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Friday, January 2, 2009

Digital Sales Hit New Weekly High

According to Soundscan, US digital sales hit a new high for the week of Dec. 22 - 28 with 47.7 million sold.  That's an increase of about 126% from the previous week.

Why such an enormous sales increase?  People filling up iPods to be given as Christmas gifts for one thing.  Redeeming iTunes gift cards received over the holidays is another.  Either way, it was a big end of the year for digital music.

Wednesday, December 31, 2008

20 Trends For 2009

I don't know if I agree with them all, but here's what Trendhunter considers the 20 trends for 2009.  Most of them reflect how people will cope with the sagging economy.

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.

Tuesday, December 30, 2008

Kill The CD To Save The Industry, Study Suggests

A new study from Gartner (a leading research company) thinks that the sooner the music industry kills the CD, the sooner it can turn the corner on sliding revenues.  

This might sound good on the surface, but the fact of the matter is that CD sales still generate about 75% of the industry's revenue.  And while digital sales might seem to be on the rise, the fact of the matter is that they've actually flattened this year.  Plus the fact that most consumers buy a single song at a time for a bit more or less than $.99 as opposed to the $10 - 20 per CD, and you can see the discrepancy in the thinking.

One of the points of the study that actually makes some sense is the suggestion to press CDs "on-demand" at the time a consumer wants to purchase.  The technology for this currently exists and could be implemented if the RIAA decided to do something useful rather than suing its customers (although that's been curtailed in recent weeks).  

An in-demand CD kiosk could actually be a boon to industry sales.  Imagine having such a kiosk in your local 7-11, for instance.  You'd be able to press any CD that was in the catalog and have it available in a few minutes.  Sure beats searching for an old fashioned record store, which are fewer by the day.

That being said, Kunaki is a great on-demand CD creator for the average band or artist (without the kiosk - they're just on-line).  Each CD can have up to 4 color graphics, comes shrink wrapped in a jewel case, and looks like a million dollars (if your graphics are great) for $1.75 each, regardless of the amount ordered (that means it's the same cost per disc from 1 to 100,000).  They'll even drop ship for you.  For a band or artist who doesn't want to press 1000 at a time, it's a great alternative.

Monday, December 29, 2008

The 10,000 Hour Threshold

In Malcolm Gladwell's new book "Outliers: The Story of Success", he states that there's no such thing as a true genius and that any complex task can be mastered after 10,000 hours of repetition or rehearsal. If that's true, then the music industry is truly in trouble.

Back in the 50's, 60's and 70's when clubs were everywhere, musicians had the opportunity to learn and master their craft both as players and entertainers thanks to the abundance of available work. As I stated in a previous post, with the DUI laws that came into effect in the 1980's, the number of clubs were players could hone their craft dropped by a huge amount (as much as 85% by some estimates).

As we look back on the 50's through 70's, it seems to be a true "Golden Era" of music in general (for all music, not only for Rock). Is it a coincidence that there were more clubs during that era? It sure doesn't look like it and plays into Gladwell's 10,000 hour concept. The more time you spend on any task, the more likely your skill level goes from merely good to great.

Now with the tough economic times we live in, the number of venues available to musicians will no doubt decrease. You can still get your 10,000 hours of playing in your bedroom, but true music genius still requires interaction with others to be truly great.

Gladwell also states that when and where you were born has a tremendous effect on your "genius", maybe as much as the 10,000 hours, and this is probably true as well. If you create or participate in a new sub-genre of music, chances are that you'll need far less than 10,000 hours to rise to the top of the genre. But for world-class competence that borders on or is considered "genius", the 10,000 hour goal (or even more) appears to always apply. Woodshed anyone?


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