Hots On #4: RIAA Is Watching/Digital Junkyard

Short one this week. I read in The New York Times Online (5/28/07) that CD sales have fallen more than 20% this year--the most precipitous drop in the format's history--and that the big music conglomerates, or at least the ones not in the process of being bought or sold, are having to get creative. Steps taken include: taking cuts of their artists' profits outside of album sales (touring, merchandise, and licensing profits), finding new retail outlets for their plastic coasters (Starbucks recently signed a distribution deal with the boutique label Concord), and farming out their songs to TV shows and commercials (admittedly not the newest or most original revenue stream but one of the easiest and most lucrative).

And yet the landslide continues, unabated by iTunes or other digital music retailers. One under-explored revenue stream rapidly gaining traction at the RIAA involves sending downloaders settlement claims to the tune of $650 dollars per song, with the implied threat of a much more costly lawsuit should the downloader balk. Google "sued by RIAA" and you have a fun afternoon of informative reading ahead of you. Or anyway that's what they want you to think--I remember reading a statistic somewhere (no, I'm not going to look it up) that said you are 400% more likely to die in a car crash than you are to be sued by the RIAA for illegal downloading. Programs such as Soulseek host millions of users, so making an example out of a few hundred seems like picking straws out of a burning haystack. Torrent trackers are all but untraceable, and many file-hosting sites, such as Rapidshare, are based overseas and therefore lie completely outside US jurisdiction. The moral of this story? Fasten your seatbelt, and don't lose any sleep over this guy.

So is there an analogy here? Technology = devaluation of intellectual property? When every single thing ever written, filmed or recorded is at your fingertips, what makes anything special? Except for the handful of actual quality art everyone already knows about anyway, the internet is basically a funnel for tons of content headed for the digital scrapheap--including this article. (Half of it is actually picked out of the scrapheap and looped back through the system--how many crappy new-wave bands from 1981 did you "rediscover" in the past month?) Will recorded music be completely worthless in 50 years, leaving bands to wander the countryside playing acoustic sets for a can of beans? I mean we could all be doing that--depends on how this whole Iran thing works out--but still, I can see a future where bands record their albums mainly to market t-shirts and belt buckles.

Oh wait--that already happened. Welcome to the future everybody!

CCTV photo taken by Improbulus on Flickr

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By matthew dewitt on May 31, 2007 2:05 PM 0 Comments

Comments [rss]

m

this picture is actually a Banksy stencil in London and is located near a tunnel which allows pedestrians to walk from the tube stop to Hyde Park without crossing high-traffic Bayswater.

i miss London.

John

Here's an idea: maybe the number of CD's sold by the majors is down because they're not putting out any products worth purchasing. Factory-produced artists, created to give some record executive more money, are just starting to lose their appeal to the masses.

The indies know how to do it - reasonable prices, and incentives to buy - pre-order specials, interesting packaging, and GOOD PRODUCT.

I say they did it to themselves.

Grape Ape

Remember that a lot of bands are moving away from labels and putting out their own stuff now. Instead of getting $2 of that $16.99, they can get $7-8 per CD having it made themselves and putting it out themselves. The internet (blogs, review sites etc) are the way ppl find out about music now, not through record labels.

me

In a way I think it's sad, because I think artists should be compensated for their work and not have to tour to be able to feed themselves. But the non-Justin Timberlakes of the world have been getting a 1% royalty rate for longer than the internet's been a serious issue.

The problem is the same problem every company is dealing with now; basically a publicly-traded company is beholden to shareholders who demand that the company's value increase constantly, forever. Even though this is a completely ridiculous way to run a business, these record conglomerates resort to the fiscal-analysis approach of band signing/record promotion, which means you end up with a huge pool of lowest-common denominator BS that will hopefully pay for everything else that loses money. So try not to feel insulted when paying $16.99 for a plastic disc manufactured in China.

s

nice post. the advent/popularization of the Internet and the easy access to music it provides us is essentially the "judgment day" for record companies...since the 50s, these behemoths have been running a business model that is inherently unfair and oppressive, mostly to artists, but to the consumer too. now they're faced with an ultimatum: either adapt to the new era, or refuse to adapt and bring about your own ruin.

adapt = accept that the Internet will continue to exist and start creating new business models that offer value to the New Consumer.

don't = use piracy punishment and threats as your primary tool

so far, EMI is the only record company among the Big Four to really show signs of adaptation.