CD Sales Drop Again

By Jon Newton 12/20/05

Are you sitting comfortably, handkerchiefs at the ready? Then we'll begin.

"It's sort of a bleak holiday season at the end of a bleak year," says Jim Urie, president of Universal Music Group's Universal Music & Video Distribution arm, quoted in the Wall Street Journal. "Retailers who specialize in music say that their outlook is worse than bleak. Music sales at Virgin Megastores' 20 North American locations are down nearly 20%, according to Simon Wright, chief executive of Virgin Entertainment Group. Other music retailers report similar numbers."

Jon Newton

In fact, "Things are so tough that Rob Roth, owner of the Vintage Vinyl music store in Fords, N.J., says that being able to simply keep pace with last year's sales puts him among the lucky few. His new motto: 'Flat is the new up'."

Traditionally, Christmas is, "a time for the music industry to relax and watch the money roll in as big-name releases all but sell themselves," says the WSJ. "The stocking-stuffer effect is generally strong enough that the season generates 40% of the industry's annual revenue."

However, 2005 is different. During the "crucial" Thanksgiving week, for instance, the top 10 albums sold 40% fewer copies than the top 10 albums the same week in 2004, says the story, going on:

"Album sales so far this year are down 7.8%, according to Nielsen SoundScan, compared with the same point a year ago. Sales of individual digital tracks on services like Apple Computer Inc.'s iTunes Music Store have increased - but not nearly enough to offset the slide in CD sales. According to an estimate from SoundScan, overall sales of recorded music are down about 4.5%, if one considers 10 individual tracks the equivalent of an album."

What does this suggest? That "despite a brief uptick in music sales at the end of last year, the music-industry meltdown that began more than five years ago is far from over."

And what's responsible? A combination of factors including, you guessed it, file sharing, better known to the mainstream media as online piracy.

But that's not all, concedes the story. "CD burning, high prices and competition for consumer dollars from videogames and DVDs" also play their part."

There is, however, another factor in play.

The Net.

For the first time since Thomas Alva Eddison began selling wax cylinders, the music industry is having to deal with an informed customer (NOT consumer) base whose constituents can, and do, communicate with each other via blogs, emails, IM, chats, text messaging, and so on.

And what they're saying is: We have a choice, and we're exercising it.

If the record labels think their persecution of online customers who include schoolchildren and and disabled mothers is going unnoticed offline, they're wrong.

The WSJ doesn't mention the failure of Organized Music (Sony BMG, Vivendi Universal, EMI ands Warner Music) to accept the reality that it's now in the digital 21st century and not the physical 1970s and 80s and that its business models need to be updated accordingly.

OM's members are in addition being found guilty - and very publicly - of one seamy practice after another and if they believe it'll all just go away, they'd better think again.

It's not going to get better, it's going to get worse. For the Big Four.

But it's going to get better for us as more and more options to stale and over-priced formulaic corporate 'product' continue to become available, and as more and more avenues and means of communication open up.

Jon Newton is the editor of and is a regular contributer to MP3 Newswire. Jon's site is devoted to the politics of digital music and his insights as well as those of his co-writers can be read there. We urge you to explore it.

Other MP3 stories:
For Every 3 iPods, Creative Sells 1 MP3 Player
Ipsos-Reid: Only 2% of Consumers Care About Legal Issues With Downloading Music


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