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Wednesday, December 31, 2008

2008 In Review

We're at the end of another interesting year in the music business.  2008 provided few shocks but plenty of evolution.  Here are a number of items of significance, in no particular order.
  • Record labels, both major and indie, continued to take a revenue hit as CD sales decreased by about 14% again this year.
  • Paid digital downloads started to plateau this year at about 2 billion.  Sounds like a lot but at $.99 each it doesn't begin to make up for the lost CD revenue.
  • Perhaps coupled to the above, Apple iPod sales also began to plateau.  Has the market been saturated?
  • Guns N' Roses long awaited release Chinese Democracy falls well below expectations both sales-wise and artistically.
  • AC/DC's long awaited release Black Ice does well, just not as well as what a superstar act sold 10 years ago.
  • Musical Equipment and pro audio manufacturers skated through the tough economic times mostly untouched until the last quarter.  2009 might not be so bright though, as major retailers are cutting inventory due to the credit crunch.
  • Major musical equipment retailers hold the price line.  New policies keep discounts to a minimum.  The tag price is the sales price.
  • The RIAA sees the light and decides that suing their own customers for 7 years hasn't stopped unlawful digital downloads in the least.  The policy is discontinued.
  • Sony BMG discovers bigger isn't better and separates.  Oh boy, one more major label than last year! That will get the music business going (ha!).
  • 2008 was the year that ringtones traveled past their prime.  They're no longer hot either for the buyer or the seller and became a declining revenue source as a result.
  • Games like Guitar Hero and Rock Band are more popular than ever, giving legacy artists a real shot in the arm revenue-wise.  Now if only all the kids playing these games spent the same amount of time learning real instruments.
  • Concert promoter Live Nation gets into the long-term exclusive promotion business with deals with Jay-Z, U2, Shakira, Madonna and Nickleback.  The wisdom of such deals, which costs significant amounts paid to the artists, is questioned by the industry in face of the country's current economic condition.
  • In what may be deemed as a reply to Live Nation's move, Ticketmaster acquired the venerable Frontline Artist Management (home to the Eagles, Jimmy Buffet, Christina Aguilera, Aerosmith and many more), installing longtime industry kingpin and kingmaker Irving Azoff as CEO.  Ticketmaster immediately eliminates the hated service charges for many of its major act's concerts.
  • And finally, the merger between satellite radio giants Serius and XM finally came to pass.  Even though subscriptions continue to rise, the new company is still bleeding massive amounts of money, making their long term prospects dubious.
Happy New Year!  Even though it doesn't look great at the moment, it can only get better from here.

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