Why Record Sales Are Down

The recording industry is crying about CD sales being down, and while digital/online sales are rising, the overall revenues of the music industry are dropping. And they're blaming music piracy.

Let's look at the history of the music industry. For decades, it was all about the single, sometimes with a B-side. And they were priced appropriately for a person buying one or two songs. It wasn't until 1948 that the LP (Long Playing record) was invented, and it would be another dozen or more years before LP albums really became the dominant format for the distribution of music.

But when the LP took over, the record companies got fat. They might put 10 songs on a record and price it appropriately for 10 songs, but only one or two of them had to be hits. They'd found a way to sell you 4 times as many B-sides to get the couple of good songs you wanted.

When the dominant format moved to cassette tapes and CD's, the pricing model of the album went along, only now the record companies could put more songs on the new media and charge even more. The record were now selling their customers 6 to 7 B-sides for every song the customer actually wanted. In some cases, an artist would put out a truly spectacular album where most or all of the material was worth paying for, but in general the B-sides to worthwhile music kept a 5 to 1 ratio or worse.

It's long been a complaint of consumers, having to spend $15-20 for a CD to get the 1 or 2 songs they really wanted. And the music industry had a nice 50-year run with the LP, getting fat off making us pay for music we didn't want in order to get the music we did want.

But the drop in music industry revenues isn't coming from pirates (or not as much as they think), it's coming from the death of the album. In many cases, the sale of a $1 single on iTunes represents the loss of the sale of a full album in a record store. People can now just buy the two songs they like from the album and not have to pay for the 12-14 songs they didn't like enough to buy.

But due to the RIAA spin machine and lazy reporters who would rather quote press releases than do any explaining or analysis, the record companies get away with glossing over the impact of the death of the album on their bottom lines. They get to make it seem like music piracy is the sole cause of their losses.

I'm sure that piracy is causing losses. But there are LOTS of us who cut our music budgets by 80% or more when iTunes and other similar services became available. We could get everything we wanted... legitimately... for 1/5th the cost, not have to buy what we didn't want, and the record companies didn't make up the gap by putting out more and better music to encourage us to spend more.

This is why record sales are down, IMO, not piracy.

This entry was posted on Friday, July 13th, 2007 at 9:46 pm and is filed under Techno Thoughts.You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.