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CD Sales Slump As Musical Instrument Sales Boom Print E-mail
Thursday, 22 March 2007
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.

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