Krupa's Back Pages

February 17, 2011

A Business Chart for Music Fans

With the Grammy’s behind us, I thought music fans might enjoy mulling over this chart, which came to my attention courtesy of Bob Lefsetz, a music industry blogger.  It falls into the “a picture is worth a thousand words” category.  

Revenue from digital music is growing, but not enough to make up for the decline in CD sales, which have fallen precipitously since the advent of digital music.  It looks like the music business should be in a state of emergency, yet new music is everywhere, from what I can tell.

 chart of the day, music industry 1973-2009, feb 2011

Lefsetz’ quote: 

“… the CD was the greatest invention in the history of recorded music”

And he is right, at least in the context of generating profits for the music industry.  Yet, while the gross margins on CD’s were massive, the margins on digital music should be even better.  Afterall the production and distribution costs on digital music are minimal.  Sure, the revenue of the music business is declining, but I wonder where the profits are headed.  Oddly, much of what I have read indicates that profits are headed down, under the theory that piracy of digital music continues to damage profitability.  While I am sure piracy has eaten away at music industry profits over the years, it is also true that modern technology has significantly reduced the production costs for making professionally recorded music.  To me it feels like there is more music, i.e., more artists and albums in a greater variety, than ever before.  If it is in fact the case that record labels cannot turn an outstanding profit under these conditions, the problem is more than likely poor management rather than piracy.

It also feels like music has transformed from a Superstar culture to a more journeyman profession.  We have a lot more music and many more acts, but fewer mega-acts and fewer stars.  And I think that’s okay.  It’s now inexpensive to make and distribute music, allowing anyone with creative impulse and ability to try to build an audience.  The barriers to entry are low, and it seems that a creative revolution should follow.  I definitely look forward to that.

I have posted on some interesting D-I-Y artists in the past, including Bon Iver, Animal Collective and the Brian Jonestown Massacre, and as I find more new acts that make great music outside the power base of the music establishment, I will definitely bring them your way.

In the meantime, as an example of where music might be heading, keep an eye on the new Radiohead album, King of Limbs.  It is coming out on Saturday, in all sorts of formats, released by the band itself.

http://www.thekingoflimbs.com/

The King of Limbs

Advertisements

Create a free website or blog at WordPress.com.