Consumer attitudes and the record industry

By Richard Menta 11/11/02

When the record industry talks about a 5% or 10% drop in sales rarely has the acts of a dissatisfied consumer been included in the blame game. This is partially understandable, because while consumer attitudes can be polled, translating that into effect on sales is something harder to quantitatively measure.

Yet no one will argue that consumer dissatisfaction can have a powerful effect on sales. And what if we get to a point of consumer anger?

Take the plight of the Audi 5000 and Suzuki Samurai in the 80's. When first released both vehicles were a very successful. That success turned into disaster when news stories appeared questioning the safety of these vehicles. The end result was that sales plunged. Part of it was naturally consumer fear, but part of it was something else.

The Nomad Zen can be ordered from Amazon.

In the case of Audi and Suzuki there was an arrogant denial by both manufacturers, a tactic to fight the allegations without having to directly address the issues that concerned car buyers. It wasn't their cars, Audi and Suzuki said, it was bad drivers.

Consumers didn't buy the denials and that strategy backfired badly. Car shoppers not only stopped buying these particular models they stopped walking into Audi and Suzuki showrooms altogether, damaging the sales of their other models.

Here is a more recent example.

Martha Stewart's company has seen a 40% drop in revenue this quarter because of the insider trading scandal she presently is embroiled in. The product she delivers to millions via magazine, TV and Kmart stores has never changed. The recipes are still tasty, the crafts still fun and creative, the garden furniture endorsed with her name have not gone up in price. All that has changed is the image of their spokesperson; little Martha who is now tainted in the eyes of millions who mix her recipes.

The record industry's handling of their audience has not been much better than the auto manufacturers and their public image since Napster has suffered a decline considerably worse that Martha Stewart's. Rather than listen to CD buyers, they went on the attack. They called their patrons thieves for trading online. They released PC disabled CDs in a world where many people's computer systems sub for their stereo. They raised prices three times in three years. They dismantled personal Net radio, a popular destination for many office workers chained to their PC in the office.

Much of the actions of the industry have shown a complete disregard for the fans who spend their hard earned dollars on their wares. But according to industry logic their patrons are stealing from them. Why should they listen?


This is what Rolling Stone's recent half-page ad (on the right) in the NY Times is leveraging - a disconnect between the Big Five and what the consumer wants. This is also the root of Hilary Rosen's unfavorable performance at the Oxford Union Debate as described by P2Pnet and here.

Look at reader responses to article postings on Slashdot or Plastic or the websites of many of this nation's newspapers. Many consumers now view the record industry as the equivalent of the evil empire with RIAA CEO Hilary Rosen starring as Darth Vader, the empire's most powerful weapon.

Hardly the product of a positive PR program.

The most recent response of the industry, putting their top stars in TV ads, actually exemplifies the problem. To throw the likes of Madonna and Britney on TV is one thing. To have them admonish people who trade is another. Interesting they did not put in front of that same camera the opinions of Prince, Joni Mitchel, Courtney Love, Radiohead, The Offspring, Will Smith, Tom Petty, and Janis Ian.

Most of the record buyers who posted on the Web their opinions on that commercial have dismissed these ads as propaganda. No one can say if these postings accurately reflect the opinions of all record buyers as a whole, but it probably does for the 140 million who actively trade on KaZaa alone these days. That audience number, by the way, is twice that of Napster at its peak.

Last year Webnoize's director of research Lee Black said "consumers and labels are at war". His words were accurate, but if this is true how come we haven't seen the significant sales drop that Martha Stewart experienced? The reason is probably because people buy artists, not record labels.

Grab any CD in my collection and I will be hard pressed to tell you which label produced it. Frankly, I don't care. I suspect this is true for all other record buyers and why the drop in sales has been modest so far. But a pall is being cast over the entire industry itself and it is getting darker. Frustrated consumers are more apt to walk away from new CDs if their attitudes on the industry as a whole is negative.

They can go elsewhere to get their music if you piss them off. The trick is to make them feel positive over the value of a store bought CD as they feel about the value of bottled water over free tap water. Then any negative sales effects that might caused by a service like KaZaa can be offset by the positive promotional effects P2P services have proved to offer, a promotional power akin to radio.

I suspect the recent drop in Online sales of new records reflects this pall. The value of a new CD in the eyes of consumers is taking a hit. The industry will claim it is further proof that file sharing is destroying their business, but the recent explosion of used CD sales seems to counter, at least partially, this argument.

I found this commentary on a Slashdot post that I found quite interesting and telling. It was written by spoot (104183):

...But I'm so damn disgusted with the whole mess I don't even bother. In the napster heyday I was buying music like crazy. More than I had in years. I'm in my 40's and way out of the demographic for music comsumers, but I was downloading on napster and finding new music and buying cd's like I was a teen again. Since the riaa nonsence I've stoped buying cd's (althoug I did become a member of emusic, what a great collection of jazz and blues. actually I see emusic as the worlds largest cut out bin.) I refuse to buy my teenage daughter any cd's this christmas. screw the greed of the record companies. And to top it off, my mother bought some crappy cd at target that refuses to play in her older cd player. she's returned it twice and they refuse to give her a refund. I just can't believe how insanely stupid the record companies are. treating your customers like thieves and criminals is no way to run a business... but a perfect way to ruin one. fark the record companies right in the arse. they desirve it. morons.

I have no doubt that consumer anger and distrust plays some factor because any disconnect between industry and consumer always plays a factor. It plays a factor on Wall Street and it plays a factor at the local record store.

It plays a factor because it devalues the experience brought about by that product. Just ask Martha.


The Nomad Zen can be ordered from Amazon.


Other MP3 Stories:
Raising the Barriers to Entry
SongSpy RIP
Creative Targets iPod with Nomad Jukebox Zen
Review: The Archos Jukebox Multimedia
Can I borrow your computer while you're asleep, please? - Altnet

Back to