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Just Some Facts
February 22, 2008
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"The business is going to have to wake up and realize that recorded music sales are an ancillary business."
-- Eagles manager, Irving Azoff, in the New York Post this week..While too many in the industry are still living inside "the matrix," outside of it, here in the real world, big wheels keep on turning.
I thought this week it would be good to just list some of the factual data about what's going on. (All data sourced at: http://www.itfacts.biz/category/music unless noted otherwise )
Item: US recording industry revenues fell to $11 billion in 2006, down 25% from a 1999 peak of $14.6 billion, according to a report from the Yankee Group (http://www.yankeegroup.com). The rise of digital music will hopefully compensate slightly for this loss, reaching an estimated $5.34 billion by year 2012, up from $1.98 billion at the end of 2007, but the growth of digital music will not replace the revenues lost from physical CD sales.
Item: Ringtones brought sweet music when it came to revenue generation in 2007. There were 220 million ringtone purchases in 2007 resulting in sales of $567 million. During the last week of the year, Christmas week, which is usually the best retail week, ringtone purchases increased by 22% over the previous week. Mastertone purchases accounted for 91% of all ringtone sales in 2007. The top 100 Mastertone ringers sold 65.1 million, accounting for 30% of all ringtone sales for the year, Nielsen SoundScan reports.
Item: Though global digital sales grew by estimated 40% in 2007, according to IFPI, total sales were down almost 10% as physical CD sales continue to slide. (Source: http://tinyurl.com/2zbtgf )
Item: There were more than 840 million digital tracks purchased in the U.S. in 2007, for an increase of 45% over 2006. Digital album sales reached the 50 million for 2007, up 53% over the previous year and accounting for 10% of total album sales compared to 5.5% in 2006. There were 41 songs that exceeded the 1 million sales mark for the year, compared to 22 digital songs in 2006 and only 2 digital songs in 2005. There were more than 390,000 different physical albums that sold at least one copy over the Internet during 2007. Physical Internet album sales reached a new record high with sales of 30.1 million unit sales, for an increase of 2% over 2006 year-end total (29.1), Nielsen SoundScan reports.
Item: Music purchases in the U.S. reached 1.4 billion, and that was the third consecutive year music sales surpassed 1 billion. Overall Album sales (including Albums and Track Equivalent Album sales) declined 9.5% compared to 2006. Total album sales declined 15% compared to 2006. Consistent with the previous three years, 20% of total album sales occurred during the holiday season, Nielsen SoundScan reports.
And this: As I mentioned in a previous newsletter recently, the videogame explosion is becoming even bigger. The global-installed base for the Nintendo Wii will rise to 30.2 million units in 2008, up from 18 million in 2007 and beat the Xbox 360's total of 25.7 million units in 2008, iSuppli says, "The installed base for the Nintendo Wii will grow to 37.7 million units by 2011, rising at a Compound Annual Growth Rate (CAGR) of 20.3% from 2007. In 2011, the installed base of the PlayStation 3 will exceed that of the Wii, iSuppli predicts. The PlayStation 3 will reach an installed base of 38.4 million units in 2011, rising at a CAGR of 39% from 10.3 million in 2007. The Xbox 360 by 2011 will grow to 32.3 million installed base units, rising at a CAGR of 15.4% from 18.2 million in 2007." (Source: http://www.isuppli.com/catalog/detail.asp?id=8974 )
That kind of dynamic growth will come at the cost of other types of entertainment, including CDs and DVD sales.
If the music and film industry leaders are watching this growth, they should start creating strategic plans for more competitive pricing, more SWOT (Strength, Weakness, Opportunity, Threats) analyses, and product development enhancements to ensure their market shares don't shrink as videogames become more and more sophisticated.
And Now This...
Despite all the RIAA spin about how their lawsuits are helping decrease illegally downloading, a new NPD Group report released in January finds that "while most teens and tweens are using paid music download services these days, they're also still using pirate sites at a high rate. The research group estimates up to 70% of U.S. kids aged 9-14 download music in a given month. Almost half, or 49% use iTunes, while another 26% use Limewire. MySpace was listed as the third most popular site for sharing music, at 16%."
"The music industry hoped that litigation and education might encourage parents to keep better tabs on their kids' digital music activities," said NPD analyst Russ Crupnick in a statement releasing the reports results, "but the truth is many kids continue to share music via P2P."
As Microsoft's Steve Ballmer said (and I've used this quote in the newsletter on many occasions) back in 2004, "We can build the technology, but there are still ways for people to steal music."
