CNN Money: Music's lost decade: Sales cut in half

[heyholetsgogrant]

Music's lost decade: Sales cut in half

By David Goldman, staff writerFebruary 2, 2010: 11:43 AM ET

NEW YORK (CNNMoney.com) -- If you watched the Grammy Awards Sunday night, it would appear all is well in the recording industry. But at the end of last year, the music business was worth half of what it was ten years ago and the decline doesn't look like it will be slowing anytime soon.

Total revenue from U.S. music sales and licensing plunged to $6.3 billion in 2009, according to Forrester Research. In 1999, that revenue figure topped $14.6 billion.

Although the Recording Industry Association of America will report its official figures in the early spring, the trend has been very clear: RIAA has reported declining revenue in nine of the past 10 years, with album sales falling an average of 8% each year. Last decade was the first ever in which sales were lower going out than coming in.

"There have been a lot of changes over the past 10 years," said Joshua Friedlander, vice president of research at RIAA. "The industry is adapting to consumer's demands of how they listen to music, when and where, and we've had some growing pains in terms of monetizing those changes."

The two recessions during the decade certainly didn't help music sales. It's also a bit unfair to compare the 2000s with the 1990s, since the '90s enjoyed an unnatural sales boost when consumers replaced their cassette tapes and vinyl records en masse with CDs.

But industry insiders and experts argue that the main culprit for the industry's massive decline was the growing popularity of digital music.

"The digital music business has been a war of attrition that nobody seems to be winning," said David Goldberg, the former head of Yahoo music. "The CD is still disappearing, and nothing is replacing it in entirety as a revenue generator."

The disease of free

The battle for paying digital customers may have been lost before it had truly begun. In 1999, Napster, a free online file-sharing service, made its debut. Not only did Napster help change the way most people got music, it also lowered the price point from $14 for a CD to free.

"It's pretty easy to give away something for free," said Russell Frackman, the lead attorney for the music industry in its 1999 case against Napster. "It's not that the music industry thought the technology was bad, it just objected to the use to which it was being put."

Apple's (AAPL, Fortune 500) iTunes is credited with finally getting people to pay for digital music, but it wasn't unveiled until 2003.

In the time between Napster's shuttering and iTunes' debut, many of Napster's 60 million users found other online file sharing techniques to get music for free. Even after iTunes got people buying music tracks for just 99 cents, it wasn't as attractive as free.

Source: CNN Money

Full Article Click Here:

http://money.cnn.com/2010/02/02/news/companies/napster_music_industry/index.htm?hpt=T2

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My :2cents:

If you got 60 million households (the amount of people Napster had during its peak) to pay $20 a month for unlimited downloads/or 1,000 downloads a month, thats 1.2 billion per month. In a whole year thats more than double what they are making now. Too bad the music industry is too focused on suing 12 year old kids, 70 yr old grandparents, and mother's of four. By then the music industry will be bankrupt. Gone are the days of walking into Tower Records and spending $200 on Cd's

Thought's?

[No_Pressure]

I think that people hated Metallica and especially Lars Ulrich 10 years ago with that whole Napster thing because the group of bands involved in that class action lawsuit were being a bunch of greedy *******s trying to stop people from sharing.

I remember watching an interview with Lars where he was saying that file sharing online is going to kill the recording industry and that they didn't just have their interests in mind, but the interests of bands that were like them- struggling to make it big as musicians early on. He said that file sharing would hurt those bands the most because A. smaller labels will go out of business first making it more difficult to get music produced, and B. Music that is produced won't be bought in the way it once was because everybody can just duplicate the music and distribute it for free.

I remember SO many people pissed off at him and Metallica, calling them petty, saying they were money grubbing millionaires crying about not getting an extra buck out of everybody. I realized that what they were saying made sense and that intellectual property such as music would be changed forever by the internet, but nobody wanted to believe that.

It should come as no surprise to anyone why things are the way they are right now. The music industry has lost all of this market share and it will continue to lose it. Like the OP said they spent way too much time going after the wrong sources, and filing lawsuits rather than finding a way to profit off of electronic music distribution the way apple has with iTunes. This is where they failed, even Lars Ulrich has admitted that they were going in the wrong direction with their lawsuit. They missed the boat.

What is the result of this? A band has a hard time making it big unless they are lucky enough to piggyback on a large entity like MTV, movies, or video games. Sure you have a lot of road bands and live shows are still profitable and always will be, but they won't ever make the kind of money they would have with a record deal years ago. Hell, lots of rich bands have given up completely...who was it that released their album basically for free and asked people to pay an amount they felt was appropriate for it?

