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Pricing And Video (Games) Killed The CD Star
March 21, 2008
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"This is the end of the music industry as we know it. Media executives eager to stay afloat in this receding tide must clear the path of discovery and purchase, but only hardware and software providers can ultimately make listening to music as easy as turning on the radio."
-- Forrester Research Vice President and Principal Analyst, James L. McQuivey"This is the end of the music industry as we know it. Media executives eager to stay afloat in this receding tide must clear the path of discovery and purchase, but only hardware and software providers can ultimately make listening to music as easy as turning on the radio." -- Forrester Research Vice President and Principal Analyst, James L. McQuivey
Mr. McQuivey made that statement last month after Forrester Research released a report stating that half of all music sold in the U.S. will be digital in 2011, sales of digitally downloaded music will surpass physical CD sales in 2012, and CD sales will be reduced to just $3.8 billion that year.
U.S. sales of video game hardware and software hit $1.33 billion in February, up 34% from a year earlier, with Sony's PlayStation 3 topping Microsoft's Xbox 360 for the second month in a row. Nintendo's Wii was still the best-selling console, moving 432,000 units and topping the 281,000 PlayStation 3s and 255,000 Xbox 360s, according to market research firm NPD.
Software sales in February were up 47% year over year while hardware sales rose 19% in the same period, NPD said.
Back in January in the newsletter I talked about the video game explosion and said, "Where are all those disposable entertainment dollars coming from? I don't know for sure, but last time I checked CD sales were tanking precipitously. Maybe, just maybe, the demographics for music are similar to those of people buying video games. Again I'm thinking CD prices are simply not realistic in light of all this data ... How the music industry can expect to capture more dollars from this generation already caught up in the video game explosion, and the next ones that will grow into even more advance games, is something that every industry executive should be concerned about right now."
It's grossly apparent as we are near the end of the first three months of 2008, that CD pricing is not valid anymore. I've said that for at least two years now. But now, one need only look at the weekly sales totals for the Top-10 albums to see that. The longer labels wait to react to a changed marketplace, the more revenues will continue to spiral downward as physical CD sales decline.
Perhaps too many label executives are all "deaf, dumb and blind" to what's really going on at retail and perhaps they are living in a "quiet vibration land" like The Who's "Tommy."
Here's hoping their "sight" is returned quickly. With real vision it's easy to see that "If your environment is changing, you must change with it. If you don't, you perish."
And Now This...
The NY Times article I link to below "1,700 Band Rocking As The CD Industry Reels," is a terrific glimpse into what went on at the South By Southwest Music Festival last week in Austin.
If any of you still have any doubts about how new artists and new music will be exposed as the industry continues to evolve, the article is a mus- read. There is a whole bunch of new artists, more energized than ever about their possible futures, and not waiting for a major label contract to start them on the road to success.
As I've said many times in previous issues of the newsletter, the Internet has done more to help new artists gain exposure than ever before possible. As Lou Reed said this year a convention keynote speaker about artists seeking label contracts, "You have the Internet -- what do you need it for?"
TECH WATCH...
A Company Worth Watching: Silicon Valley's Luxim has developed a lightbulb the size of a Tic Tac that gives off as much light as a streetlight. News.com's Michael Kanellos talks to the company about its technology and its plans to expand into various markets. You can watch a video all about it here: http://tinyurl.com/2jl4r6.
Indie Labels Take E-commerce Into Their Own Hands
On cnet.comWith their digital download sites, a growing number of indie rock labels have begun to answer the prayers of fans who would love to hear long-out-of-print singles on their iPods or other mobile devices.
Read more about it by clicking here.
Trent Reznor: Radiohead's 'In Rainbows' Promotion Was 'Insincere'
From cnet.comRadiohead's groundbreaking promotion for the album 'In Rainbows' was "insincere" and smacked of a "bait and switch," according to Trent Reznor, leader of the group Nine Inch Nails. Reznor made the comments during an interview with the Australia Broadcasting Corporation earlier this week.
"I think the way [Radiohead] parlayed it into a marketing gimmick has certainly been shrewd," Reznor said. "But if you look at what they did, it was very much a bait and switch, to get you to pay for a MySpace quality stream as a way to promote a very traditional record sale."
The truth is that Reznor, who at times is volatile--and is always outspoken--is doing more for music fans and fellow musicians than anybody.
Read more about it by clicking here.
Apple Could Split Device Sales With Music Labels
From cnet.comIs Apple rethinking its music strategy? As part of a deal to offer devices featuring preprogrammed music, Apple would have to agree to share sales revenue from the devices with the labels, says a source close to the deal. Cutting the labels in on iPod or iPhone revenue would mark a sharp turn in Apple's strategy.
