22.11.07

The future of the music business

Take notice that this post talks about the future of the music business, and not of the music industry. History shows us that when companies are quickly falling, and those who constitute the actual music industry are, are quite imprevisible: it's a matter of when do they wake up. On the other hand it's pretty hard do conceive that in the next few years we'll stop having a music business...

I've been reading a lot of studies and reports lately about the music business, including the music industry in general or some of its companies in particular. At the same time, I've been discussing some of this matters in several communities and with several individuals. With that, I've formed a simplistic idea of what do people "feel" about this matter, and what researchers have to say about it.

Starting with the end



The overall music business (amount of profit per year) is going to decrease year after year at least until 2012.

Digital sales and Emergent business models



Digital sales will increase year after year, at least until 2012. By that time, digital sales aren't still bigger than the other ways of profit.

Revenue coming from emergent business models, like ring tones, ad-profits, subscription services and such, is going to increase, but it's total will still be irrelevant.

Compact Disc's, DVD's, Vinyl and Compact Cassette



CD and DVD sales will keep falling vertiginously, and that is going to be the cause for the overall decrease of profit (as it is right now), at least until 2012. Probably the fall of CD sales will keep further than that.

The Vinyl market is re-emerging, and will keep doing so, but in three or four years it will start to slow down and stagnate. This is a format that will not dye in the next couple of decades, and it is expected to survive longer than the Compact Disc.

The Compact Cassette survives for so long for a various amount of reasons. It's presence in every car player for so many years was probably the biggest longevity kick it had, and when audio books started the Compact Cassette was the best format since would give you more talk-time for less money. While some niche groups exist, the format is slowly falling and it will eventually dye. It will probably be sooner than the Compact Disc, but not so soon as the majority of people think: it is declining but slowly, and the latest trends slowed down even more that tendency.

Gigs, merch, the rest



Last but not least, gigs and related stuff is commonly seen as the "salvation" for this trends. It might be, in a more distant future, but the predictions tell us that the profits that they generate will maintain themselves, at least in the next five years

Piracy



Most people download music illegally, but at the same time most people think it is fundamentally wrong. Another wing says that a digital copy has no costs, so there's nothing immoral about doing such thing. But for the soon-to-be future, or at least until there isn't a collective position regarding it, what matters is that piracy is here and it's something that will not stop. So, more important than thinking about "right" or "wrong", let's take a look about the repercussions. Most people are convinced that piracy is the reason why the music business being less profitable day by day, probably induced by all the lies the general population has been consuming lately from the music industry. One other sign of that is that many people believe that "digital piracy" is theft, even if that's illogical if you see the definition of theft (I've wrote about this in the past).

What studies tells us is that the goal of measuring if the impact of piracy in the music business is positive or negative has never been reached. In its process, these sub-conclusions:

  • piracy is directly related to music consumption, and in many cases piracy boosts music sales

  • until now, no one managed to establish a relation between piracy and the decrease of sales



Good or bad? It really doesn't matter - even if its impact is proven to help the decrease of sales, it will never be in the order of magnitude of the decrease we're seeing in the last couple of years.

Stop!



What does this mean? Is the music business doomed? No!!!! Who should I blame? What can I do?

The funny part now: this doesn't mean really anything. As in any market, the music business has been inflated by the music industry for a long number of years, so it is now naturally deflating. The fall is aggravated by the fact that the music industry itself never knew how to adapt themselves, basicly living in their comfortable model and ignoring any other tendency. What happens to businesses that don't innovate? But you don't stand being a watcher? You feel the urge to help fix this whole mess? There aren't much choices but two things that can be done: first, buy music, buy a lot of music. Secondly, help define the new music industry, the new business models. Support the "good labels". Boycott the "bad labels". Act as people do in any aggressive market. This is an aggressive market, so if you want to influence it, don't be passive, be active.