases in the endless cycle where the initiative passes to the little chaps.

Edit: The idea the downloading will lead to everything being reduced to single tracks also seems mistaken to me. Long before music was even recorded (let alone collected on long playing records) composers were organising music in longer sequences - suites, song cycles, symphonies etc. They did not need an artificially imposed time limit to decide that it was a nice way of structuring music. I'm sure musicians will carry on putting out 'albums' of music as an expression of their creativity.

Edited January 2, 2009 by Bev Stapleton

[BillF]

The rumour among HMV employees is that it's about to go into administration.

[A Lark Ascending]

The rumour among HMV employees is that it's about to go into administration.

I'm not surprised!

[The Magnificent Goldberg]

Edit: The idea the downloading will lead to everything being reduced to single tracks also seems mistaken to me. Long before music was even recorded (let alone collected on long playing records) composers were organising music in longer sequences - suites, song cycles, symphonies etc. They did not need an artificially imposed time limit to decide that it was a nice way of structuring music. I'm sure musicians will carry on putting out 'albums' of music as an expression of their creativity.

Good point Bev. What could start me on downloading would be full length sermons. But the difficulty is, how would you go about finding them on the web? At least in the past, one could look at the record companies that issued a lot - Chess, Jewel, Peacock/Songbird, Randy's and pick some up. And there were always other reasons to look at those companies' output, so you could get into it. The total isolation of musicians/performers doing their own thing seems to me to be counter-productive.

MG

[The Magnificent Goldberg]

I think we have to be careful about mixing up the current economic downturn with the transfer from CD to electronic distribution. To my mind the new technology offers fantastic possibilities - although the big players seem too obsessed with protecting their existing assets rather than looking to the potential in the changes. We could be entering one of those phases in the endless cycle where the initiative passes to the little chaps.

Well, yes. But they're both happening together so the effect is going to be mixed. In the thirties, the number of record companies in the US was pared down to two in 1934 - Victor and ARC - and the position was only rescued by the opening that year of the US subsidiary of UK Decca. This followed (as it is doing this time around) a period pre-crash of mergers/acquisitions/bankruptcies (Columbia went bust in 1922) between most of the largest US firms. After the Depression, the indies came in, as you've implied, and made headway - particularly in black music - precisely because the 3 majors were busy looking after their existing assets

But the little chaps, in order to make headway, still had to understand a market - usually a local one. Not sure that's going to work any more. The danger must be that there'll be so much disparate stuff out there from so many individuals that no one will be able to find anything. (As I was saying just now )

MG

[John L]

Certainly, downloading offers new and exciting possibilities. The big problem is a commercial one. How can artists continue to make good money on sales of their music, when it can be effortlessly and costlessly transferred from person to person? We may be moving back to the age when the primary function of record sales was to promote live performances. The problem is that technological advances have also increased the value of home relative to live entertainment.

[GA Russell]

I know that people like me are not in the consideration of the majors. However, I too bought fewer cds in 2008. In fact, in 2008 I bought the fewest albums I have in 30 years or so. I quit Your Music. I bought from BMG only with Aggie's codes.

But in my case it was because I didn't see much that appealled to me. I seem to recall the record companies crying the blues before (Was it in the late 70s?), and the problem then and now I think is that people didn't want what they were selling.

I've said this before, but I'll say it again. The majors' business model calls for selling most of their albums to teenage boys, and many teenage boys nowadays would rather buy and spend their time with video games than with music.

One point about jazz. I predict that more people will follow Sonny Rollins' and Dave Holland's route, which is to follow The Rolling Stones' route, and create their own record companies, using the majors as distributors. This model may be irrelevant to what the high schoolers buy, but I think we will see more of it for adult music. By taking the risk out of it for the majors, the cd's of adult artists should still be available for their market.

[gmonahan]

I guess I'm a hopeless dinosaur, but I want RECORDS. If they're cds that's fine, but I want (little) album covers and liner notes and photos and discographies. I don't want to have to download them myself and burn cds so I don't have to depend on the ephemerals of crashing hard drives.

