Before the days of grunge and during a time when the compact disc
offered the consumer a fair value for $18.99, the domestic music
business briskly sold north of 30 billion dollars’ worth of music per
year.
Powered by catchy pop acts and surprisingly well-crafted rock and
metal, the music business in the early 1990s made a product that could
be sold in a profitable format in high volumes and that mainstream
consumers truly wanted. Roll the tape forward just a few years and
couple the Nirvana-esque, “I don’t care if I tune my guitar, brush my
hair or even blow my brains out, whatever” attitude with the grunge
scene, and you see the beginning of the problem.
Add in the commercial
success of Apple’s iPod paired with the launch of the DVD, which gave
consumers both an audio and a video experience that lasted two-plus
hours, had supplemental goodies, surround sound and more, and you start
to see how today CD sales have dipped to about nine billon per year
domestically, down from 30 billion only a decade ago. Despite the fact
that every old-school record executive in Hollywood or Manhattan will
scream that it was Napster that killed their sales, that isn’t true.
Napster is basically dead today, having given birth to a
three-billion-dollar per year industry of downloads that actually helps
prop up a recorded music business that can’t seem to find an innovative
new product to sell people at a price that makes the big profit margins
of years gone by. Downloads are just the sweetest fruit hanging on the
lowest branches of the tree. The solutions to the recorded music
industry’s problems require getting out a ladder and a little more
work, but the nectar will be far more sweet.
What is amazing when you listen to the people who run the music
industry talk is the way they think their segment of prerecorded music
makes up the entire music business. It doesn’t. CD sales, downloads and
now ring tones are without question a big deal but the lack of truly
great modern music – the kind of music Baby Boomers saw in the
Renaissance of the late 1960s with Jimi Hendrix, Led Zeppelin, the
Rolling Stones, the Doors and Motown – leaves the recorded music
business clinging on to trying to sell bad value CDs and struggling to
find ways to make up the difference with downloads.
But there are compelling trends in the music business outside of the
scope of just prerecorded music sales that show how consumers are
changing the way they bring music into their lives. As CD sales have
slumped, musical instrument (MI) sales have boomed. As a recent
CNN/Money report shows, cheap overseas instruments allow the masses to
actually pick up a guitar or beat on amazingly good electronic drums
and make music that feeds the soul. In fact, increasingly, it feeds the
soul more and more than CDs used to. Beyond musical instruments
themselves, the rise of the personal computer and especially recording
software like ProTools, make it possible today with a modest Macintosh,
a mixing board, a modestly priced piece of software and a few mics for
average music fans to make their own recordings of their own music.
This would have required hundreds of thousands of dollars in hardware
just a decade ago. Add in a $2,000 HD video camera and you have the
makings of a high-end YouTube.com video. Anyone wondering about the
societal impact of that can ask Google about how they feel this impacts
their bottom line. With American Idol being the empire it has become,
people of all walks of life now see that they can go from obscurity to
super-stardom in about one season of a reality show. People aren’t any
less interested in music today, compared to a decade ago. The problem
is the major labels don’t know how to offer a product that competes in
the marketplace favorably.
Despite the failure of the music business to address selling a product
that ups the value from the compact disc, people still love music.
Unlike in decades gone by, in 2007, consumers have access to so much
media ranging from terrestrial radio to their iPods to satellite radio
to Internet radio and beyond that it makes the need to buy the same
albums over and over again less important to the mainstream consumer.
Focusing on the download market and ignoring music in high-resolution
stereo, music with high-resolution video or music in surround sound
would have been a far smarter move, but that is not the path the four
majors took. Because of this horrendous mistake in judgment – seemingly
the birthright of record executives – consumers spend more money on
movies, video games, satellite radio and even playing their own music
while spending less and less money on antiquated formats like the
traditional compact disc. When will the majors get it, you ask? Perhaps
when someone in a garage writes the next big song or hits on the next
truly talented act and instead of having to beg a major to sign them
(and it does take begging – ask Alanis Morissette what it was like
trying to get signed before she sold 17,000,000 records years ago),
this person might just release the hit on YouTube.com and sell the
download on his or her own site. There is a grassroots movement at hand
here in the world of the music business. The majors are either going to
improve the product they sell, find more important and talented
artists, or people will do it themselves. The boom in MI and home
recording equipment sales should tell the power base at the majors all
they need to know about the pending apocalypse. However, if you are a
betting man, bet on them doing nothing about it just as they have
literally ignored the vast possibilities of Blu-ray and HD DVD.
