Back to the CD Future

For Major Record Companies, Time-Tested Acts Fit the Bill…
But at What Cost?

Anyone who’s relatively familiar with the current state of music CD sales knows that they have been sharply declining. However, most music buyers (and non-buyers) are completely unaware of the fact that it’s the decline of “new” music CD sales that is dragging down all music CD sales.

According to the NPD Group, the leading provider of market, consumer and retail information, “there were nearly 17 million fewer CD buyers in 2008” than in 2007. And it’s worth noting that in 2007, just an estimated “one million consumers dropped out of the CD buyer market.” Also in 2007, NPD maintains that nearly one-half (48%) of ALL teens did not buy a single CD, compared to 2006 when 38% of all teens avoided buying CDs.(1) So if teens, the group who has traditionally driven “physical” music sales aren’t buying CDs (currently the primary physical music format), what group is? Answer: consumers age 36-50!(2)

For the past 10 years or so, the not-so dirty little music industry secret is that the major record companies rely on time-tested recording artists for record sales, not new artists. The logic behind this, of course, is that consumers 36-50 are typically more concerned about music as a long-time investment rather than a cheap instant thrill. For consumers 36-50, who are typically less compulsive with their purchases, the consumption of music is much less about a shared online social networking experience and more about an individual connection. This is not to say that for those 36-50, music isn’t part of a broader social context. Indeed, it is. However, for 36-50 year-olds, the social experience of music isn’t driven by the current internet-mob social mentality.

Wait, There Has Always Been a Teenage Mob-Mentality

True, the teenage mob-mentality factor has long been a part of the music industry’s sales picture. However, for the first time in history, the teen mob-mentality component is helping to drive overall record sales down, not up. In fact, more NPD data reveals that, in 2007, “the percent of the Internet population in the U.S. who engaged in peer-to-peer (P2P) file sharing reached a plateau of 19 percent,” and the “number of files each user downloaded increased;” and even more revealing, P2P file sharing grew “aggressively among teens.”(3)

Now, this isn’t to say that teens are the reason that music sales are declining. Not at all. The real reason is a much more complex three-headed monster: (1) bad major label business model; (2) the death of artist/product development; and (3) the devaluation of music among new music listeners. What I have hoped to begin to present here, in one of a series of articles to come, is that while the major record companies were focused on making money off of time-tested recording acts, they weren’t really minding the “new” music store. As a result of this, artist/product development dissolved, and “new” music became even more centralized and increasingly more indistinguishable. This has, in turn, led to a massive devaluation of the notion of music for sale.

Notes:

(3) See note (1).