Can someone school me on what happened to the music industry?

I don't know. BTS' Be is likely to be the #1 album in the US following its release last Friday (that's the current projection, anyway) and the only physical copy of that album available was a $40ish deluxe version or a digital one for significantly less. The album sold relatively well because people wanted to buy it. There's definitely a market for physical media when it's packaged in an appealing way. Artists like BTS and Taylor Swift offer unique packages, sometimes multiple ones of the same album, that encourage purchases. I haven't purchased CDs in years and only recently got into vinyl but in the past few months, I've purchased more physical media than I have in years because of the way it is presented.

So I do think there's hope in this sense. When the most popular artists in the world are making physical albums fun and exciting for a generation that has grown up with digital media at their fingertips (I am in my late 30s and include myself in this, btw!), that means there's a way. It just may take a little creative thinking and fans that are willing to invest.

 

Enjoying music has nothing to do with reading liner notes and holding a physical product in your hands. Nothing.

I've said this before, but blind people can't read liner notes or see what cover they're holding.

When I was a kid in the mid-seventies we'd go to this flea market and I'd buy cassettes for a dollar. Beatles, Stones, Zeppelin. They had white paper covers with the album title on them. I was ten, I didn't know they were pirates. I just liked the music. Somebody with the liner notes didn't like it more.

All that stuff is obsessiveness.

 

Who are you to speak for all those people? I can enjoy an album more when i can place the album in perspective.

 

Someone mentioned you can stream music to your stereo, but that idea doesn't fill me with joy as a collector of music. It reduces the experience to surfing the internet. I can watch YouTube videos for two hours have no emotional attachment to anything I just watched. Those videos may be deleted, or re-edited, or whatever the next time I look one of them up if I ever do. When it comes to my music collection, I want to pick the disc up off the shelf and think "I remember buying this, it's the 2002 version of Ozzman Cometh with the remixes where they replaced the original bass and drums on the 1980-81 tracks. Let's give it a listen!" I don't need a smart phone app to do that. I don't need Spotify. We need to get off the internet once in a while.

 

In the beginning it was mostly a means of communication as well as entertainment.

It was also a service for a long time historically, as it provided a function for religious, military etc. and other social activities, eventually also being a service that rich folks, including royalty had the luxury of enjoying in their homes, again often as an accompaniment to various social events.

Music as an art form that existed "solely for the art form's sake" is a pretty recent development--that wasn't very common until the later 1700s at least, and then it increased during the 1800s. For one, it required an environment with concert halls (so the population had to be adequate for this) that people who weren't so wealthy could afford to frequent.

 

Appointed Spokesman For All Those People.

It's a thing, you don't need to look it up.

 

It would, but the startup, continual tech development and marketing costs would also fall on to the record companies. Now not only does 50% of that become the problem and expertise of the streaming companies, but the record companies don't have the challenge of having to draw and keep an audience for their services which only make available their own content.

Tech development -- which is a continually moving arms race -- really isn't one of the core competencies of record companies. Neither actually is drawing audiences/consumers -- that was always the task of retailers. Had record companies tried to make that their business -- vs just taking 50% of the revenue from companies which had those things as their core competencies -- I'm not sure they would have done better, especially early on when the tech development and business path wasn't so standard.

Also, there's a huge disadvantage to consumers, and barrier to entry to consumers, which a streaming service has only certain exclusive content and not other things. I know there record business has consolidated enormously, and also that this is the way the video business has gone -- witness Disney Plus, HBO Max, in addition of course to Netflix et al. But I think most consumers -- those who aren't the music obsessives we are -- treat music differently than they treat TV and movies and narrative fiction general. Those things they actually stop what they're doing, sit down, and watch as a separate activity. We do that with music of course, but more often when it comes to music, people are listening in the background a soundtrack to their lives and activities. I don't think there's much value to consumer in exclusive music content as there is to, say, parents in a library of Disney movies.

The record companies certainly fought tooth and nail to hold off the inevitable -- that music would be delivered over internet as a service, not sold as a package good. Maybe they could have had a shorter, less steep fall had they rushed in with both feet sooner. But then again, in the early days -- and I was in the internet media biz in the 1990s and was talking with record company people then -- audiences were not of a mind to pay for content online. Selling subscriptions to online media -- whether it was music or newspapers or whatever -- was like pulling teeth. The tech (in the form of smartphones and 4G, in particular but also broadband at home) and the culture, in the form of a net native generation coming of age comfortable with paying $10 a month for Netflix without a thought), had to change before paid streaming took off. Rushing in earlier would have been of little avail.

