Yesterday’s New York Times featured a lengthy piece on the state of the music industry. And guess what? It’s not doing too well! EMI is on the block, Paul McCartney is selling his CD through a food chain (Quiznos, maybe?), and CDs are about to become the most obsolete Japanese technology since the second-generation Tamagotchi:
Despite costly efforts to build buzz around new talent and thwart piracy, CD sales have plunged more than 20 percent this year, far outweighing any gains made by digital sales at iTunes and similar services. Aram Sinnreich, a media industry consultant at Radar Research in Los Angeles, said the CD format, introduced in the United States 24 years ago, is in its death throes. “Everyone in the industry thinks of this Christmas as the last big holiday season for CD sales,” Mr. Sinnreich said, “and then everything goes kaput”…
For the companies that choose to plow ahead, the question is how to weather the worsening storm. One answer: diversify into businesses that do not rely directly on CD sales or downloads. The biggest one is music publishing, which represents songwriters (who may or may not also be performers) and earns money when their songs are used in TV commercials, video games or other media. Universal Music Group, already the biggest label, became the world’s biggest music publisher on Friday after closing its purchase of BMG Music, publisher of songs by artists like Keane, for more than $2 billion.
Here’s another way to weather the storm, and while we’ve said this before, it bears repeating: Everyone in the industry has to get used to making less money. That goes from the execs at the top all the way down to the EAs at Rolling Stone. You can’t live like it’s 1985 anymore, with those Rumours and Thriller accounting statements coming over the Telex, and with the only competition for young kids’ dollars being the Pac-Man machine down the street. If everyone could get used to this concept, maybe there’d be less panicking about lower physical-CD sales and piracy, and more emphasis on A&R and talent. Or maybe not. But at least your third quarter wouldn’t live or die based on the fact that you might get a Keane song on Crossing Jordan.