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XXX222 (< 20)

Why the Music Industry is Going to Die

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11

November 20, 2009 – Comments (11)

Gentlemen,

As I sit here typing, a phenomenon you may or may not be aware of is occuring in electronic media. Contrary to what you may of have heard, or what some people have said, this phenomenon is not going to go away, and in fact, will be the defining characteristic of the new era in the technological world.

I am talking about illegal downloading.

In the past 10 or so years, the spread of file sharing programs has rendered the conventional business model for selling music and software programs obsolete. Some of these programs you may of heard of, programs and websites like Bearshare, Ares, Frostwire, Limewire, Bittorrent, Pirate Bay, Isohunt, and others are now the dominant way for the acquistion of both music and software. 

At this point, 95% of music is downloaded online without paying. The CD is dead. Online music stores like iTunes and Rhapsody are hardly hanging on to a sliver of the music market, and everyday others leave for aforementioned programs. The music industry doesn't want you to know this. They have spent a fortune trying to sway public opinion that this trend is only temporary, and that with the proper government regulation and a healthy public awareness campaign, they can end this problem.

OoohHH, how wrong they are.

No one in my high school, and hardly anyone below 25 pays for music anymore. There is actually a huge negative stigma on those that purchase music. You're seen as "paying the man" for something you can and should get for free. The public ad campaign launched by the RIAA is absoulouty laughable. They are never going to be able to stop it.

http://www.youtube.com/watch?v=hUCyvw4w_yk&feature=related

The arguements that the RIAA makes against downloading are laughed down by anyone even mildly familiar with downloading.

 

1. Downloading music will give you viruses.

Response: A decent firewall or anti virus program will keep you clean, and you should only download music that is "at the top of the list". Many viruses, trojans, and malware are planted by RIAA agents to discredit download sources, and this only stirs up anger towards them.

 

2. Downloading hurts artists.

Response: Large artists with high volume songs are hurt the most, but music downloading helps smaller bands by increasing their exposure. It's hard for people to feel guilty about this when they know only a few cents on every download goes to the artist.

 

3. It's stealing and uncool to download.

Response: With a product that can by duplicated for no cost, it's no wonder that people will take it for free. Coolness is and always will be fighting against the man, and thumbing your nose at big companies is something every kid loves to do.

 

The music industry is petrified about the future, with good reason to be. The future of music is going to be bands realeasing their music for free, and making their money on merchandise and touring. In other words, the middle man is cut out and the large music companies are left cold.

The newest trend is downloading software from the internet. This is an emerging problem that has the potential to hurt companies like EA and Blizzard. 

For anyone with holdings in companies that rely on conventional methods to produce and distribute software, music, and movies, please be aware that the future is going to be very perilous for your investment. Regardless of wheather it is right or wrong, a whole generation is growing up used to not paying for electronic media. The older customers are dieing out, and they will take the old music industry with them.

11 Comments – Post Your Own

#1) On November 21, 2009 at 12:40 AM, Synesthetic (< 20) wrote:

I was on Rhapsody a few days ago and I wanted to listen to Achilles Last Stand by Led Zeppelin.  The song is on their album Presence. 

Now Rhapsody is great because they give you access to thousands (millions?) of songs for a low monthly fee of $15 or so.  But, as I'm sure you know, not all of the songs are free.  You have to pay for some of them.  Well, okay.  I didn't mind paying $0.99 to download the song. 

But when I went to the page for Presence, it was the one song that I COULD NOT buy!  Instead, I would have to buy the whole album to get access to the song.  So I thought a little more, and it hit me... YouTube!  Sure enough, there it was on YouTube. 

Also, not sure if this is related but Billy Corgan is releasing a "new kind of album" - Teargarden by Kaleidyscope.  It's going to have 44 songs on it but it's going to be released one song at a time with a few weeks between songs.  He said something about no apologies to today's need-it-now attitude - I can't find the exact quote - and for wanting to create a holistic experience.  Each song is going to be free.  You'll also have the option to buy collections of the songs for the artwork, etc.  

It'll be interesting to see how it goes. 

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#2) On November 21, 2009 at 1:27 AM, mawnck (< 20) wrote:

Thanks so much for the original and insightful financial commentary there, Junior. Now go run along and play.

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#3) On November 22, 2009 at 6:51 AM, jhass85 (< 20) wrote:

While you're generally correct (about public opinion, etc.) I feel that your facts need to be checked in regards to "only a few cents on every download goes to the artist".  That's just not true.  With regards to iTunes, they pay out 70 cents per 99 cent track to the artist.  Generally there is a yearly fee, or a small percentage, taken by digital distribution companies (such as TuneCore or CD Baby), but for independent artists, this is how a lot of them have been making a good amount of money.  For example, see independent electronic cellist Zoe Keating- she is very unique, doesn't get radio play and makes most of her money by iTunes.  Look it up.

For those attached to a major record label, the deal may vary, and indeed the artist may see very little of that 70 cents per 99 cent track, but this idea that downloading ONLY hurts "greedy middleman companies" and doesn't financially hurt artists is just wrong.  Of course, the exposure of file sharing helps sell t-shirts and concert tickets, but what about bands that don't have good looking merch?  Or that are such a studio band that they rarely play live?  They are left with few alternatives.

I'm not arguing that file sharing is what will happen now- it's here to stay.  But it's kind of sad that most of the articles about bands making money these days are always about some great entrepreneur in the band coming up with a monetization strategy- not every band has those ideas.  Many, instead, focus on... SONGS!  And now those artists are left needing to find a business strategy, which is just not a part of the average artistic brain.