 

In the beginning, music was a way of communicating, of worshiping, of entertaining, of passing along the news or history. It's still a way of communicating, of worshipping, of entertaining, not so much passing along the news or recording history anymore. All along the way the people who made the music did it for different social and even professional reasons and were often compensated one way or another, including, from the start, being paid to provide a service, like playing for dancers.

 

Do you think that tech development--and especially product development--was a core competency of Amazon when they began simply as an online bookseller? No. They realized that they had to adjust to the direction culture was headed in if they wanted to be a successful company. That's what successful, long-term viable businesses do. They keep changing, they stay on top of trends, they adapt. (And this is why Jeff Bezos could buy the record industry at the moment if he wanted to.)

I don't like answering a lot of different points at once, because posts back and forth just keep getting longer and longer and stuff gets ignored, so I'll just address that one issue to start.

 

Of course. But that doesn't mean other people can enjoy music the same way as you do by not collecting.

 

Interesting. Sounds dumb though.

 

It is but someone had to step up.

 

Nice posting!

I am expanding on one statement you made;

When you're only focused on having a good quarter you can easily lose sight of moves you might have to make for long-term success.

Early next year will be my 25th in Corporate America. While I'm not in the music or any entertainment related industry the paradigms are mostly the same.

What I have witnessed over and over again the last quarter century is the only thing most Senior Mgmt is concerned with are their own individual bonus'. In very few cases are their own best interests aligned with the corporation's best interest. Although those Senior folks will argue the opposite with righteous indignation to the death.

As a result of the Bonus model they are only interested what they can do today to make themselves look good and tomorrow be damned. Given the Senior person will likley move to another firm or another division in same firm right after their bonus is deposited into their greedy little hands it's all the next person mess. Of course rarely does this every benefit the company itself.

In my current firm Bonus' are doled out the end of January each year and each Feb Senior people who did what every they could to look good the previous year move on as their house of cards collapses. Sadly one of the things to look good, nay great is lay off as many people as you can even if the firm has record breaking profits. It's far easier as a senior person to look good via miserly methods than innovative (which truly brings in the money), as innovation takes a bit of time to get off the ground so it may not have impact for the next bonus period.

Conversely I've noticed that Senior people not looking to play musical chairs make much better decisions choosing innovation over penny pinching and in long term do much better for themselves and the firm. Those who do things that way are in the minority.

I'm sure much of what I mention applies to the music and entertainment industries.

P.S. I did not mention how the stock market and stock price factors in, thats for another day...

 

Things change. We can over think it all we want but it is what it is.

 

I don't know that it would be impossible for record companies -- and especially not record companies owned by consumer electronics conglomerates (not so much the record divisions) -- to, long term, develop this stuff. But I also know, from having been in the internet media business in the 1990s, not only was it difficult to develop the stuff, to recruit the best tech staff, to stay ahead of the tech curve, in competition with actual tech companies, but while you were investing in media development you were also investing in tech development that would often become a dead end and a waste of money. Just letting other parties to that business and taking 50% off the top to licenses you content, is a very good arrangement for a content company.

Amazon is sort of a different business. It was ALWAYS a tech business, and it went whole hog into the tech backend business where it didn't really have other kinds of investments or legacy businesses to pay for or protect. AWS is really today as much as anything its core business unit. And they've snapped on media production decades in.

There's no doubt a company like Bertlesmann could have done more. But even then, it probably would have been through acquisition and partnership -- like at the time AOL Europe was a joint venture with Bertlesmann. I don't think any of those legacy media companies was going to be the developer of the future tech platforms the way Amazon or Google or Apple were. Hell, Microsoft really didn't succeed at it either. You needed business freedom from the fear of cannibalizing existing businesses, creativity, ability to recruit cutting edge tech staff (with not just the best in tech ideas but the promise of an IPO), start up investors willing to live with losses (not late stage equity investors looking for growth and profit). One thing I learned early on in my dinky little start up internet media business in the mid 1990s what that I could invest in the content or in the tech development (and in those day, development was much more custom and fast moving), but it was going to be hard and expensive to do both, and that the best development talent was always going to the coolest companies with the biggest opportunities to get rich.

 

You obviously either misunderstood my meaning or just want to post something.

 

When looking at revenue for the music industry, it's worth pointing out that at least as far as RIAA revenue figures are concerned, revenue has gone up every year since 2015, and at a pretty steady clip, driven primarily by paid subscription services like Spotify and Apple Music.

We're now at a revenue level just above where we were in 2008 and, putting aside the revenue boom driven by CDs, equivalent to what the music industry was bringing in in 1986. This is all adjusted for inflation, of course.

