New analysis: Did downloads really kill the record labels? (1 Viewer)

[mike_decock]

Baloney. The whole "suffering artist" thing holds for some people, but not all. Not every musician has to be starving to be inspired.

Yeah, my statement was too "sweeping". I just get a little frustrated that the "big money" aspect of the music industry corrupts the art so much.


-Mike...

 

[Malcolm R]

Bottom line for me is that I'm not going to pay $15 to get one song I like.

If I could download that one track for a reasonable price, in a format I can manipulate as I like, I'd gladly pay.

If I could buy a single with the song I want, I'd gladly pay.

For an album of filler with one good song, I won't pay.

 

[Lee Scoggins]

I just get a little frustrated that the "big money" aspect of the music industry corrupts the art so much.

Mike,
I have tried to come up wiht a new business model in my poorly titled thread Venture Model for Music Industry...
I would appreciate your thoughts on whether you like the idea or not.

 

[Joel C]

I don't see how downloading can be killing anything... with a university connection, I haven't been able to download a song in weeks! I want to hear a few Til Tuesday songs to see if I like them as well as Aimee Mann solo, but I can't even grab their biggest hits.

 

[mike_decock]

I don't see how downloading can be killing anything

There's two sides to this and I witnessed both extremes in my own house. My roommate downloaded tons of MP3s, burned them to CDs, and NEVER bought CDs unless he couldn't find the MP3 after months of searching. I think he had a total of 3 CDs he ever paid for (and about 30 Gigs of MP3s).

I downloaded MP3s all the time and bought MORE music because I was introduced to so much new stuff. I don't have a fast internet connection anymore, but I'm still buying up the stuff I discovered through Napster and AudioGalaxy. When I've exhausted those artist's catalogs, I don't know where I'll discover new music... It certainly ain't gonna be the radio or MTV.


-Mike...

 

[Brian Perry]

I downloaded MP3s all the time and bought MORE music because I was introduced to so much new stuff. I don't have a fast internet connection anymore, but I'm still buying up the stuff I discovered through Napster and AudioGalaxy.

Imagine if when you went to the public library you were able to check out all the books you wanted and then were able to keep them (or reasonable fascimiles, such as a paperback vs. the nice hardcover version). Don't you think the book publishers would have a fit?

 

[Malcolm R]

Using your example, Mike's saying that he went to the library and checked out a bunch of books, read them, and loved them so much he ran out and bought brand new copies for his personal library. I think the publishers would love him.

Had he not been able to borrow the books to read in the first place, he never would have known he liked them and certainly would never have bought copies for himself.

It's a bit of an odd example, since libraries are essentially the Napster of books anyway. You don't get to keep them, but can borrow all the books you want, as many times as you want, and never have to buy from a bookstore again. Why aren't the publishers shutting down the libraries? Look at all those lost sales.

 

[Carl Johnson]

He said keep, not buy. If patrons of your local library had the option of keeping a hard copy of their rentals at the click of a mouse with the honor system being their biggest motivator pay money for it then publishers would be looking to shut libraries down.

 

[Benson R]

But your assuming an mp3 is the equivalent of a cd since the book in the library is the same as the one in the bookstore. It isn't. Most people want the physical cd even if they don't think there is any sound difference between the two.

 

[Dick]

Personally, a one-minute excerpt from each song on an LP is adequate for me to make a decision whether or not to buy. Many individual artist web sites have excerpts, although not necessarily for every song and usually for about 30 seconds. If we could sample a whole minute of every song for every artist new and old, that might be a good compromise, no?

 

[Benson R]

This isn't about try before you buy. Music is different then a movie. Most good music needs to grow on you before you buy it. I think the record companies probably have the right to shut down file sharing networks the question is is it a good idea? Does file sharing actually hurt anyone? I'm still not quite sure myself but I'm leaning towards no. You can argue that someone got something for nothing but did it create a lost sale?

Fifteen years ago audio cassette was the most popular form of a prerecorded album. Most stereos included dual decks for dubbing. Everybody, and I mean everybody traded albums with their friends. That probably did create a few lost sales but I don't ever remember there being this debate over whether it constituted thievery. Plus the recording industry survived. I know with mp3 it is being done on a global scale but there is still a comparison to be made.

 

[Thomas Newton]

Here's a little example of how the RIAA and their members have shot themselves in the foot.

The recording industry rakes in about $14 billion per year in the U.S., or about $1.00 per citizen per week.

I used to buy AT LEAST one CD per week - of which probably 80% or so were major-label CDs. If you figure that most CDs go for at least $12 even on sale, that made me one of the industry's better customers.

Then came SDMI. I started boycotting any music that might be likely to contain SDMI watermarks (which I judged to be any major label CDs with a copyright date >= 2000). In the last couple of years, my purchases of major label CDs fell by 50% -- and my purchases of their CDs are still falling. When I shop for CDs these days, I consider independent label CDs and little else.