It's 2008, and they are still stealing music. And now films.
And it will never stop despite all the efforts of all the legislators and associations. The technology already out there cannot be undone.
The solution to the problem can only be found by realizing and accepting that hard, ugly truth, then moving forward to creating models that can generate revenues despite the that truth.
It will take a lot of work, but it can be done.
The question is, how long will it take industry leaders to actually start moving in that direction before it's too late.
MySpace Eyes Ad-Supported Music
From CNET News.comFree music, it seems, is here to stay. First, Imeem, then SpiralFrog, QTrax and now, News Corp.'s MySpace is aiming to bring ad-supported music to the Web's largest social network. CNET's Greg Sandoval says the Web's No. 1 social network is currently in discussions with music's big four about giving the record labels an equity stake in MySpace in exchange for offering free music.
Reports in the blogosphere conflict over whether the new music service would offer downloadable or streaming music; PaidContent says downloads, while the Silicon Alley Insider says streaming. Sandoval's source wouldn't comment, but "I have a hunch it streams," he says, because Big Music has mostly shown no interest in giving away downloads on ad-supported sites.
SpiralFrog is the only one to score a top record company (Universal Music Group), while QTrax is still trying. Imeem and CBS' Last.fm both offer streaming services on their social networks, and Sandoval says data shows that streaming music actually encourages sales. The only way MySpace will be able to secure downloads, he says, is if News Corp. pay so much for them that the labels can't resist.
Read more about it by clicking here.
The Eagles Soar...Conversation With Irving Azoff
From the NYPOST.comIrving Azoff, the long-time manager of The Eagles and a music industry heavyweight, last year convinced the band to self-release its 2007 CD, "Long Road Out of Eden" -- its first album in 28 years -- and it ended up shipping four million copies in the U.S., and selling over 8.5 million worldwide.
As I said back in the newsletter last December: a) GREAT pricing at retail means you sell more CDs even when people are downloading songs for free illegally (the Eagles two-disc album sold for only $11.88); b) QUALITY music sells even when people are downloading songs for free illegally: c) a GREAT retailer that sells QUALITY music can deliver volume sells even when people are downloading songs for free illegally.
It was Azoff's idea to have the CD sold only through Wal-Mart, a risky proposition that could have ruined the band's comeback. As The Eagles prepare to kick off their 2008 tour -- which could bring them to New York in May -- The New York Post caught up with Azoff to discuss the Wal-Mart deal.
(Special note: And for more evidence that quality music wins out over all the disposable flavor-of-the-month "product" being released by labels, the Eagles "Farewell 1 Tour - Live From Melbourne" DVD is now certified 30x Platinum RIAA video sales)
Read more about it by clicking here.
Flash Drives Offer New Choices For Music Fans
From cnet.comWhen the Mars Volta put out its latest album, "The Bedlam in Goliath," in January, the act gave its hard-core fans an option that is becoming increasingly popular--and creative. Instead of a CD or digital version of the Universal album, fans could buy a $30 USB drive designed like a Ouija board planchette. The device comes with a digital-rights-management-free version of the album and the promise of more bonus materials in coming months. Users simply plug it into their computer's USB drive and then listen to the album or download it into their music library.
The Mars Volta joins a growing number of recording artists who have experimented with USB releases in recent months, among them Jennifer Lopez, Ringo Starr and Matchbox Twenty.
Read more about it by clicking here.
Aerosmith Plugs Into 'Guitar Hero' Popularity
From USA TODAYTwo years ago, Aerosmith guitarist Joe Perry came home and found his youngest son, Roman, now 16, playing Guitar Hero with friends. "I played it a little bit and said, 'This is fantastic. Does it have any Aerosmith songs on it?" Perry says. "The first game didn't, and I was hugely (upset)."
Perry may have been playing the blues then, but no more. The first one-band edition of the game, Guitar Hero: Aerosmith, is due in June for PlayStation 2 and 3, Xbox 360 and Wii. GH: Aerosmith (about $50) will track the history of the Rock and Roll Hall of Famers, who have sold 100 million-plus albums. GH: Aerosmith is based on the technology of Guitar Hero III: Legends of Rock, which has sold 6 million copies in its first four months. The $820 million in Guitar Hero sales for 2007 set a U.S. industry record. The GH franchise has sold more than 15.6 million copies worldwide of the games that let you strum and hit note buttons on a guitar-shaped controller as tracks play on-screen.
Read more about it by clicking here.
