Monday, September 28, 2009

5 Reasons For Optimism In The Music Industry


Mitch Bainwol, the chairman and CEO of the RIAA (the record label trade association) recently wrote a post on thewrap blog regarding the 5 reasons for optimism in the music industry. He obviously gives a very slanted vision of the current state of things, but it's worth taking a look. My comments are in italics after each point.

1. Our product, music, remains as popular as ever. While other businesses may scrap to generate consumer interest in their product, music remains as popular as ever, according to our surveys, and is an economic catalyst for many other industries. Think about some of the news in recent weeks: leading technology company Apple rolls out a new line of its phenomenally popular music-listening gadgets as well as a major upgrade of the iTunes music store. Videogame developers Harmonix and MTV Games introduce a seminal version of its Rock Band franchise featuring the iconic Beatles.

I don't know if I agree that music is as popular as ever. Music doesn't relate today in the same way as in previous generations. It's not a way of life anymore like it was in the past. Blame the Internet, cable television, video games, or increased activities, but there's a lot more entertainment available these days and that's sucked some of the passion out of music. And there's a lot of artists and musical trends that have not captured the audience at all (I'm talking about rap and hip-hop, genres that major demos still can't get their ears around). That being said, music still is popular and in no danger of diminishing to the point of irrelevance.

2. Long live the album. The album’s demise is exaggerated. CD sales may continue to decline (though the success of the Beatles’ remastered catalogue demonstrates an enduring appetite for compelling music in physical form), but so far in 2009, growth in digital album sales is again outpacing digital singles (17.5 percent vs. 11.7 percent). Digital music is still a maturing marketplace, and fans are becoming increasingly comfortable buying not just the latest single online, but the entire album. Throw in the recent iTunes LP initiative from Apple and the major record companies and the album’s unparalleled significance is taken to the next level.

He's right in that the CD is going to be around for a while, since there are still enormous numbers sold. They just don't sell in near the same numbers as before (about half as many as in 2000). It's decreasing in importance though, as an entire generation is now most comfortable with digital singles. That doesn't bode well for the CD's future.

3. But it’s more than just the album. Too often, observers assess the health and vitality of the music business simply by comparing year-over-year unit sales. But that narrow analysis of yesterday’s music business fails to capture the whole story. The modern music company is an increasingly diversified, full-service entertainment firm deriving revenues from a variety of different streams.

Yes, but they're still not that good anything other than traditional sales in an old distribution model (they are getting better though, because they have to). And, it's the industry itself that seems to compare year-to-year sales, so who's to blame for that perception?

4. Record labels make or break the day. A handful of well-known bands have elected to distribute their latest albums without the help of a record label. More power to them. But, interestingly and tellingly, what connects the few oft-cited examples is that virtually all are established acts, with a devoted fan base and an established brand. That notoriety and fan support exists in the first place because of the unique marketing and promotional expertise of a record label.

This much is true - no one has really broken big from Internet exposure and distribution alone yet. Every major artist (and the vast majority of minor ones) are still a product of the record "business" as it once was.  At least at the moment, if you want to break out in a big way, you still need a major label.

5. Great music. TheWrap rightly plugged Jack White’s phenomenal musicianship. He’s worthy of the accolades, but he’s hardly alone. This fall, fans will hear another great slate of albums from the world’s most talented bands and artists, including Alicia Keys, Nelly Furtado, Pearl Jam, Norah Jones, Bon Jovi, KISS, Leona Lewis, Tim McGraw, Shakira, Rod Stewart, Carrie Underwood and countless others. This is yet another encouraging sign of a music business that is energized, vital, relevant and here to stay.

Yeah, yeah, they're all stars. There always were and there always will be. Some are more deserving than others, but they all have an audience that loves them. That's not going to change, although the audience will be a lot more stratified in the future. You'll see fewer superstars, but more mid-level musicians with a strong following.

For the full article, go the thewrap.com.

1 comment:

craig said...

"You'll see fewer superstars, but more mid-level musicians with a strong following."

That's been my perception of the shift in the music business too.

The age of electronic distribution allows many artists to connect with and sell to fans that may be thousands of miles away.

You never know where your music will connect to an audience, but a savvy act should be able to capitalize on their "hot spots" and make some money digitally where they may not have made physical sales in the past.

I'm hopeful that a new internet based "middle class" of musicians will emerge, allowing more music to filter its way down to the people who want to hear it.

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