So when the record companies cry of lost sales, and claim that it's due to the Internet, take it with a large grain of salt. In my case, they lost sales equivalent to those from many "average" consumers, and the lost sales were -- and continue to be -- entirely due to their own actions.

 

[mike_decock]

I used to buy AT LEAST one CD per week

You are by no means an average customer, and you are FAR more informed as well. The average person buys about 13 CDs a YEAR. Heck, I often do twice as many CDs and LPs in a month.

Unfortunately, the labels don't give a crap about us types because we don't buy the 13 "big sellers" (and if we do, we're still only responsible for one sale on those). We just make their life difficult by forcing them to keep carrying enormous catalogs in print. What, other than music, gives you 50,000 - 100,000 in-production options?

It's a rotten industry that caters to the masses and shuns the enthusiasts.

-Mike...

 

[mike_decock]

caters to the masses

Actually, that ain't even right. Their goal is to milk the masses, not cater to them.

AAAAAAAAAAAARRRRRRRRRRRGGGGGGGGGGHHHHHHHHH!!!!!!!! !


-Mike...

 

[Todd H]

Downloads didn't kill the record labels. The record labels killed the record labels.

 

[Brian Perry]

Fifteen years ago audio cassette was the most popular form of a prerecorded album. Most stereos included dual decks for dubbing. Everybody, and I mean everybody traded albums with their friends. That probably did create a few lost sales but I don't ever remember there being this debate over whether it constituted thievery. Plus the recording industry survived. I know with mp3 it is being done on a global scale but there is still a comparison to be made.

I believe that part of the cost of blank cassettes goes to the record companies as part of an agreement reached several years ago. My understanding is that it was to partially compensate them for unauthorized copying. Of course, cassettes are a significant step down from the sound quality and convenience of CDs, so they weren't really considered a threat. MP3s, on the other hand, while sonically inferior (to me at least--many are happy with the sound quality) offer MORE convenience and portability than CD, and are therefore more of a threat.

 

[Andrew W]

Here's another reason that I don't think has been mentioned. I think a lot of people hate the recording industry labels now.

In the past you just went down and bought your record, tape or CD. It was like buying a pack of gum. You just cared about the artist, title and media type. You bought the music, took it home and listened to it. Simple.

But, in recent years, it has become much more public how the labels screw the artists and the consumers. We now know about the advances that have to be paid back and how the artist has to pay all the costs that really should be paid by the label. We know the RIAA is trying to screw all the consumers out of their fair use rights.

A lot of us just don't want to support this anymore. I hardly buy music at all anymore. I hardly ever DL either. I just listen to my current collection of classic rock and classical and don't throw away any more money.

 

[RobertW]

let's discuss the costs to the label to but out a cd. i wish i had the link to it, but courtney love wrote a great article about this a while ago.


a band signs to a record label. the money they get for signing is usually an advance; the label can recoup that money out of the artist's royalties. band uses that money to live on and record their album. cost to label-$0

label gives money to band to make video, also recoupable out of artist's royalties. cost to label-$0

label pays to promote album. this is the only cost besides cd replication costs that the label bears itself. and if you're not one of the huge mega sellers like britney or nsync, then it's hard for you to get the label to spend much on promoting you.

label gives money to band to tour, also recoupable. cost to label-$0

band makes royalties off wholesale price of each unit sold. not retail, but wholesale. a great royalty rate would be 25%, most are on the order of 12-13%. a fixed cost for cover art, breakage(a big factor in the days of albums, but almost non-existent in the cd era) and packaging is charged against the artist's royalties.

artists do not earn royalties on cd's the label gives away as free samples or promotional copies. so a label sells 100 copies of a cd to someone, but in actuality, records them as 80 sold and 20 as promotional copies. the label gets its money for all 100, those 100 are sold at retail, but the artist only recieves royalties on 80 copies.

all in all, the cost to the labels for a band to put out a cd is negligible. however, they do reap the lion's share of the profits. one of the major problems with the record industry is spending a ton of money to sign and multi-millions to promote mega artists like mariah carey or micheal jackson, and having their releases stiff because they are so bad. that's how they lose money.

 

[RobertW]

here's the courtney love article:Link Removed

 

[BrianB]

a band signs to a record label. the money they get for signing is usually an advance; the label can recoup that money out of the artist's royalties. band uses that money to live on and record their album. cost to label-$0

label gives money to band to make video, also recoupable out of artist's royalties. cost to label-$0

label pays to promote album. this is the only cost besides cd replication costs that the label bears itself. and if you're not one of the huge mega sellers like britney or nsync, then it's hard for you to get the label to spend much on promoting you.

label gives money to band to tour, also recoupable. cost to label-$0

Of course, it's only zero sum if the band is successful.