Changes in Pricing for Albums and Downloads Affecting the Value of Music Today. Written by Jason Cangialosi for The Indie Renegade.
A recent article in the LA Times on getting paid for music, "Use Honey, Not Vinegar" by Kurt Hanson and attorney Jay Rosenthal names six suggestions for the music industry's current stance on the legal and illegal downloading of music.
The article is interesting as it addresses both sides of the argument, and the ideas Hanson raises are well-founded. Have a read of the article, even if it is a little lengthy, and I will address some of the issues discussed in the article here.
First, some background on recent pricing in the Music Industry. More than 30% fewer people bought music than in 2000 and CD sales have dropped 20% since the same time one year ago, according to Recording Industry Association of America (RIAA/Ipsos) data. What's to blame? "Piracy", shouts the big record companies, but let's not be so hasty.
A 2002 study by Harvard University and University of North Carolina found that an effect on album sales from file-sharing was "statistically indistinguishable from zero." The authors of the study write, "We find that file sharing has only had a limited effect on record sales. While downloads occur on a vast scale, most users are likely individuals who would not have bought the album even in the absence of file sharing."
The direct effect of file sharing on music sales will be long debated, but there are less debatable effects that can be closely linked with declining sales. Forrester Research analyst Josh Bernoff names the three main reasons of sliding sales as; economic conditions, competition of other entertainment formats, and shorter playlists on the radio.
So what does this have to do with pricing?
Bernoff's research indicates that in the pre-Internet early 1990's economic downturn there was a "significant drop in the growth of CD sales." CDs are by nature a luxury, an indulgence, and slow economic conditions would account for lower sales."
Shorter playlists on the radio is also a key reason, because obviously fewer artists and bands are recognized. But it is price related because people are less likely to pay the same $10-18 for an album of a band they have never heard.
Finally, and probably most influential, is the competition of other forms of entertainment, mainly DVDs and video games, that have been on the rise significantly since 2000. As Hanson and Rosenthal suggest, how can retailers justify a $12 price point when you have in your left hand, 40 minutes of audio, and in your right hand, 20 hours of video plus audio for $30.
Expecting customers to pay the same price for an album as they did a decade ago when they have less money in their wallet, they are more unfamiliar with the artists than before, and there are better options to spend money on is downright unreasonable.
It becomes an imperative for the music industry to reduce prices of CDs and downloads to increase sales. Lower prices don't mean lower profits. Lower value, however, does mean lower profits. And if prices don't match those values, then it is easy to see why there has been such a slump in CD sales.
There is another possible reason. Before the digital age, to get the song you wanted, the one you heard on the radio or were told about from a friend, you had to go out and buy the album. You had to fork out $12 or something for 12 songs, but really you where looking for the one that interested you most. Now that individual songs are available to download for 99 cents, why go buy that album? This is essentially called bulk-breaking.
When you can download a song from an album, without having to spend time or money on the other songs, it's appealing when as far as you're concerned, are rest of the album is filler. This is not a great attitude towards albums, but the truth is that this is the sentiment of most customers. Even singles cost $5 and the supplementary tracks were hardly ever worth the extra money. EMusic and the iTunes store were a product of the damage the big companies thought piracy was doing to the industry and the CD sales, but it probably only added to the issue.
What all this comes down to is lesser value for music than ever before. People want the exact songs they are looking for, more of them, more accessibly, and at a lower price. Sure piracy is a major concern, but maybe it became the scapegoat for deeper problems that are plaguing the music industry. From the details of pricing problems, we get down to the real issue, which is the broader concern of value in today's music.
When Ali G (of Da Ali G Show) asks Donald Trump, 'What is the most popular thing in the world', the reply is of course, 'Music'. Ali G believes it is ice cream, but that's another issue altogether. There is no doubting Music's importance and with the recent influx of MP3 players, satellite radios and other music paraphernalia, it is hard to argue the value of music in today's society.
People's attitude to music has changed. The concept of an album is all but destroyed, with fans making their own playlists to suit their desires at any particular moment. The song is now a single entity alone, rather than just one segment of an organized piece of work. From the large record company's perspective, an artist is judged on their saleability, with return-on-investment being more important than artistic integrity and talent.
Perhaps the solution isn't as simple as lowering prices. There is not doubt reducing the album's and download prices will increase sales, and probably be enough to increase overall profit, but this seems like a short-term fix. Or perhaps the solution is increasing value. An entire album is greater than the sum of its parts, or at least it should be. Record companies should deliver on such an aspect, and promote this quality of an album.
Maybe it's no surprise that fans resort to their own playlists when the albums coming out of the large record companies contain 4 hits and 8 fillers. The lowering of prices by these large labels will symbolize their acknowledgment of the diminished value of albums. It now becomes the responsibility of labels, artists and fans alike to demand value in the album and perhaps it will be the time for a renaissance in the music industry.