The deal being discussed by the labels and Apple calls for the company to license the music and also "kick in a piece of the device sales," said the source. The Apple device, which hasn't been determined yet, would come preprogrammed with a certain amount of music that after a period of time, perhaps six months or a year, would roll into a subscription type of service plan, the source said.
Read more about it by clicking here.
Surrge Offers Incentive-Based Social Distribution Network
From MediaPost.comSurrge.com, a new referral model and social distribution network, has the noble goal of reshaping the digital music scene. The network was launched Saturday at the South by Southwest festival in Austin, Texas. The site aims to foster a community that encourages fans to get involved in an artist's success, and offers monetary rewards for doing so.
Everyone invested in the success of a band--from the fan to the artist to the label--is compensated for their efforts through this network. Additionally, tying associations like ASCAP and BMI into the network's technology, Surrge is effectively supporting the artists' rights--a major roadblock exacerbated with the advent of new media. "The site will pay performance fees for music streams and also compensate songwriters," said Jonathan Bingham, Surrge co-founder with his brother Justin. "We're taking the high road with this from the get-go," he said.
Read more about it by clicking here.
In Austin:1,700 Bands, Rocking As The CD Industry Reels
From The NY Times.comThe South by Southwest Music Festival is a talent showcase and a schmoozathon, a citywide barbecue party and a brainstorming session for a business that has been radically shaken and stirred by the Internet. For established recording companies, the instantaneous and often unpaid distribution of music online is business hell; CD album sales are on an accelerating slide, and sales of downloads aren't making up for the losses.
But for listeners, as well as for musicians who mostly want a chance to be heard, the digital era is fan heaven. As major labels have shrunk in the 21st century, South by Southwest has nearly doubled in size, up to 12,500 people registered for this year's convention, from 7,000 registered attendees in 2001, not including the band members performing. In an era of plummeting CD sales and short shelf lives even for current hit makers, the festival is full of people seeking ways to route their careers around what's left of the major recording companies.
Read more about it by clicking here.
Free Music for the Desk-Bound
From PC Magazine.comWhen you're parked at your PC, your mp3 or other media player may get kicked to the side in favor of PC-based tunes. Web radio and streaming services offer the music you want, when you want it. The fact that such music can be free is icing on the cake. These 12 music-streaming services are not only free and legal (like all radio), but customizable, to boot.
Read more about it by clicking here.
CROW TO FLY WITH FLEETWOOD MAC?
Sheryl Crow and Fleetwood Mac? In an interview with Spinner.com, the singer said she and the classic rock band "definitely have plans for collaborating in the future," and that said collaboration might take place next year.
ATTENTION ALL ASPIRING MUSIC VIDEO DIRECTORS
Radiohead allowed fans to name their own price for their current album 'In Rainbows.' Now the band is giving its followers the chance to craft their own music videos. The group has launched an online contest giving fans the chance to make an animated video for any song from the new album, with a prize of $10,000 for the winner, along with the chance to produce a full-length music video. The deadline is Apr. 27th.
ON THE ROAD AGAIN
Queen is hitting the road, playing 14 countries in seven weeks starting in mid-September. The band will kick off the trek in Moscow Sept. 16th and wrap it up in Vienna Nov. 1st.
ON THE ROAD AGAIN TOO
The Jonas Brothers have announced the summer dates for their Burning Up tour, kicking off July 4th in Toronto and wrapping up Aug. 31st in Essex Junction, Vt. Tickets go on sale for fan club beginning Tuesday, and to the general public on March 29th.
ON THE ROAD AGAIN 3
Pearl Jam has announced the dates for a 10-stop tour of the East Coast, kicking off June 11th in West Palm Beach and wrapping up June 30th in Mansfield, Massachusetts. Tickets go on sale April 4th.
ALL FOR A GOOD CAUSE
The proceeds from this year's "Idol Gives Back" special will benefit six charities, including the Children's Defense Fund, the Global Fund, Make It Right, Malaria No More, Save the Children and the Children's Health Fund, organizers announced Monday. The show airs April 9th and will feature appearances by Bono, Reese Witherspoon, Miley Cyrus, Eli Manning, Peyton Manning, Mariah Carey, Fergie, Chris Daughtry and Carrie Underwood and others. For the second year in a row, Ellen DeGeneres will join Ryan Seacrest as host.
AND IDOL MENTORS
Mariah Carey, Dolly Parton, Neil Diamond and Andrew Lloyd Webber are among the celebrity mentors who will impart their musical wisdom upon this season's crop of contestants.
