It’s Official: The Music Industry Is Struggling
By Anna Johnson on July 2nd, 2008A report by eMarketer clearly indicates that the music industry is struggling, as more and more people go online to download music… without paying as much as they used to.
Whilst legitimate music downloading is increasing, overall music industry sales are declining. They’re not exactly in free fall, but in the U.S., annual music spending per capita was just $120.03 in 2006, down from a record high of $268.01 in 1995 and lower than $198.04 in 1980. The per capita spend for 2007 isn’t available yet, but is expected to be in line with the downward trend.
Folks, these are nominal figures. That means that after adjusting for inflation, the drop in spend per capita is even lower.
Meanwhile, more people than ever are buying music, with a trend towards online downloads rather than physical formats such as CDs. In January 2008, 21 percent of U.S. consumers bought MP3s or other digital audio from an online download service, up from 16 percent in 2007.
According to eMarketer senior analyst Paul Verna, the array of music formats, players and vendors has hindered sales growth. But if online sales have increased, – while revenue overall is declining – something more fundamental is going on here.
There’s no question that people love music… but now that it’s so readily available for either low (or no) cost, the price at which supply meets demand is just much lower than it was in the 1980s and 1990s.
Here’s a thought: perhaps we were paying too much for music in the first place. Not so much for production or distribution, but for licensing deals with music artists. Perhaps in an environment where people just aren’t willing to pay so much for the latest pop song, the fees demanded by prima donna music artists and bands will increasingly become a thing of the past…
Source: eMarketer, “Digital Music Spending, Complexity Up”, eMarketer, June 20, 2008