My hope is that Luddites like me (and lots of others who post here!) will at least keep specialist labels like Mosaic in business for a while. Sigh.

greg mo

[Dave James]

This is economic Darwinism. Those who have to ability to adapt will survive and those who don't, won't. In many ways, what's happening to the recording industry is the same thing that's happening to print media. The internet is so pervasive, and those in the most desirable consumptive demographic are so wired into it, that they simply don't consider alternatives. Bev makes an excellent point in that this may result in a return to the singles based approach that ruled the record industry before The Beatles turned that business model on its ear. Clearly, there's still money to be made. Just ask Apple.

Up over and out.

[A Lark Ascending]

But the little chaps, in order to make headway, still had to understand a market - usually a local one. Not sure that's going to work any more. The danger must be that there'll be so much disparate stuff out there from so many individuals that no one will be able to find anything. (As I was saying just now )

We may not be tuned into that, but I think younger people are much more comfortable with sifting the enormity that is out there. They accept a TV that has a zillion channels (most of it of little interest) as the norm - yet still some things emerge as very popular; and some things become central for particular 'tribes'. In much the same way as we have gravitated to a place like Organissimo as a 'portal' for jazz information so their are 'portals' for hundreds of other areas of interest.

I suspect the 'local' thing will still matter because live music will inevitably be mainly local - most UK jazz musicians, for example, don't get much opportunity to play abroad until they reach a certain level of visibility. So having a download of your music available after a local gig is going to be important. I'm always amazed by the rush at the end of concerts to buy the CD...and even more amazed by the musicians who don't have any or have left them in the last hotel. Unless you are a big name your performance will figure in an audience's brain for at best a few days before other interests crowd in. If you want to make a sale you have to be ready then. If the listener can go home, log on, download some recent recordings of the songs they just heard to get to know them better, then you are going to get your music more widely known.

Though that does pose another question...is the current practice of recording the new compositions and then gigging them artistically the best way of doing it?

The uncertainty of the industry can be seen in a label like ECM. Their music is now up on the commercial download sites, most of the back catalogue is on e-music (in some regions) where it can be acquired for a fraction of its former cost (and this from a label who until very recently did not do budget priced reissues)...yet they also launch the physical CD Touchstone series. But the recognition is there that the electronic route cannot be ignored.

I'm going to be very interested to see how Blue Note play it. There are a lot of Blue Note albums on iTunes and elsewhere. With a major batch of deletions of CDs due I wonder if they will leave them there (i.e. move towards permanent availability) or withdraw them from there too (keeping to the traditional model of withdrawing material to allow a new demand to build up).

Finally, an interesting development with Naxos. Their initial downloads were at the much derided 128 kpbs. They are now/have converted to 320 kpbs. But instead of inviting everyone to buy their downloads again in higher resolution (the 'remastered edition' approach of the 90s in CD) they are allowing customers to upgrade free of charge.

It's going to be a very different world and I don't think any of us can know how it will eventually pan out. But I'm pretty sure it's all going to happen much more quickly than we imagine.

[The Magnificent Goldberg]

But the little chaps, in order to make headway, still had to understand a market - usually a local one. Not sure that's going to work any more. The danger must be that there'll be so much disparate stuff out there from so many individuals that no one will be able to find anything. (As I was saying just now )

We may not be tuned into that, but I think younger people are much more comfortable with sifting the enormity that is out there. They accept a TV that has a zillion channels (most of it of little interest) as the norm - yet still some things emerge as very popular; and some things become central for particular 'tribes'. In much the same way as we have gravitated to a place like Organissimo as a 'portal' for jazz information so their are 'portals' for hundreds of other areas of interest.

Jazz is easy - yes, there's here and other places for jazz and one can connect. But REAL minority music has always been hard to find and has never had any kind of presence on the web - because the web only deals with things that prosperous people have an interest in. You can get a good feel for this by trying to find sermons on Amazon UK. There's no browse category for them. There isn't even a browse category for Gospel music - all the Gospel is listed under R&B & Soul! Now, you can get sermons from Amazon UK, but you have to know the names of the preachers. Putting in Rev C L Franklin, Rev Jasper Williams or Rev Leo Daniels gets you quite a few results (and I'm glad I tried it ). But as for finding people you didn't already know about, which is what the internet is supposed to be all about, it's hopeless. And Gospel is relatively popular! As for more obscure African material, good luck!

