According to an article just published in International Herald Tribune, the Music Industry is loosing money overall despite strong online music sales and I quote “Music revenue via computers and cellphones globally nearly tripled last year to $1.1 billion, a robust 6 percent of the recording industry’s sales and up from a fraction of 1 percent just two years ago”
The RIAA published some information about sales in america, they have 10 year purchasing trends here, the most interesting report is the 10 year trend published in 1998 which goes back to 1989. Back in 1989 the music industry #1’s revenue stream was selling “Full length cassettes”, it represented 54.8% of total sales of 6.5 billion $ business, while CDs represented only 25.1% of total sales. Let’s do some math:
| Year of review |
Cassettes (mil. $) |
CDs (mil. $) |
Comments |
| 1989 |
3 605 |
1 651 |
 |
| 1990 |
4 124 |
2 345 |
 |
| 1991 |
3 901 |
2 933 |
cassette sales decline (-4 %) |
| 1992 |
3 934 |
4 196 |
cassette sales pickup… (+1%) |
| 1993 |
3 817 |
5 155 |
cassette sales decline again (-3 %) |
| 1994 |
3 873 |
7 047 |
cassette sales pickup again… (+ 2%) |
| 1995 |
3 092 |
8 008 |
cassette sales sinking (- 20%) |
| 1996 |
2 419 |
8 573 |
 |
| 1997 |
2 227 |
8 590 |
 |
| 1998 |
2 031 |
10 265 |
 |
| 1999 |
1 166 |
12 134 |
 |
| 2000 |
0 701 |
12 790 |
 |
| 2001 |
0 467 |
12 256 |
cd sales decline (-4 %) |
| 2002 |
0 428 |
11 415 |
cd sales decline (-7 %) |
| 2003 |
0 260 |
10 408 |
cd sales decline (-9 %) |
| 2004 |
0 206 |
10 975 |
cd sales pickup (+ 5%) |
Ok, so what is happening, are consumers really spending less for entertainment ? Not really according to this statistics page here, while CD pressings went from 5,950 million units in 2002 to 5,378 million units in 2004 (-10 %) the DVD pressings went from 2,200 million units to 4,123 million units increasing those numbers from 8,150 million CDs/DVDs for 2002 to 9,501 million units (+16 %).
And when you think about it, the recording industry and the movie industry is a closely knit business, most of the time they are part of the same company like Sony (Pictures & Music) or Universal (Pictures & Music).
So let’s pretend you’re a CEO of an entertainment giant, your business unit which we’ll call M has 10% less sales and your business unit which we’ll call P has +90% increase in business netting in +16% revenues globally for those 2 business units, are you really desperate? Not at all, and your shareholders will congratulate you too.
Wikipedia has a good article on adoption of new technologies here, you can clearly see that any market works in a bell curve, no market is an exception, once everyone has electricity the companies installing cabling in the streets expect to no longer sell new lines, they mostly maintain the existing network.
The entertainment industry keeps producing content but once you have bought back all those Beatles vinyls in CDs you ain’t buying them again until you get some really new features like 3D vision High Definition DVD version of that same music, until then the new content is the only engine that keep sales from really going down (like a bell curve). But since so many entertainment companies are producing movies now as a new revenue stream for all those persons replacing their aging VHS tapes they can expect several good years ahead, but they cannot expect it to last forever. Other businesses like the print media and the railroads had their golden age too, but they did not adapt in the american market to the Internet (for print) and Airlines (for railroads) and they have been loosing business to these for several years now.
The International Herald Tribune article can be found here