Obit: CD Finally Put Out Of Its Misery
From McClatchy-Tribune News ServiceBy Chris Riemenschneider
Once praised for its clear, crisp audio quality but panned for its susceptibility to scratches and smudges, the compact disc passed away in 2007 after a quick but painful illness. It was 25 years old.
The final cause of death has not been determined, but friends and fans blamed digital-download sites such as iTunes and illegal file-sharing among rich kids. In addition, doctors pointed to the big record companies and mega-selling artists who put out CDs in recent years that featured only a few good songs and lots of filler.
The CD was preceded in death by its siblings, the cassette and 8-track tape. Its older cousin, the vinyl record, has been hanging on for two decades, with life support from nerdy audiophiles. Since 2004, CD sales have declined by one-third while digital album sales have quintupled. Last year's 19 percent slide from 2006 led doctors to finally sign off on its death notice.
Read more about it by clicking here.
Hacker Breaks Link Between iTunes And The iPod
From TimesOnline.comSoftware letting iTunes users copy music and video to mobile phones has been released by the hacker known as DVD Jon.
Once again, proving that anything that can be done digitally, will be done, a notorious Norwegian hacker known as DVD Jon is preparing for another run-in with the music industry after he released software that lets iPod owners copy music and videos bought from iTunes and play it on other devices.
The program allows people to drag and drop songs from iTunes into a folder on their desktop, which in turn copies the files to other devices such as mobile phones and games consoles via the web.
Read more about it by clicking here.
Wilco Bares All In Chicago
From The LA Times.comChicago rock band Wilco pledged to perform its entire recorded catalog over five shows in six nights in its hometown.
Importance: Over the course of its six studio albums, Wilco has proved to be restlessly adventurous, its multiple lineup shifts resulting in an endlessly evolving band that challenges itself, and its audience, with each release. From the wide-eyed Americana of "A.M." to the electronic pop deconstructions of "Yankee Hotel Foxtrot" to the more subdued, almost soulful melodies of its most recent "Sky Blue Sky," Wilco has balanced experimentation and songcraft. The lyrics of the band's center and guiding force, the slightly scraggly-voiced Jeff Tweedy, possess a bit of nostalgic romanticism, characters who, to borrow a line from Wilco's "Sunken Treasure," appear just "outta tune" in their ability to connect with love, rock 'n' roll and culture.
Read more about it by clicking here.
NO JAM, JUST EDDIE
Eddie Vedder, Pearl Jam's frontman has announced plans to embark on a small seven-city West Coast-only solo tour this spring. The tour kicks off Apr. 2 in Vancouver and wraps up on the 15th in San Diego.
ANOTHER ONE BITES THE DUST
TVT Records, which was once one of the top independent record labels in the United States, earning Billboard's Independent Record label of the year award five times in a row, the most recent in 2006, fired its staff and is expected to file for Chapter 11 bankruptcy.
DIVORCE COURT
The closed-doors divorce trial of Paul McCartney and Heather Mills McCartney was extended into this week, despite plans for proceedings to wrap up in London a week ago Friday. The estranged duo failed to agree on terms of a financial settlement. Ms. Mills, who obviously has been watching too much Court TV, is representing herself at the trial.
DIVORCE COURT 2
Pink and husband Carey Hart, who wed in January 2006, have separated and plan to divorce. "This decision was made by best friends with a huge amount of love and respect for one another," the singer's publicist, Michele Schweitzer, said in a statement. "While the marriage is over, their friendship has never been stronger." Yeah, uh-huh, sure.
BRIT AWARDS RUNDOWN
The Foo Fighters, the Arctic Monkeys and reunited boy band Take That took home a leading two nods apiece at the Brit Awards Wednesday, the U.K. equivalent of the Grammys. The Foo Fighters won Best International Group and Album. Amy Winehouse and Paul McCartney both performed during the show, with the latter receiving a Lifetime Achievement Award at the ceremony. Kanye West was also honored at the show, named Best International Male, though he was not in attendance. Kylie Minogue took home the prize for Best International Female.
JESSICA SIMPSON #1 ... IN SIBERIA
Jessica Simpson's "Blonde Ambition," a nearly straight-to-DVD release in the U.S., which was confined to just eight Texas theaters and which racked up just $1,171 in its opening weekend, debuted at #1 at the box office ... in Ukraine. According to Box Office Mojo, the flick topped the nation's Valentine's Day weekend, grossing $253,008, proving that there's an audience for almost anything these days.