[hockeysc23]

I think the OPs 2 cents make sense to me. Turn it into a netflix type of service.

The current music available is mostly crap. It's gimmicky and lacks staying power. Why would I spend 12-20 dollars on a cd with 1 or 2 good songs. Then they limit how many times I can put it on my computer or move it to my iPod.

The music industry didn't accept their changing industry and the sales are proof. Imagine where they would be without iTunes? I know a lot of people don't mind paying a fair price for music but the industry hasn't figured it out yet.

[Lombardi's_kid_brother]

Question: After Napster, how do you re-train audiences to pay for music after they have been through a period where it was free?

I'm not sure the music industry ever could have figured out a way to deal with online distribution, because it will never be able to compete with the price point of free items.

Still, I don't think this hurts bands as much as labels. Bands never made much money off album sales.

The problem - of course - is that without major labels, it's difficult to go from "making a living" to superstardom.

Aside from a few pop stars, what modern acts will be able to sell out arenas ten years from now? The only thing that really saddens me about the collapse of the music industry is the loss of that communal moment that pop music can create.

[Smoot4Prez]

Sure you have a lot of road bands and live shows are still profitable and always will be, but they won't ever make the kind of money they would have with a record deal years ago.

And you have a problem with this? Personally, I don't think musicians should ever be making the kind of money they used to make.

You say that musician's can't "make it" now. Any musician worth their two cents knows how to use the internet to push their music without the assistance of the conglomerates. And they will still make their money touring. Instead of making 100 times the the national average salary they will make 20 times. Poor musicians.

You calling Metallica not greedy reminds me of their stance on Guitar Hero. They wouldn't even okay a cover of a single one of their songs in the game because it was a ****ization of their art. Now that the game is selling, they want a whole game devoted to their music.

Poor selfless Metallica. BTW they haven't put out a descent album since they were poor, so maybe this well actually help them out :pfft:

[Lombardi's_kid_brother]

The current music available is mostly crap. It's gimmicky and lacks staying power. Why would I spend 12-20 dollars on a cd with 1 or 2 good songs.

That's such a lame argument. Was "Open Up and Say Ahhhh...." so good top to bottom that it really needed to move 10 million units in 1988? If I had Itunes back then, I would have bought 2 songs for $.98 instead of the cassette for $8.99.

In Chuck Klosterman's new book, he has an essay on Garth Brooks. He writes about how the Chris Gaines album was a massive failure, because it sold 2 million copies. The irony is that it would be one of the five biggest selling albums of 2008 with those kinds of numbers.

[Lombardi's_kid_brother]

Poor selfless Metallica. BTW they haven't put out a descent album since they were poor, so maybe this well actually help them out :pfft:

This Tailgate is obsessed with Metallica.

I'm going to start a thread on crooners like Sinatra and see how long it takes someone to mention Metallica.

[Mooka]

I feel for the artists, but they have to adapt.

I don't feel sorry for an actor for not paying to watch his TV show because I pay a monthly bill for television.

[Captain Wiggles]

Personally, I don't think musicians should ever be making the kind of money they used to make.

Damn Communists!:evilg:

[Hooper]

Personally, I don't think musicians should ever be making the kind of money they used to make.:pfft:

Why do you hate freedom and capitalism?

Seriously, the music business has always been about screwing the artists over. If a band was making a lot of money, it was only because they were generating a ton of it for the record company. And even then, they were getting pennies on the dollar.

[Captain Wiggles]

Why do you hate freedom and capitalism?

Seriously, the music business has always been about screwing the artists over. If a band was making a lot of money, it was only because they were generating a ton of it for the record company.

Exactly. Plus I know this sounds hard to believe to some but it's hard lonely ****ing work being a Musician. Especially if you don't have a recording contract with a major label.

EDIT: Smoot I'd love to know where you think that money should have gone instead?

[Koolblue13]

This is great. **** them. I hope movies are next. I hope their ridiculous celebrity statuses start to fall apart too. Main stream music is pure stinking garbage.

As the music industry got bloated and full of ****, smaller, local music venues and musicians have suffered. A good portion of the music I listen to is small regional bands, trying to make some kind of buck.

Do you realize how hard it is for a small name band to sell a $7 CD, when people can download mainstream music off the internet?

I hope the greed and vanity of main stream music dies a fast horrible death and things will return to smaller local venues.

