Recording industry blues
An excellent recent Rolling Stone article by Brian Hiatt and Evan Serpick ("The Record Industry's Decline", 6/19/2007) details the death spiral of the recording and oligopoly and the hopeless, angry inability of the now Big Four recording companies to adapt.
Here are a few facts and observations from the article:
- The big contradiction, as the article points out, is that while music listening is as high or higher than ever (measured by sales of iPods, concert tickets, ring tones, and so on), the companies that control most of the music are losing money.
- Album sales (CD or electronic) are down 25% from 2000 and sales of the top ten albums is down more than 505.
- Over 5,000 record-company employees have lost their jobs since 2000.
- 2,700 US record stores have closed since 2003
- As of June, overall CD sales had fallen by 16% compared to the previous year, so the trend is not changing.
- One music industry attorney is quoted as saying "The record business is over….The labels have wonderful assets- they just can't make any money off them."
- After years of stubborn resistance, the big record companies are finally realized they can't win simply by negativity. Some are dropping elaborate copy protection schemes, some are permitting free single-use downstreaming, and they've made a deal with YouTube to legalize its "borrowing" of music videos without permission. But it's probably all too late.
- Many observers, the article reports, think that the industry lost billions in the years since it sued the first file-sharing site Napster, rather than working out a deal. In 2000, they came close to a deal, but fear of "jumping off a cliff," that is, making sense of the already in-progress digital revolution, ended the possible deal in squabbles and short-sighted greed. The industry was dragged kicking and screaming into grudgingly allowing for iTunes and other services, but by the time they allowed it, the habit of piracy had already been well established.
- One commentator notes that the 2001-2003 was the critical period. "That's when we lost the users… Peer-to-peer took hold. That's when we went from music having real value in people's minds to music having no economic value, just emotional value."
The great irony, of course, is that just when a handful of companies managed to dominate the world, they also managed, through hubris and greed, to destroy the industry that they had managed to dominate. We are about to see some serious "creative destruction" in the recording world.
4:55:40 PM 
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