Is the music industry dying?  Is piracy killing it?

Confession time.  I don’t believe the music industry is dying.  Not in the least.  But I had to have a catchy title to get you to read, didn’t I?  Gotcha!

But seriously, what can be made of the music industry today?  The industry spokespeople are all up-in-arms because the sales of CDs is declining and the sales of online purchases aren’t making up the difference.  I recently had an email conversation with a friend about the current state of music and how it makes it onto our iPods.

First of all, it is my belief that the decline of CD sales is due to several factors.  First, fewer top-name artists are being plugged by the recording labels.  They seem to prefer a few huge names to many smaller artists.  Well, who is going to buy more than one copy of a given album, unless they are giving them as gifts?  Fewer top bands means fewer albums that will sell.  But if they promoted more bands, then more CDs will be sold.

Next, there seems to be a severe downturn in the quality of music.  Now perhaps I am just getting older, but there was a time when I liked the top 40.  Then I tolerated it.  Now I hate it.  There’s probably less than 5 of the most popular songs that I would claim to like.  And I am not an old fuddy-duddy just yet.  I listen to new groups a lot, and some pretty hip stuff, if I do say so myself.  Sure I still enjoy my classic rock, but there is some real good new stuff.  Just not among the super-hot bands.  So, the point I am making here is that the new music that makes it to our radios isn’t as good as it used to be and so the sales are declining.

A la carte purchases from the web are also having an effect on CD sales, I am sure.  How many times have we bought a CD and realized that there was only one song on it we liked?  Well, now days, with the advent of online purchases, you can buy just the track you want and skip the remainder of the album.  And if you find such a song that you like that is surrounded by crap on the remainder of the CD, then you may be more likely to skip buying the CD.

Piracy is a factor, I am sure.  I do not know how big of a factor, but I would wager that it takes a significant bite out of the sale of CDs.  My friend that I was conversing with is a college professor and he takes a poll every semester on how many of his students buy CDs, how many purchase online, and there is the assumption that the none-of-the-above crowd simply pirates (this tends to be by far the largest group amongst the polled).  I remember being in college.  I remember money being so tight that I had to choose my value-menu items carefully.  And even getting to go to a fast food joint was a treat!  So I can see that young people might prefer to get things for free that they can’t really afford.  And the largest bands are generally targeted toward that demographic.  So, it stands to reason that if the music industry puts all their eggs in one basket, and the target of those eggs are fanatical about not paying for things, then I can see that their bottom line would be suffering.

I am not sure what the answer is, but I have some ideas.  First, the industry needs to look at the direction that music is taking.  With the advent of iPods and other MP3 players, a great many people are taking their entire music collection with them.  There’s no need for a radio, in many cases.  And the cheaper, smaller, and larger-capacity these players get, the less likely people are to seek out new music, since they can have all their favorites with them all the time.

As well, I have a feeling that high-speed communication will get cheaper and more ubiquitous to the point that personal media players will no longer need to store music; it could be streamed on-the-fly from servers on the web, either commercial or private.

So, that brings us to a new frontier in music.  People aren’t listening to the radio as much, so where are they going to learn about new music?  Well, that’s what the industry is going to have to come up with.  Here’s an idea.

This isn’t my idea and I wish I could credit who I first heard it from, but I forgot who I heard it from.  However, I remembered the idea and I think it’s brilliant.  Music should be sold online for a nickel a track.  That’s right, five cents.

The first thing that this does is it reduces piracy.  I remember my Napster days.  Yeah, I downloaded a lot of stuff back then.  But I also remember that I had to grab six or seven copies of everything that I wanted because maybe then one of them would be decent.  That may not be such a problem anymore since CD rippers are more sophisticated.  But the point is that when you go to P2P sites, you never really know what you’re getting.  Spyware and virii are big there too.

So, given the random quality at which pirated music is found, wouldn’t you pay a nickel to just download the track you want with assured quality?  I mean, heck, it’s just a nickel!

But here’s the trick.  A big database needs to be established that has relationships among songs.  If you like this, then you’ll like these too!  Some services on the web try to do this.  Pandora streams songs to you based on your preferences.  And there is a program, I forget the name, that scours your iTunes tracks and finds other people that have similar tastes and then tells you what they have that you don’t.  Amber McArthur blogged about it, so ask her.

So, if you could buy 20 tracks for the same price as 1 track today, you may be inclined to go ahead and buy stuff willy-nilly.  After all, if you don’t like it, hey, it was only a nickel!  Now you’re getting exposed to many bands and songs you probably never heard of before.  And you may just purchase many of these tracks.

So, how does this make the music industry money, you may ask.  How does dropping prices increase profits?

Well, it’s pretty simple.  Right now, the reason that the industry only promotes a limited number of bands is the fact that getting the radio play and doing the marketing takes time and money.  It’s expensive.  And it takes manpower.  But maintaining a database of connections between songs and artists doesn’t take much money or manpower at all.  It’s basically free advertisement for hundreds and thousands of other smaller groups.  Sure, they can still promote their biggest names in the traditional means, but they will be getting tons of revenue almost for free (bandwidth costs only) by allowing the music file servers to promote for them.  And after all, isn’t that far more effective?  Wouldn’t you much rather be given a list of stuff you will probably like instead of just stuff that other people seem to like that gets blasted to you over the airwaves and your only means of showing your dislike is to change the station?  Targeted advertising is far more effective than the shotgun approach.

So there it is.  Those are my thoughts on how the music industry can save itself from extinction.  Surely, they need to modernize or else they’ll die off and be replaced by those of us that “get it.”

This entry was posted on Wednesday, March 28th, 2007 at 12:01 pm and is filed under Audio, DRM, MP3, Opinion, Zune, iPod.