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Record Companies Struggle in Digital Age
by
findingDulcinea Staff
CD sales are sliding for the seventh year running, artists are striking out on their own, and the record industry is in the doldrums. But not everyone is singing the blues.
30-Second Summary
Recording giant EMI said on Jan. 15 that it is planning to cut a third of its workforce and restructure the label. Plummeting CD sales and the losses of major artists have dogged the company of recent. Radiohead and Paul McCartney are two major acts to have abandoned the label.
Warner Music, another major label, lost Madonna last year. Other recording artists have also started to bypass record companies in favor of alternative sources of revenue.
For a limited period last year, Radiohead made their album In Rainbows available online at any price customers were willing to pay.
The trend away from the labels spans the entire record industry.
In the early 2000s, illegal music-sharing started chipping away at companies’ profits, but observers agree that it is the advent of broadband that sped up the decay.
Today, people can listen to music on YouTube or download it free elsewhere online.
The growth of legal downloading has brought some hope for the industry, but has failed to offset the losses, The Wall Street Journal wrote.
The explosion of digital downloading is not necessarily a bad thing: it has benefited consumers, most observers contend. Music buffs now have more flexibility in picking their music, which is available to them at a fraction of what they used to pay.
Not everyone applauds the pace of digitization though. When the Tower Records stores closed last year, The Nation bid it a reluctant goodbye. “It’s the end of the world as we know it,” columnist Max Fraser wrote, quoting the verse of an R.E.M. song of the same name. But we don’t feel fine, in Frazer's estimation.
Warner Music, another major label, lost Madonna last year. Other recording artists have also started to bypass record companies in favor of alternative sources of revenue.
For a limited period last year, Radiohead made their album In Rainbows available online at any price customers were willing to pay.
The trend away from the labels spans the entire record industry.
In the early 2000s, illegal music-sharing started chipping away at companies’ profits, but observers agree that it is the advent of broadband that sped up the decay.
Today, people can listen to music on YouTube or download it free elsewhere online.
The growth of legal downloading has brought some hope for the industry, but has failed to offset the losses, The Wall Street Journal wrote.
The explosion of digital downloading is not necessarily a bad thing: it has benefited consumers, most observers contend. Music buffs now have more flexibility in picking their music, which is available to them at a fraction of what they used to pay.
Not everyone applauds the pace of digitization though. When the Tower Records stores closed last year, The Nation bid it a reluctant goodbye. “It’s the end of the world as we know it,” columnist Max Fraser wrote, quoting the verse of an R.E.M. song of the same name. But we don’t feel fine, in Frazer's estimation.
Headline Links: Times are a changin’ for major labels
EMI Group will cut 2,000 jobs, or a third of its workforce, because of plummeting CD sales and the loss of several major artists. It is one of the companies that have been affected worst by the increase in digital music downloading. The Beastie Boys, Norah Jones, The Spice Girls, Coldplay, The Rolling Stones and Kylie Minogue have contracts with EMI.
Source: CNN
Radiohead releases online album independently
Radiohead’s decision to make their In Rainbows album available online for whatever listeners wanted to pay was “revolutionary,” BetaNews reported. Radiohead do not have a major label behind them, but instead have a contract with a publisher. The publisher manages, and does not own, the music rights, wrote BetaNews. This new way of selling music will be more profitable to the artist and cheaper to buyers, the article concluded.
Source: BetaNews
Madonna leaves Warner
In October, Madonna left the record industry and signed a deal with concert promoter Live Nation. The company will have exclusive rights to the artist’s tours, new albums and merchandise. “The loss of Madonna is a blow to Warner's bottom line and to the record industry as a whole,” BetaNews wrote.
Source: BetaNews
Background: Digital kills the compact disc
As CD sales in 2007 declined 20 percent over 2006, it is clear that customers are changing their preference regarding how to acquire music. The demise of specialty music retailers, such as Tower Records, is partly to blame. About 800 music stores shut down in 2006.
Source: The Wall Street Journal
Many artists are leaving record companies. The prevailing wisdom is that they no longer need album contracts when fewer and fewer people buy CDs, while a lot of their music is available for free or very cheaply online.
Source: CNN
Downloading music is becoming increasingly popular, the Chronicle reported in December 2005. Sales of digital music nearly tripled over the year before. Analysts credit the release of Apple’s iPod with this development. Record companies, in contrast, have seen their sales shrink.
Source: San Francisco Chronicle
Opinion & Analysis: The future of music is digital
Pro
The 1990s experienced a “hit bubble,” according to Wired magazine. Album sales doubled, and half of best-selling 100 albums ever were released over that decade. The turning point was in 2000. For the next five years, album sales continued falling. The labels blamed the losses on piracy. But even paid-for downloads allowed listeners more choice. “Rather than having to purchase an entire album to get a couple of good tracks, they can buy songs à la carte for 99 cents each,” Wired wrote.
Source: Wired
Contra
An article in The Nation bemoans the digitization of the music industry and the loss of Tower Records stores. “If Tower had become an outdated relic, it remained a cherished one,” it wrote. And although digital music is gaining ground, CD sales still account for three-quarters of music sales.
Source: The Nation
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