Roy passed on this story to me which is of interest. An excerpt…
“The music industry has a new Internet problem. A decade ago, the major record labels began to worry about online piracy, in which people illegally swapped music over peer-to-peer networks like Napster (BBY) and later LimeWire. Partly in response to the piracy threat and partly due to sliding CD sales, music companies began to experiment with licensing their records to new online services.
The idea was that services like Imeem, Last.fm, and Pandora would let people listen to music on PCs, mobile devices, and home stereos, while collecting small fees and advertising revenue that the services would share with labels and artists. Music fans would be discouraged from stealing tunes, and the major labels—Warner Music Group (WMG), Sony Music, Universal Music, and EMI—might even get a sales boost as listeners discovered new kinds of music.
But it hasn’t worked out that way. Researchers and industry consultants say online music sites are being used by a growing number of listeners as a substitute for purchasing music, rather than serving as a catalyst for more purchases. Saila-Ngita’s experience shows that the sites allow music fans to spend much less money than in the past. “Most of this is substitutional. People go to [the Web] instead of buying records,” says Jay Rosenthal, senior vice-president and general counsel for the National Music Publishers’ Assn., a Washington (D.C.)-based trade group that represents publishers of songwriters and composers.
Overall music sales have continued their years-long slide. Total industry sales were about $10 billion last year, down from $14 billion in 2000, according to the Recording Industry Association of America. Revenues from digital download services like Apple iTunes (AAPL) and Amazon MP3 (AMZN) are still growing strong, but they’re not generating enough revenue to make up for the sharp decline in CD sales. Overall spending on music is forecast to shrink 4% through 2013, according to a recent report by Forrester Research (FORR).”
I think this is a fantastic topic for debate in the comments. There is also a great video about the subject that accompanies the article linked above.
March 9, 2009 73 Comments