The Music Industry is Dead: Long Live The Music Industry!

People have been predicting the death of the music industry for longer than I can remember. This article examines the changes in how we listen to music and then explores how record labels are still trying to make money from music sales.

Whilst the fact that we are buying less music now than we did ten years ago is common knowledge, the rate of the decline is quite staggering. According to research by the NPD Group, 13 to 17 year old Americans “acquired 19% less music in 2008 than they did in 2007.” Unsurprisingly CD sales fell at twice the rate of digital sales, down 26% and 13% respectively.

What is also interesting is that people are not only buying less music but also sharing their music less. Indeed the same research from NPD showed the quantity of tracks downloaded from P2P networks fell 6% in 2008 and the number of teens borrowing music to copy, fell by 28%.
The Music Think Tank illustrates the decline in file sharing by looking at the Google search trends for Free Music, Free MP3s and File Sharing, all of which show a clear trend:

So how are teens getting their music? Not surprisingly, sites like Spotify and Last.fm, coupled with technology like the iPhone, are changing the market, as the NY Times put it, “from an acquisition model to an access model”.

Is music ownership now a thing of the past? Has there been a fundamental shift in how we perceive music, from a thing that we own to a service that we can use whenever and wherever we are? Certainly the British research illustrated the beginnings of such a shift, with two-thirds of teens now listen to streaming music “regularly” and nearly a third listen to it every day.

So how are record labels making money? Revenues made by the British music industry from live music increased 13% on last year to £1.4bn. In London alone the number of licences for events of more than 5,000 people has risen from 40 in 2005 to about 200 today. But that revenue only makes up 39% of the total. Hence actual music sales are crucial to the survival of the music industry.

In the face of sites like Spotify, how can bands and their labels continue to sell music? The answer according to a recent article in Wired is to reinvent the distribution model. Below are 5 of the more interesting ways record labels are changing how they sell their music:

Capitalising on YouTube sensations



With over 15 million views on YouTube last time I checked, the Wedding Dance video is the current viral hit. Rather than sit back planning legal action over the bride and groom for using their song, Sony Music made a smart move to capitalise on the use of the Chris Brown song "Forever" in the video. According to the YouTube blog “The rights holders for "Forever" used these tools to claim and monetize the song, as well as to start running Click-to-Buy links over the video, giving viewers the opportunity to purchase the music track on Amazon and iTunes.” The result of this was that even over a year after its release, “Forever” reached number 4 in the iTunes singles charts and number 3 on Amazon’s best selling MP3 list.

Music discovery – I love this idea from the music company Ghostly International. To get people to explore more of the artists on their record label they created a free app called Ghostly Discovery. Unlike Last.fm the recommendations are based on your mood which you select using a colour wheel. You can then select the style by choosing between Digital and Organic and Fast and Slow. If you like any of the songs on the custom playlist you can then add it to your favourites or buy on iTunes.

Sell more than just a CD - Mos Def sold his latest album in the form of a T Shirt that contained a download code for getting the tracks online.

Collaborate - DJ Danger Mouse’s latest album, Dark Night of The Soul, involved a collaboration with director David Lynch as well as a host of other stars. Unfortunately the album was blocked by EMI for legal reasons. Not one to shy away from controversy he subsequently released a limited run of blank CDs, asking fans to find the music “by whatever means”… The CDs were limited to a run of 5000, and each copy came with a poster and a 100 page book with photographs by David Lynch.

Brand partnerships – certainly not a new idea but there are right and wrong ways of doing it. One of the best examples was the Nike and De La Soul tie up earlier this year. The partnership resulted in the album “Are You in?: Nike+ Original Run,” a 44-minute workout LP, which forms part of Nike’s SportMusic range.

UPDATE

More examples of how bands are trying to sell their music over on Trendplanner's blog.