Music Industry Online Sales
How is the INTERNET and online downloads effecting RECORD SALES and the music industry in general ?
I’ve heard a lot about musicians not being able to produce any more cds/records because of the online music market.
That’s devestating news.. Is there much truth behind that?
If you could give me an explanation on how online sales affect the music industry, and how it would stop artsits producing albums .. would be great.
This is a very complex question, and I’m don’t have an MBA, but buying trends are definitely moving away from CD purchases. According to one source, digital downloads are expected to surpass CD sales by 2012- but this will not be enough to make up for the loss in CD sales.
It’s much cheaper for record companies to produce and distribute music for download than it is to produce, manufacture, and ship CDs. The cost of a CD is still around a $1 more than it would be to download the same songs. So, on one hand, profit per sale is increasing for record companies, but because of illegal downloading, overall profits are going down.
If anything, it’s much easier for a band to enter the mp3 market than it is to record, manufacture, and distribute a CD for sale, so I seriously doubt any band will be prevented from releasing new music. If anything, the current trend will allow more bands to have their music heard by more people. At 99-cents a pop more consumers are willing to take a chance on a band than they would if they had to plunk down $15 for a CD. Of course, this increased competition will also hurt some acts- consumers’ have a limited amount of money to spend and more and more music from which to choose. But in terms of an actual CD you can hold in your hand, yes, there probably will be fewer bands making those in the future.
One way some bands are trying to get around illegal downloading is to produce good old-fashioned vinyl LP’s. While the sale of CD’s dropped 17-percent last year, sales of LP’s has gone up by 36-percent. Vinyl, however, is still just a speck of the overall music market. Nearly 450 million CD’s were sold last year, versus just under 1 million LP’s, according to Nielsen SoundScan. Based on the first three months of this year, Nielsen says vinyl album sales could reach 1.6 million in 2008.
Online downloading has also affected the price of concert ticket prices. Performers trying to make up for lost sales, have steadily increased ticket prices nationally from an average of $29.81 in 1997 to $62.07 last year, according to Pollstar, a concert trade magazine. Of course, because of rising fuel costs, transportation costs have also sharply risen during that same time period (It’s estimated that 35-50 percent of an artist’s share of revenue from a tour goes to paying crew members, production costs, etc.).
The music industry is far from dying, but it is rapidly changing, and record companies will have to adapt to those changes. I can remember a time when the record company execs said that illegal taping of LP’s on to blank cassettes was going to kill their industry. A blank tape tax was even proposed. Obviously, the tax never went through and the industry survived just fine. I believe they’ll be okay this time around also.
Radiohead’s online experiment
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