The Year The Music Dies

[Marius]

http://www.wired.com/wired/archive/11.02/dirge.html

The Year The Music Dies


Record labels are under attack from all sides - file sharers and performers, even equipment manufacturers and good old-fashioned customers - and it's killing them. A moment of silence, please.

By Charles C. Mann

Not long before his sudden death from a heart attack, I saw Timothy White at a party in Boston, standing by the bar in his usual bow tie and white bucks. When he waved me over, I was delighted: Timothy was not only the editor of Billboard but a respected music critic and biographer. Even the executives he often took to task conceded, with a wince, that he understood the secretive, confusing business better than almost anyone. "How much you want to bet that the entire music industry collapses?" he asked me. "And I mean soon - like five, ten years. Kaboom!"

Truth is, it may happen even sooner. This year could determine whether the music business as we know it survives.

In the first six months of 2002, CD sales fell 11 percent - on top of a 3 percent decline the year before. Sales of blank CDs jumped 40 percent last year, while the users of Kazaa, the biggest online file-trading service, tripled in number. Meanwhile, the labels' new legitimate online music services attracted fewer paying customers than the McDonald's in Times Square.

As recently as 10 years ago, the media conglomerates that own record labels regarded them as cash cows - smaller than Hollywood but more reliably profitable. Now all five major labels are either losing money or barely in the black, and the industry's decline is turning into a plunge. In the next year, whether together or separately, the labels will have to set about totally reinventing the way they do business, a horribly difficult task for any institution.

To leap the hurdles posed by digital technology, the industry must find a way to make money selling downloaded music on a per-track basis, allow in-store CD burning, slash recording costs with cheap software and hardware, and change artists' contracts to reflect the new economic reality. Doing any one of these will be next to impossible. Doing all of them would be one of the more amazing turnarounds in business history.

The record labels blame piracy for their woes. And they're right - in part. Before writing this paragraph, I logged on to Kazaa. At 10 on a Monday morning, hardly peak time, 3.1 million people were on the network - more simultaneous users than Napster ever had in its heyday.

At least a hundred copies of every song on the Billboard Hot 100 were available for download. So were 13 out of 15 tracks on Mariah Carey's new CD, which wouldn't hit stores for another three weeks. And that's not even counting the discs sold on every street corner from the Bronx to Beijing.

The industry rightly believes that if it can make file-swapping more difficult, and legitimate online services easier and less expensive, it can turn the kids on Kazaa into paying customers. Pursuing this two-pronged approach, the companies are spending millions on their own Internet services (pressplay from Universal and Sony; MusicNet from BMG, EMI, and Warner), on lawyers to chase away pirates and peer-to-peer networks, and on anti-piracy ads featuring the likes of Britney Spears...
===============
Full article at above URL

Marius