MG

[A Lark Ascending]

because the web only deals with things that prosperous people have an interest in. MG

Yes, I take your general point, although I'm not sure that it is totally true - there are some very bizarre sites out there where people with minority obsessions set up sites to talk about what enthuses them, regardless of whether anyone is reading.

You are, of course, right to say that if there is no market then you're not going to find much (and I have to say that you are the only person I've ever come across who actively seeks out sermons!). But all it takes is one person with your passion for a minority music who is also PC savvy and prepared to devote a bit of time and a portal develops.

When I'm talking about the immense opportunities the net offers for accessing music I am, of course, talking from a Western (or developed world) perspective, merely expressing a view of optimism in contrast to the frequently expressed pessimism surrounding the collapse of the old model. Of course this is pretty meaningless to the developing world where a host of issues from poverty to civil war to government corruption to AIDS make distributing music via electronic means quite irrelevant.

Whether we buy our music in the West in CD format or as Mosaic boxes or as downloads all looks equally scandalous when you look at the realities there.

[Swinging Swede]

I guess I'm a hopeless dinosaur, but I want RECORDS. If they're cds that's fine, but I want (little) album covers and liner notes and photos and discographies. I don't want to have to download them myself and burn cds so I don't have to depend on the ephemerals of crashing hard drives.

I agree 100%.

[papsrus]

But all it takes is one person with your passion for a minority music who is also PC savvy and prepared to devote a bit of time and a portal develops.

Now there's a good thought! ... MG?

[Jim Alfredson]

These numbers are bunk. Why? Because they don't take into account where most of the sales for independent acts such as organissimo come from. At least 80% of our sales happen at the gig. Those sales are not tracked by Soundscan, unlike sales from CDBaby or brick and mortar stores. I am willing to bet that the same is true for most other independent bands out there. So multiply that by thousands of bands playing on a given night and selling product... and you can see what I'm talking about.

In regards to the music we do sell at CDBaby, most of it is through download services like iTunes. We barely sell CDs. CDs are for gigs. People want something that they can take home to remind them of the show they just experienced.

More music is being produced and sold today than at any other time in human history. It's just not controlled by a handful of major labels anymore. Yes, they are hurting. But we're doing just fine, thanks! We're already out of debt on the current CD, which is incredible to me considering it took over two years to get out of debt on the first one (and about the same on the second).

People are still buying CDs.

[The Magnificent Goldberg]

We're already out of debt on the current CD, which is incredible to me considering it took over two years to get out of debt on the first one (and about the same on the second).

People are still buying CDs.

That is GREAT news!

Congratulations!

MG

[The Magnificent Goldberg]

These numbers are bunk. Why? Because they don't take into account where most of the sales for independent acts such as organissimo come from. At least 80% of our sales happen at the gig. Those sales are not tracked by Soundscan, unlike sales from CDBaby or brick and mortar stores. I am willing to bet that the same is true for most other independent bands out there. So multiply that by thousands of bands playing on a given night and selling product... and you can see what I'm talking about.

I'm also willing to bet that most independent stores (like our local ones here) aren't doing Soundscan. And the remaining indie shops are probably doing good business. If HMV close, as expected, that will leave Spillers (est 1894) the ONLY shop in Wales' biggest city (300,000 pop + the shopping venue for a further million in the Valleys). (And with thousands of rock bands in the Valleys, Spillers are flogging their CDs - the ones good enough to do what you all do - and having live performances in the (tiny) shop.)

SPILLERS RULZE!!!!!!

MG

[A Lark Ascending]

CDs are for gigs. People want something that they can take home to remind them of the show they just experienced.

And that may be one practical reason for their survival for a time yet.

Good to hear you're doing well operating independently.

