From the recent issue of Rolling Stone:
“In 2000, U.S. consumers bought 785.1 million albums; last year, they bought 588.2 million (a figure that includes both CDs and downloaded albums), according to Nielsen SoundScan. In 2000, the ten top-selling albums in the U.S. sold a combined 60 million copies; in 2006, the top ten sold just 25 million. Digital sales are growing — fans bought 582 million digital singles last year, up sixty-five percent from 2005, and purchased $600 million worth of ringtones — but the new revenue sources aren’t making up for the shortfall.
More than 5,000 record-company employees have been laid off since 2000. The number of major labels dropped from five to four when Sony Music Entertainment and BMG Entertainment merged in 2004 — and two of the remaining companies, EMI and Warner, have flirted with their own merger for years.
. . . and then . . .
“How is it that the people that make the product of music are going bankrupt, while the use of the product is skyrocketing?” asks the Firm’s Kwatinetz. “The model is wrong.”
Record companies don’t make the product, artists do and I’m not so sure they’re any worse off now than they were before 2001. I’d be really interested to hold those statistics against some reliable numbers about the change in the number of musicians that are making a living playing music or at least able to afford to make music. Meaning, some record company employees are out of jobs, what relationship does their unemployment have with the number of musicians in the world. Any? Some? None? It may be naivety on my part but I see record companies to be similar to real estate agents in that they’re middlemen who–before the internet–served some purpose, but now largely exist simply to skim profit off of the inefficiencies they create in the marketplace.
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“It may be naivety on my part but I see record companies to be similar to real estate agents in that they’re middlemen who–before the internet–served some purpose, but now largely exist simply to skim profit off of the inefficiencies they create in the marketplace.”
That’s some cold sh$t…
http://shaft.hmcnally.com/media/COLDSHIT.WAV
+1 on the real estate agents. Right on.
Bry:
it’s the truth. i should expand that group to include full-service stock brokers, portfolio managers, etc. Meaning, all of these professions that exist to connect a consumer with a product played an important role when the information necessary for the consumer to make an informed decision was difficult to obtain.
Now though, transparency and information efficiency negate the need for many of these professionals. I don’t need to pay Morgan Stanley $200/year to tell me how much interest my muni bonds paid this year. Hence the success of companies like schwab, forsalebyowner.com, etc. Cold, maybe. True, totally.
Except that most people don’t have the knowledge, even with easy to access websites, to easily decipher the facts. And, besides,are we to believe everything we read on a website…? We need middlemen once in awhile. Websites will never be strictly set up to “inform”. For every website with our best interest in mind, there will be seven thousand purporting to have our best interest in mind just to sucker us out of our life savings (or at least out of $9.99). And record companies, while smarmy (I suppose), are at least something of a filter. How will we determine where to find the good stuff if everyone with an internet connection drops their lousy music onto iTunes? The really good music might surface by word of mouth some of the time, but most of the time it’ll get lost in the shuffle. Like it or not, there’s magic in advertising… And that’s my two cents, for what it’s worth, which is probably less than two cents.