BLUE-RAY THE WINNER
If you bought an HD DVD player and HD DVDs, it was a mistake. Japan's Toshiba Corp. surrendered in the high-definition home movie war on Tuesday, giving up on its HD DVD format after losing the support of key studios and retailers to the Blu-ray technology backed by Sony Corp. Wal-Mart U.S. had announced that its 4,000 Wal-Mart and Sam's Club stores would move forward this year with one hi-definition movie and hardware format: Blu-ray. That news certainly expedited HD DVD's death.
APPLE MAKES THE SHUFFLE EVEN MORE AFFORDABLE
APPLE is now selling its iPod shuffle for $49 and is introducing a new 2GB model for $69. The iPod shuffle is just half a cubic inch in volume, weighs just half an ounce, features an aluminum design with a built-in clip and comes in five colors--silver, blue, green, purple and a (Product) Red special edition.
MORE CELLULOID ABOUT VINYL
Beyonce has signed on to executive produce and star in the upcoming 1950s period film "Cadillac Records," per the Hollywood Reporter. The singer will play Etta James in the film, which centers on the real-life story behind Chicago record label Chess Records. Adrien Brody and Cedric the Entertainer also star.
IT WAS AN ITSY BITSY, TEENIE WEENIE SMALL AMOUNT OF COCAINE-EE
Massachusetts authorities are deciding whether to charge Bobby Brown after police found a small amount of cocaine on him two months ago. The singer was in court Tuesday for a closed-door hearing on the matter. Brown's attorney described the drugs in question as "very small amounts of cocaine residue."
ALL POINTS BULLETIN
Radiohead will headline the first two nights of the inaugural All Points West Music & Arts Festival taking place Aug. 8-10 at Liberty State Park in New Jersey, while Jack Johnson will top the bill that Sunday. Kings of Leon, Cat Power, the Roots and the New Pornographers are also among the more than 40 acts signed up to perform at the green event, from which a portion of the proceeds will benefit the advocacy group Friends of Liberty State Park, which works to maintain the 80-acre spot's environmental integrity.
Quotes of the week
"It probably won't ever happen again. This is the last time you will ever get to see this Girl Power, the five Spices on the stage as one."
-- Ginger Spice, aka Geri Halliwell, in Billboard magazine, saying the Spice Girls won't tour again. And some people say there's no good news coming out of the music industry!"Boston has never endorsed a political candidate, and with all due respect, would not start by endorsing a candidate who is the polar opposite of most everything Boston stands for. By using my song, and my band's name Boston, you have taken something of mine and used it to promote ideas to which I am opposed."
-- Boston founder and songwriter Tom Scholz in a letter to Mike Huckabee's campaign, complaining that the Republican presidential hopeful has been playing the song "More Than a Feeling" at events without the band's permission. Scholz is supporting Barack Obama for president"Hundreds of you said Paris Hilton -- with the tagline that you wouldn't want to do that to the pig."
-- MTV reality star Shanna Moakler, on the contest she's running to name her pet pig, on MySpace."Yeah, leading man kind of stuff; you know, jumping off of buildings."
-- Sean "Diddy" Combs, during an interview on "The Late Show with David Letterman," saying that he'd like to move to Hollywood to become a full-time movie star."They do seem like public property in a way. They served me well -- I don't know if I'm supporting them or they're supporting me."
-- Dolly Parton, on her breasts, to Ladies' Home Journal.
The B-Side - 'Blips'
THE ONION (www.theonion.com) STORY OF THE WEEK:
CGI Team Creates Realistic Oscar For Michael Bay
LOS ANGELES-A leading team of CGI experts hand-selected by blockbuster producer and director Michael Bay has pushed the limits of what can be accomplished with special effects and digital imaging by creating a computer- generated best-director Oscar for the 43-year-old filmmaker.
The $125 million project, funded entirely by Bay, has been called one of the most ambitious CGI undertakings to date, dwarfing even Bay's most ambitious efforts in his 2007 robot-action film, Transformers. A crew of nearly 200 technicians working for nine months on a 15,000-square-foot soundstage was required to realize the director's wildly imaginative fantasy world.
Viewers are going to be blown away by how believable-looking we've been able to make Michael Bay accepting the highest award in film appear," said senior technical director Zsolt Krajcsik, who also worked with Bay on the 2003 film 'Bad Boys II.' "The podium, the backdrop, the sense of creative achievement that hangs about him-it's all so vivid and detailed that you'd swear it was real."
Read the rest here and laugh: http://tinyurl.com/2mcg43
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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