[#98QBKiller]

I think that people hated Metallica and especially Lars Ulrich 10 years ago with that whole Napster thing because the group of bands involved in that class action lawsuit were being a bunch of greedy *******s trying to stop people from sharing.

I remember watching an interview with Lars where he was saying that file sharing online is going to kill the recording industry and that they didn't just have their interests in mind, but the interests of bands that were like them- struggling to make it big as musicians early on. He said that file sharing would hurt those bands the most because A. smaller labels will go out of business first making it more difficult to get music produced, and B. Music that is produced won't be bought in the way it once was because everybody can just duplicate the music and distribute it for free.

I remember SO many people pissed off at him and Metallica, calling them petty, saying they were money grubbing millionaires crying about not getting an extra buck out of everybody. I realized that what they were saying made sense and that intellectual property such as music would be changed forever by the internet, but nobody wanted to believe that.

It should come as no surprise to anyone why things are the way they are right now. The music industry has lost all of this market share and it will continue to lose it. Like the OP said they spent way too much time going after the wrong sources, and filing lawsuits rather than finding a way to profit off of electronic music distribution the way apple has with iTunes. This is where they failed, even Lars Ulrich has admitted that they were going in the wrong direction with their lawsuit. They missed the boat.

What is the result of this? A band has a hard time making it big unless they are lucky enough to piggyback on a large entity like MTV, movies, or video games. Sure you have a lot of road bands and live shows are still profitable and always will be, but they won't ever make the kind of money they would have with a record deal years ago. Hell, lots of rich bands have given up completely...who was it that released their album basically for free and asked people to pay an amount they felt was appropriate for it?

Very good post. And it's pretty much a dead dream nowadays for a band to think that it can make the music it loves and become rich and famous doing so.

Being successful only works in the industry these days if you're a woman with the right looks,the willingness to have other people write your music for you & alter your voice in the studio, and the ability to learn choreographed dance moves to use while lip syncing on tour.

[DCBnG21]

Piracy holds some blame (after all, artists should get paid for their work) but I think the primary issue is the recording industry failing to adjust. I think what's really gone is the days where they can expect consumer's to pay $15 for a CD that contains 2 good songs and 9 that we'll never listen to. I think I can count on two hands the number of albums that I'll listen to most every song on the album.

My guess is they need to look at changing their model to counter this. It seems like they are putting a large amount of money into releasing the traditional album when they should be researching & testing other methods to make artists successful.

[Corcaigh]

Part of the problem is that music retailing is a different world now.

When I was in my teens and 20s a trip to the record store was an 'experience'. Lots of like-minded folks, people watching, loud music and store decor such as concert posters that made it an 'event'. Music was a big part of a typical teenager's life. You got to browse stuff you didn't know existed and usually left with a couple of albums.

Going online and downloading stuff is just not the same. My kids have a completely different relationship with music because of more TV choices, video gaming, social networking and youtube. Music just isn't central to their lives like it was for me.

[Kosher Ham]

Music

Movies

Sports

I think that is the order that these industries start to realize vastly over-paid they are.

[skinfan133]

advertising. Somehow, advertising revenue will play a big role in the music industry. I don't know how, but it will. I guess a netflix style service with paid advertisements on the page...

[#98QBKiller]

Part of the problem is that music retailing is a different world now.

When I was in my teens and 20s a trip to the record store was an 'experience'. Lots of like-minded folks, people watching, loud music and store decor such as concert posters that made it an 'event'. Music was a big part of a typical teenager's life. You got to browse stuff you didn't know existed and usually left with a couple of albums.

Going online and downloading stuff is just not the same. My kids have a completely different relationship with music because of more TV choices, video gaming, social networking and youtube. Music just isn't central to their lives like it was for me.

It was like this as recent as the 90s (replace records w/ CDs), this is pretty much how I remember my teens.

[Smoot4Prez]

Damn Communists!:evilg:

Hey I didn't say no one should make that kind of money. MUSICIANS shouldn't make that kind of money.

It should go to people who contribute to society, like investment bankers.

This is great. **** them. I hope movies are next. I hope their ridiculous celebrity statuses start to fall apart too. Main stream music is pure stinking garbage.

As the music industry got bloated and full of ****, smaller, local music venues and musicians have suffered. A good portion of the music I listen to is small regional bands, trying to make some kind of buck.

Do you realize how hard it is for a small name band to sell a $7 CD, when people can download mainstream music off the internet?

I hope the greed and vanity of main stream music dies a fast horrible death and things will return to smaller local venues.