When we talk about the music industry losing money, what we're really seeing, in my view, is a comedown from a massive revenue bubble driven by CD sales. The database I'm looking at only goes back to 1973, but even in the 1973-2019 period, you can see that there was a big climb in revenue when CDs arrived and then a big drop when digital music formats replaced CDs in the early 2000s. Prior to CDs arriving, the music industry wasn't making nearly what they were at the height of the CD boom.

Bottom line: The CD boom twisted expectations around what the music industry *should* be bringing in.

U.S. Sales Database - RIAA

 

As someone mentioned earlier in this thread having access to every song pretty much ever recorded as a music fan is the best thing in the world, and also overwhelming at times.

I remember trading Grateful Dead shows on cassette tapes 30 years ago( Most sounded like **** honestly), Now I have an app on my phone(Deadhead Archives) Which gives me access to every show the band ever played. 30 years ago I would have given body parts to have access to that and now it's at the click of a button.

Not sure what the future holds for physical media, but I can listen to every Grateful Dead show!!!. Still blows my mind

 

All of the expenses would be paid by the record industry as well. Hard to say whether the net profit would have been much different.

If the record industry had decided to set up their own streaming services, the smart thing to do would have been to create one service that all the labels provide content to. The alternative would be for each label to implement their own service and require users to buy a separate subscription for each record label. That would have been a terrible idea.

So if there was some sort of central, record-company-sponsored entity that provides music from all the majors, that wouldn't be significantly different from the current system, except maybe more of the profit goes to the record labels (I'm going to ignore the idea that this would somehow trickle down to the actual artists or songwriters, since we all know that would never happen).

But there would be a lot of potential downsides, too. This entity would probably be a monopoly, with no competing services offering the same music (as we have now with Spotify, Pandora, Apple Music etc.). So there would be no impetus to compete on price, and no impetus to improve the software or user experience. It would be also be easy for the major record labels to freeze out smaller labels if they wanted to.

So I'm seeing a number of potential downsides, and very little upside for the record industry (and zero upside for the artists themselves).

That's a totally different question from a different era, though. Downloads vs. streaming. You could argue that the record labels should have gotten together and launched a music download service prior to iTunes, but there's no guarantee that it would have been as successful. iTunes succeeded because it was linked to the hot new electronic device that everyone wanted. Prior to the iPod, I don't think the MP3 player market was big enough to make it worth the labels' times. There were other music-download services available at the time (e.g. Emusic?) but they weren't as successful as Apple's because they didn't have the cool piece of hardware associated with them.

I mean, consider this: Napster was founded in 1999. The first iPods appeared in 2001. Looking back with twenty years of hindsight, that's not a very long timeframe. Maybe, if the record companies were extremely visionary and forward-looking (yeah, right), they might have introduced their own service by 2000 or so, but that would have only reduced their "down years" by a year or two, and it would have involved a lot of expense and risk on their part. With hindsight, it's hard to see how it would have made that much difference at all. 2001 marked the beginning of the end for physical media, and the beginning of an era where the record companies didn't even have to manufacture, store or ship a physical product anymore. If that era had started 18 months earlier, I'm not sure how much difference that really would have made in the long run.

That only could have ever happened if the record industry was as visionary as Amazon, Apple, etc., and if they hired the level of technological skill that Amazon and Apple hired. You might as well expect them to fly a rocket to Mars. Large, established corporations are often stuck in their ways and resistant to change, but in spite of that, the record companies have done extremely well over the last twenty years, and it seems hard for me to argue, without the benefit of hindsight, that they should have been able to take on a significant risk and develop entirely new business model from scratch just on the chance that they would be successful.

 

Tech development has always been the single most important core competency of Amazon. That allowed them to build the best online store for books, and allowed them to hold onto their customers. I don't know how much you were buying online in the mid-to-late-90s, but most ecommerce sites were hot garbage. The search engines sucked, they often weren't integrated with inventory control systems, and it was a crapshoot to even enter your credit card number on half of them.

But Amazon was rock solid and reliable, and that allowed them to prosper. You could find what you wanted, get recommendations about other books you might like (revolutionary at the time) and read user reviews to help make your mind up (again, almost nobody was doing this prior to Amazon). That same tech development expertise has allowed them to become a leader in cloud computing today.

 

Right--that's what I suggested in my initial post.

 

(Raises hand)

 

What does running a website to sell books have to do with developing products such as kindles, etc.?

That's all they were at first. A website that sold books.

 

So that would have been virtually identical to the current system, except without any competition to improve the product, and with the ability to freeze out smaller competitors.

 

Did you read the part about incorporating ideas like Patronet?

This is why I don't like doing long posts back and forth.