 I'm all for weeding out leeching middlemen, but I am sick and tired of hearing people acting like a free music model doesn't hurt the artists too! 

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#4) On November 22, 2009 at 9:38 PM, XXX222 (< 20) wrote:

mawnck: I'm glad that you are financially secure not to care about the future of a multibillion dollar industry that many of us care about, and hold investments with

jhass85: iTunes pays between 50-70 cents to the record company on each song that they sell. Record companies then can choose how much they want to pay the artist out of that amount. The average is 9 cents per song. 

Source:

http://www.chacha.com/question/how-much-does-an-artist-receive-for-each-of-their-song-downloaded-from-itunes

If I was a music artist, I would be upset about music downloading, but I know that I would have to adapt my business model to adjust for the future. Not paying for music is the elephant in the room that isn't leaving

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#5) On November 23, 2009 at 9:36 AM, Jessica001 (< 20) wrote:

I'm just curious to know why people think music should be free. Like any product, it takes money to create it regardless of the medium in which it is released.  For example, on a typical record, there are costs associated with paying for the producer, the sound engineer, the mixer, the studio space, the artwork designer, the PR team, etc.  If music has no value, what possible incentive is there then for artists to create any?  By trying to screw over the so-called big bad corporations, you also screw over alot of people whose livelihood depends on you purchasing the product rather than stealing it.

By similar logic, if it's okay to steal from large corporations, I guess Walmart/Home Depot/the local grocery store/etc. won't mind if I shoplift everything I need from them.  Better yet, why pay for anything at all, since you could classify any business as "evil"?

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#6) On November 23, 2009 at 9:55 AM, JibJabs (93.26) wrote:

"I'm just curious to know why people think music should be free."

They don't. But, they know that it can be had for free.  

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#7) On November 23, 2009 at 9:55 PM, techfule (< 20) wrote:

The other factor in illegal downloading is the portability of the music. Most of the legal providers of downloadable music - Rhapsody, Itunes are good expamples - are determined to lock you into the use of their service. If you spend $1000 on Itunes downloads and lose your Ipod, too bad, so sad, you can either buy a new one or kiss your investment goodbye. Want to play your Rhapsody music in your car's MP3 player? Sorry, it's tied to your PC, and if you don't pay the $35 a month it's all gone. I have 3 cars and 2 stereos, and if I buy a CD I can play it in any of them, no subscription, no hidden fees, this year or next year. The hellish part of the business model is that illegal downloads have the same easy portability as the most expensive option, the physical CD! The lower-priced, but legal, downloads don't have that same portability.

The only "moat" that the physical medium can offer is quality. Compressed music or movies cannot have the quality of Blue-Ray or high-end audio. But for the average user who is listening on headphones or in a noisy car environment, or on PC speakers, there is no real advantage to a legal download that leaves him tethered vs. an illegal, but free one that also leaves him free to listen as he chooses. The old business model is shot, morality notwithstanding, people will not pay more for less. It just makes no sense.People will decry the immorality of it, but few will vote with their pocketbooks to support morality. I can't buy stocks based on what I think people ought to do, I have to invest based on what they will do.

 I hope that a new business model will soon evolve that will support new music, for I love and appreciate it and the artists that make it. I'll invest in it when it comes along.

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#8) On November 24, 2009 at 10:46 AM, Jessica001 (< 20) wrote:

Now you're just talking a load of bunk, techfule. How are Rhapsody and iTunes good examples of locking you into a platform when Rhapsody offers MP3s and iTunes offers unprotected AACs now and have been for awhile? Or are you still living in the past? Alot has changed in the digital music marketplace in the last 3 years.

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#9) On November 30, 2009 at 3:35 PM, dsp444 (80.10) wrote:

The problem is the music industry didn't think ahead a LONG time ago.  They should have known this was coming - it started with cassette tapes.  If you didn't want people copying music, don't distribute music on a copyable medium.  Start with a "licensed player" or something.  But its all too late for that now - so now they have to learn to adapt - which they are proving unable / unwilling to do.  They just whine like a kid "everybody should have to play by our rules.  No fair!"

Not to mention that they really want to get over on the consumer as many ways as possible.  One one hand, the music industry will claim that when you buy a CD, you are not really buying the music, you are just buying the license to play the music.  But on the other hand, if my CD gets destroyed by my 2 year old, I have to buy the same license I already own to get a whole new CD.  Same thing if I download a song and then delete it from my computer / player accidentilly - they won't let me download it again for free?  So what did I pay for in the first place?  When people buy something, they want the ability to do whatever they want with the thing they buy.  When you tell them they didn't actually pay for what they think they paid for and then turn around and say if you lose it you have to pay again, it really makes no sense and presents a double standard that shows all they really care about is making money - not music.

Of course there is value in producing music.  Even if file sharing / copying music was completely unregulated, musicians would still produce good music.  That scare tactic will never fly - people realize the only ones who won't be producing music are the posers who just wanted to make money off of everyone else anyway.

Its soooo funny how slow the record industries respond to customers demands.  That is no way to make money.

 

 

 

 

 

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#10) On December 04, 2009 at 6:10 PM, ArgusPanoptes (24.21) wrote:

motely fool: a soapbox for every fool. are you comfortable advising people what to do with their money? really? is this you:

Lord Molenaar Score: -284.49

 a guy with nearly identical picks...  it's hard to deny.

 you know there's no reset button in real life.

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#11) On February 14, 2010 at 3:58 PM, XXX222 (< 20) wrote:

Yes, that was my first account I set up, but I decided I wanted my real name on my Caps.

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