+1

Music is no longer an art form. Musicians who actually care about their craft will still have more than enough money to provide for themselves and their families. Pop stars will ***** and moan about it. Rather than flow with it, and take lessened revenue (still ridiculous amounts of money) they will try to stop all file sharing by bullying whoever they catch doing it.

And hey, I don't blame them. I would do the same thing if I was P. Diddy or Metallica. But from where I'm sitting, the changes to the music industry are a good thing.

[Koolblue13]

Music is no longer an art form. Musicians who actually care about their craft will still have more than enough money to provide for themselves and their families. Pop stars will ***** and moan about it. Rather than flow with it, and take lessened revenue (still ridiculous amounts of money) they will try to stop all file sharing by bullying whoever they catch doing it.

And hey, I don't blame them. I would do the same thing if I was P. Diddy or Metallica. But from where I'm sitting, the changes to the music industry are a good thing.

If they can't make any money, because of people getting their music for free, why was the Dead and countless other bands, so successful, while allowing designated areas for people to come professionally tape their shows.

[Destino]

It should also be noted that music sucked the last decade. The 1990's experienced most of the grunge era that started in the late 1980's in Washington State. It was new and it was organic. Alternative rock was huge early in that decade with new bands coming out of the woodwork.

The 80's gave us... well 80's music. What did the 00's give us? A **** ton of crappy studio formula pop music and a weaker more commercial hip hop.

[Captain Wiggles]

Hey I didn't say no one should make that kind of money. MUSICIANS shouldn't make that kind of money.

It should go to people who contribute to society, like investment bankers.

+1

Music is no longer an art form. Musicians who actually care about their craft will still have more than enough money to provide for themselves and their families. Pop stars will ***** and moan about it. Rather than flow with it, and take lessened revenue (still ridiculous amounts of money) they will try to stop all file sharing by bullying whoever they catch doing it.

And hey, I don't blame them. I would do the same thing if I was P. Diddy or Metallica. But from where I'm sitting, the changes to the music industry are a good thing.

Trust me Musicians whether you like it or not do contribute to society. No longer an art form. Really then what is it? Your also very fooloish to think just because I care and devote so much time/energy to music that it will just magicly generate money to feed myself/family. Why is it then that 90% of the musicians I know are divorced or single?, Miserable? Stuggling to make it?, And Feel like the've wasted their life? These people are by no means pop stars, just regualr people like you trying to make a living off what they love. Whats wrong with getting rewarded for your hard work?

[Old Bay]

I was never much of a purchaser of full albums to begin with, but anymore it's a single song or at best a 'best of' compilation CD if I like the band enough. I think the last actual CD I bought was one by Suns of the Desert and beyond the first two songs I was quite disapointed in the rest of it. It was an older CD to begin with, and I didn't spend that much on it all told. But it would've been cheaper to buy the two songs off of iTunes instead. Would've saved $3.

I do tend to agree about the 'experience' of going to a store to look for music and such. I remember going with a buddy to a store every Friday just to browse stuff and see what was new out there. I'm sure there are still places around that are like that, but all of the ones I knew of are now out of business. The replacement is going to Wal-Mart or Best Buy and that's not got the same sort of vibe.

So it's probably just a combination of things, with the internet and the lack of adapting being the biggest issue that started a chain reaction of events.

[Smoot4Prez]

Trust me Musicians whether you like it or not do contribute to society. No longer an art form. Really then what is it? Your also very fooloish to think just because I care and devote so much time/energy to music that it will just magicly generate money to feed myself/family. Why is it then that 90% of the musicians I know are divorced or single?, Miserable? Stuggling to make it?, And Feel like the've wasted their life? These people are by no means pop stars, just regualr people like you trying to make a living off what they love. Whats wrong with getting rewarded for your hard work?

I was being sarcastic with the musicians don't contribute that much to society. Sorry, hard to portray that over a forum. I agree, the arts are an important part of the human experience.

I am also fine with getting rewarded for your work. No, I do not think it is naive to think that if you are talented (truly talented, like talented enough to make you stand out amongst the 6 billion people on this planet) you will be able to make money off of your music without a record label. People already do it. There are systems in place to spread your music/influence WITHOUT the need of corporate backing. You no longer need to "sell out" to get heard.

Do you think these 90% of musicians who aren't rich now are going to be *hurt* more by the decline of the record industry? If anything I feel it will be easier for these folks...

[Rocky21]

**** Lars Ulrich. Dude's a dick.