[A Lark Ascending]

I'm also willing to bet that most independent stores (like our local ones here) aren't doing Soundscan. And the remaining indie shops are probably doing good business. If HMV close, as expected, that will leave Spillers (est 1894) the ONLY shop in Wales' biggest city (300,000 pop + the shopping venue for a further million in the Valleys). (And with thousands of rock bands in the Valleys, Spillers are flogging their CDs - the ones good enough to do what you all do - and having live performances in the (tiny) shop.)

SPILLERS RULZE!!!!!!

MG

I suspect Spillers is quite unusual. Nottingham has the long established Selectadisc which used to operate on a broad front but has cut back on the specialist front in the last ten years. If HMV goes (two stores) then they will be more or less all that is left. I stopped bothering to visit Nottingham a good year back because there was so little in the shops. So Selectadisc lost my custom too.

I can't think of an independent in central Sheffield any more - I think Record Collector is still going but that is a fair way out in the suburbs.

But for the millions of us who live in small towns or villages the options are really just the online CD stores like Amazon or downloading. Interesting that Amazon.co.uk has started offering downloads.

People over 25 are still suspicious of downloads (for good reason). I think that will change.

[The Magnificent Goldberg]

I think with Zavvi, HMV and Woolworths going, there are three options for any large town but London:

1 WH Smith expands its record sections, or creates new ones (there's no record section in the main Cardiff shop) - this is hard to imagine and not possible in most locations;

2 other indie shops start up on the basis that one small shop (with a strange clientele, which most of the indies have had to cultivate in order to stay alive) can't supply the whole of the regional shopping need (for as long as it lasts);

3 people really do get down to internet buying and downloading.

I think 2 and 3 will happen; 2 as a temporary burst of activity until 3 rules the kingdom

But just imagine how hard it will become for the majors to engineer hits without the big retailers to help push them...

MG

[A Lark Ascending]

Here's an experiment to try on Monday. Go to your bank and try and negotiate a loan to open a record shop!

In the long run I can only see 3. as the way forward - and the second part at that. With bands (or people associated wit them) creating CD-Rs for gig sales. It won't happen immediately because I'd imagine that most record sales are to casual buyers and casual buyers won't go to the trouble of downloading.

But it will be the specialist sectors - classical, folk, jazz etc - that abandon the physical CD first. It's going to be fascinating looking out in 2009 for the first label to do this. I have a feeling the classical labels will be out in front.

The challenge for the industry is to ensure the quality is up there equal to CD. This is happening in some places but not all - you do get blips on downloads (like you got plops on LPs). In their rush to get thing online they are letting errors through. A little more care, a bit of time listening to the transfer will lead to customers coming to trust the medium and ignore the disinformation still coming out about 'crappy mp3s'. But this was exactly what happened with CD - 5 to 10 years of careless transfers creating a belief amongst audiophiles that CD could not match vinyl, followed by another ten years remastering!

The beauty of the new model is that you don't have to rebuy your existing collection. If you choose to store it on a computer or squeezebox then you can just rip your existing collection.

[The Magnificent Goldberg]

Here's an experiment to try on Monday. Go to your bank and try and negotiate a loan to open a record shop!

Yeah, well...

MG

[djcavanagh]

I think with Zavvi, HMV and Woolworths going

Unless I'm missing something HMV isn't gone yet - we seem to be taking a rumour as gospel. Although I don't know how they can continue as a music retailer with the prices that they charge, even in the post-Christmas "sales". I was in on Saturday to spend some vouchers that I'd been given for Christmas and their jazz sales seems to consist of Kind of Blue.

[The Magnificent Goldberg]

I think with Zavvi, HMV and Woolworths going

Unless I'm missing something HMV isn't gone yet - we seem to be taking a rumour as gospel. Although I don't know how they can continue as a music retailer with the prices that they charge, even in the post-Christmas "sales". I was in on Saturday to spend some vouchers that I'd been given for Christmas and their jazz sales seems to consist of Kind of Blue.

Sure it's rumour, but indicative of a serious situation.

MG