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RIAA States Studies That Say Piracy is Up Thus CD Sales Are Down 7% in First 1/2 of 2002 Print E-mail
Sunday, 01 September 2002
In the face of a recent Forrester study that showed that downloadable music isn’t hurting CD sales, the RIAA has announced other studies by outside agencies showing the opposite effect. The RIAA says both online and physical music piracy continue to impact the music industry midway through 2002, with a comprehensive new survey of public practices providing the strongest evidence to date that illegal Internet downloading is displacing sales and helping explain a seven percent drop in CD shipments and a 69.9 percent increase in counterfeit/pirate optical disc seizures, according to new analysis and data released today. The RIAA states according to PricewaterhouseCoopers LLP, CD shipments dropped 7 percent in the first six months of 2002, while seizures of counterfeit CDs soared by 69.9 percent. The first-half decline in CD shipments comes on top of last year’s overall 5.3 percent drop.

Another study cited was a May 2002 survey of 860 Internet-connected music consumers age 12 to 54, where Peter D. Hart Research Associates found that by a more than a two-to-one margin, consumers who say they are downloading more also say they are purchasing less. Among people who said their downloading from file-sharing services had increased over the past six months, fully 41 percent reported purchasing less music now than six months ago, compared to only 19 percent who said they were purchasing more music. Even for those who are downloading the same amount, nearly two-to-one are purchasing less music in the past six months -- 25 percent purchased less, 13 percent more and 62 percent purchased the same amount of music. And, for those who are downloading less, 22 percent said they purchased less in the last six months, 23 percent said they purchased more and 55 percent said they purchased the same amount.

Music enthusiasts and AV industry executives paint a different picture of why music sales are down.

The Compact Disc is 20 years old and is truly tired as a consumer format. Relatively low resolution 16 bit stereo recordings with basically no added values make for a non-competitive product in the 2002 prerecorded entertainment market. GenX and GenY will buy a $24 DVD-Video movie loaded with extras and features or a video game for $50 that can be played over and over before they spend on a low resolution CD for $16.99. The RIAA rarely (if ever) talks about supporting either SACD or DVD-Audio as a copywritten, high resolution, surround sound based prerecorded audio format. They are still too busy about worrying about forcing sales of undervalued CDs than struggle to compete with even crappier sounding and sometime pirated MP3 files.

The way people listen to music is changing yet their desire for good new tunes remains. The music industry, led by the RIAA, hasn’t dealt effectively with either problem so far. The core record buying audience, GenX and GenY, want their music on their iPod or on their PC but there is still no industry accepted Napster replacement thanks to the heavy handed legal wrangling of the RIAA. On the other hand, getting the big five to agree to anything is nearly impossible but everyone agrees that the current label specific downloadable music sites offering up with $3 per song downloads are simply useless.

Ask anyone on the streets from a homemaker to a CEO to an auto mechanic and they will give you the same view of why CDs aren’t selling as well anymore. Despite people staying home more after 9-11, the fall of the CD and the rise (and fall) of free downloadable music, the reasons why CDs don’t sell as well anymore is current pop music absolutely sucks. Brittany Spears, ‘N Sync, 98 Degrees, O Town, – need I mention more because I could. Unfortunately, these are the artists that sell but few with any background in music would agree that they are actually talented. They definitely aren’t Michael Jackson, The Eagles, Led Zeppelin or The Rolling Stones. They aren’t even The Monkeys or The Spice Girls which is really sad.

The music business is in dire trouble for the first time ever. Since The Beatles, the music industry has been a highly profitable yet extremely inefficient entertainment machine that printed money faster than a Columbia drug cartel in harvest season. Very little effort was focused on the future and the future is now. The second biggest demographic in U.S. history, GenX, has been completely alienated to the point where they actually feel justified in stealing their music instead of buying it. This is where the RIAA gets bent out of shape but finger pointing isn’t really helping. The music industry people trying to launch the two new formats get very little support in terms of money, marketing, PR or actual music titles for either new format. The RIAA could put their force behind one of the new formats instead of lawsuits.

All of these factors make for the real reason why CD sales are down in 2002 and if you are betting man, head to Vegas with big dollars in your pocket to bet that 2002 will be the worst year in modern music business history for sales. The silver lining in two years of stagnant sales might be the music industry adopting changes like support for one of the exciting, new prerecorded audio formats, development of talented new artists (who can possibly play an instrument?) and the breakup of the monopolies in radio and the concert business. With those potential changes on the table, you have hope for a new golden age for music.

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