LOVE SETTLEMENT
Former Beach Boys bandmates Mike Love and Al Jardine have reached a settlement in their court dealings related to their long-running feud over use of the band's name. The case centered mostly around Love's request for $2.2 million in attorneys' fees spent in previous litigation against Jardine in federal court.
MILE HIGH MUSIC
The Dave Matthews Band and Tom Petty & the Heartbreakers will headline the first Mile High Festival, taking place July 19-20 in Commerce City, CO. Other acts on the bills include John Mayer, the Black Crowes, O.A.R., Michael Franti & Spearhead, Rodrigo y Gabriela, Steve Winwood and Spoon. Tickets go on sale March 29th.
DIVORCE COURT
A judge has awarded Heather Mills a lump sum of $48.7 million in her divorce from Paul McCartney. The ex-couple, who wed in 2002, have been battling it out in court since separating in 2006. Ms. Mills, evidently not happy with her $48 million, immediately complained to the British press about the settlement, once again endearing herself to absolutely no one.
FALL OUT GOES ALL-OUT FOR GUINNESS
Fall Out Boy has announced plans to set a Guinness World Record as the first group to play all seven continents in under nine months. The band kicked off the challenge last summer with shows in South Africa, then toured Europe, Asia, Australia and North America last fall. A South American show is scheduled this weekend in Santiago, Chile, followed by a concert next week on King George Island in Antarctica, after which the band hopes to claim the record.
LOOKING FOR A NEW CAR?
Britney Spears' father, Jamie, has been granted permission to sell off several vehicles in her fleet of seven cars, court documents show. Lawyers for Jamie Spears stated that the many cars were too expensive to maintain and that selling some off them off would "save substantial expense to the conservatorship estate."
PASSING
Author Arthur C. Clarke, who wrote the novel 2001: A Space Odyssey in tandem with the production of Stanley Kubrick's classic film, died Wednesday in his adopted home of Sri Lanka. He was 90.
Quotes of the week
"She knew her lines better than me."
-- 'How I Met Your Mother's' Josh Radnor, on Britney Spears's first day on the sitcom set, to People magazine. Well Josh, there's two ways to look at that. Either Britney is getting better, or your memory is failing."It never surprises me that the music industry is in the mess that it's in. Consumers want one thing and the record labels want another. In any other industry, this type of thinking would put companies out of business. But in the music industry, it's standard operating procedure."
-- USC Professor Jerry Del Colliano, from his blog post this week 'In Music, The Customer Is Always Wrong'"You don't know who is here for the glamour, for the gossip factor. You really just want to know that somebody loves you for you. That's a difficult thing when, you know ... Sometimes you just do really feel like an ATM machine with a wig on it."
-- Mariah Carey to Parade Magazine, on fame."A little later on I'll be at the Dinah Shore Golf Tournament, of course. That's if it doesn't conflict with my women's basketball games that I go to."
-- Ellen DeGeneres, leaving a message for Rep. Sally Kern of Oklahoma, in response to an anti-gay speech she gave last week."You don't have to be Jewish to be a friend of Steven Spielberg. You don't have to be a Muslim to be a friend of Muhammad Ali. And you don't have to be a Scientologist to be a friend of Tom Cruise."
-- Will Smith to the New York Daily News, refuting reports that he's become increasingly involved with Scientology in recent months. No, Will, you don't have to be a Scientologist to hang with Tom. Actually, since your science fiction films do so well at the box office, and there's so much science fiction in Scientology, maybe your hanging out with him is a good thing.
The B-Side - 'Blips'
THE ONION (www.theonion.com) STORY OF THE WEEK:
Report: 32% Of Prayers Deflected Off Passing Satellites
HOUSTON (March 19, 2008) - According to an official NASA report released Saturday, nearly 32% of all prayers exiting Earth are deflected off satellites orbiting the planet-ultimately preventing the discharged requests for divine intervention from ever making it to the Gates of Heaven.
Read the rest here and laugh: http://tinyurl.com/3yy2rd.
The Blogs
Check out a great blog by Jerry Del Colliano, the Director Executive Programs, Clinical Professor Music Industry & Recording Arts, at the Thornton School of Music,University of Southern California, by clicking here: http://www.insidemusicmedia.blogspot.com.
Box Office
Check The Daily & Weekly Box Office (and more film info) at: www.boxofficemojo.com.
TinyURL
Check out www.tinyurl.com where you can make a smaller URL that will work for any webpage you wish to link to or reference. (As you can see, I'm using it in my news stories above!)
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