Jumping the Shark: Barely-Educated Theory #1

2. April 2010 by admin.

I have a few barely-educated theories I would like to share with the class over the next few blog posts. I realize that I could be completely wrong, but based on the research I’ve done, the music industry is barreling steadily in the direction I am about to outline for you. Hopefully you will find these theories helpful. Hopefully you will go out and find your own theories.

Barely-Educated Theory #1:

I think that CDs are a dying breed, and the CD-focused Big Music industry is waning right along with them. I can get a CD’s worth of music on iTunes at half the price. Music publishers tout the fact that they can market music to the far corners of the music industry as well as maintain your copyrights. You can do both of those things with the internet. Music distributing companies base their prices on their ability to get your CD into major record stores across the country. Not only do you not need that anymore, you can do it with the internet. Record companies claim to support you and protect you, but you can pretty much support and protect yourself on the internet.

CDs comprised 65 percent of all music sold in the first half of 2009 compared to paid digital downloads, which comprised 35 percent of music sales. By comparison, paid digital music downloads comprised just 20 percent of sales in 2007 – growing to 30 percent of the music market last year.

- NPD Group Study, August 19th, 2009

For the full Zero Paid article on the new NPD Group Study, click here. For the very short PDF of the NPA Group Study, follow this link.

To me, this quote does not have statistics that discourage my hypothesis, despite the negative spin on the numbers. The music industry may not be rid of CDs, but its well on its way. 35% is nothing to shake a stick at. I think we’re heading to a new era where musicians, not huge corporate juggernauts, drive the music industry.

Audio4cast agrees with me:

…Labels should be working hard to drive traffic to their Internet radio partners, who should be emphasizing music download sales to their audience and realizing revenue from that as well. Creative collaboration is the path to sustained profitability in digital music’s future.

- Audio4cast, June 24th, 2009

MediaPost also agrees with me, though they take a gloomier and possibly more realistic approach:

While the digital boom sounds like good news, it presents a gloomy picture for the music industry. The Forrester study, titled “The End of Music as We Know It,” notes that new digital sales revenues won’t come close to replacing the lost CD revenues. From a high of $14.2 billion in 2000, total revenues will shrink to just $8.6 billion in 2012, if Forrester’s prediction holds.

- MediaDailyNews, February 20th, 2008

For more information on Forrester’s “The End of Music as We Know It”, click here (for further proof that wisdom is never free), or here (for some sweet charts).

MediaPost’s blog post, as well as everything I’ve read from Forrester’s study, tells me that there will be less money to go around, and I predict that it will not be taken from the musicians. I think that Big Music is going to bleed dry.

Times Online is even less optimistic:

The idea that niche markets were the key to the future for internet sellers was described as one of the most important economic models of the 21st century when it was spelt out by Chris Anderson in his book The Long Tail in 2006. He used data from an American online music retailer to predict that the internet economy would shift from a relatively small number of “hits” - mainstream products - at the head of the demand curve toward a “huge number of niches in the tail”.

However, a new study by Will Page, chief economist of the MCPS-PRS Alliance, the not-for-profit royalty collection society, suggests that the niche market is not an untapped goldmine and that online sales success still relies on big hits. They found that, for the online singles market, 80 per cent of all revenue came from around 52,000 tracks. For albums, the figures were even starker. Of the 1.23 million available, only 173,000 were ever bought, meaning 85 per cent did not sell a single copy all year.

- The Times, December 22nd, 2009

For the full article from the Times, here’s the link, and here’s a link to Chris Anderson’s blog (he’s on hiatus from his blog right now, but it’s a good place to get the gist of his theories).

I’ve said it before and I’ll say it again, despite the unhappy situation of Big Music, the internet is creating myriad possibilities for musicians and their dedicated representatives. Besides Myspace, sites like ReverbNation (which I swear by) offer (with Premium membership) online distribution, online press kit makers, information about your fans, 25MB of song storage, the “most powerful email marketing platform on Earth for musicians“, an extremely sleek and sexy website builder, the most advanced widgets on the planet, and a whole slew of amazing free features. This one flabbergasting site has sections on promotional tools, how-to’s on viral marketing (viral stunts, by the way, are damn near impossible to manufacture), statistics and tracking, ways to earn money, a whole block of the site dedicated to Venues, and a killer following. It is used by “over 500,000 artists, managers, record labels, and venues to grow their reach, influence, and business across the internet,” according to the About section on the ReverbNation site. Check out their About section for more information on ReverbNation.

Also, check out this helpful blog post, or this one, for more suggestions and information on online sources for musicians.

Call me an idealist, but I think I’m onto something here. As musicians and independent labels take their passion into their own hands, they see less and less of a need to allow a bullying middle man to get between them and their music. Soon to be gone are the convoluted licensing processes, and confusing, expensive distribution and publishing deals. Record labels are going to have to swallow their big budgets and swollen prides and start catering to the talent they claim to serve. Now begins the rise of the little guy, the niche markets and incredible hidden talents that the big record labels didn’t think would sell. The revolution is on the horizon. I hope you’re ready, because once it comes, we’re never going back.

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