Not A Music Industry Crisis -- It's A CD Crisis

from the indeed dept

Tue, Jan 27th 2009 10:03am — Mike Masnick

I got to spend some time with the organizers of Midem when I went there last week, and beyond doing an incredible job putting together a great event they actually have a really comprehensive view of what's happening to the market. Unlike some of those in the industry they serve, the Midem organizers not only have a really clear understanding of the market changes, but they seem to be working quite hard to adjust to the times -- and they've done it before. Midem actually started (and still functions) as a "marketplace" for buying and selling music rights around the world. So, for example, deals would be made where someone would buy the European rights for a hot new American artist or whatever. Somewhere along the way, the organizers realized that with so many folks from the industry all there together, it made sense to go beyond just a marketplace, and they added a conference on top of it. Then, ten or eleven years ago (well before many other folks) they realized that the internet and digital technologies represented a profound shift in the marketplace -- and they added MidemNet on to the beginning of the event, having two days that are just focused on digital issues.

There was one thing that struck me, though, during the event -- which is that separating out the digital part as a stepchild doesn't necessarily make much sense anymore. While they do include some digital/online things during the rest of the event, having the digital part as a "separate" event feels like it's a minor side issue, rather than a core trend changing the market. I had thought of bringing that up to the organizers... but, not surprisingly, it sounds like they're already ahead of me on that. Hal Bringman has a writeup on Midem for Digital Media Wire, where he notes that the director of the event, Dominique Leguern, says that they're considering merging MidemNet into the wider Midem as the industry is evolving into a fully digital domain. Also, Leguern made a key point that plenty of people have been making for a while:

"It's not a music industry crisis, it's a CD crisis."

Indeed. It's great that Midem is in such good hands. As an "insider" music industry conference, it wouldn't surprise anyone if the organizers acted like some of the old school execs in the industry -- focusing on the past and creating an echo-chamber of people trying to recapture a lost marketplace. Instead, they've been forward looking for many years, and working to change along with the market -- and even trying to help pull some of those execs along with them.

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Filed Under: business models, midem, music

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Ima Fish, 27 Jan 2009 @ 11:01am

"It's not a music industry crisis, it's a CD crisis"

I have to disagree. The CD crisis is merely a symptom of the much larger music industry crisis.

As I've stated many times before in these forums, the number one obstacle any musician faces is obscurity. The music industry used to be the sole solution to get. In order to get played on the radio and get your LP/CD in the most stores, you had to sign to a major label.

Those days are basically gone. Nowadays, as you guys point out nearly ever day, musicians can overcome obscurity by using the internet. These same musicians can create new business models that do not involve the traditional music industry. The current music industry is dead.
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Phibble, 27 Jan 2009 @ 11:14am

The CD is an interesting thing. It is something the artists seem to want, but the fans seem to want digital (mp3).

On my artist registration page, I have a small survey that helps me get to know the artist a bit so I know how to promote them. One of the questions is "Do you want to go all digital". 100% all say NO! They all want the CD because of the artwork and the overall experience that the CD brings.

Whenever I have the opportunity to talk to music fans, I'll ask them if they prefer buying music in mp3 format or CD. Most (not all) say they'd rather just download the mp3 version. This is mainly because they only want a song or two, versus the whole record.

There seems to be a disconnect between the artist and the fan, but I agree with the artist. The CD provides a much better experience than the mp3 ever could (I guess I'm showing my age here). This generation has become acustomed to the "instant gratification" and less on the experience.

I think the key is to finding a way to bridge the gap and create a "happy medium" where the "experience" can be had "instantly".
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chris (profile), 27 Jan 2009 @ 11:22am

Re:
Nowadays, as you guys point out nearly ever day, musicians can overcome obscurity by using the internet. These same musicians can create new business models that do not involve the traditional music industry. The current music industry is dead.

i think that you might be confusing the music industry, the business activities that are associated with music, and the institution that is known as The Music Industry(TM). they are two very distinct entities.

it's bad when one thing becomes two.

the general industry is fine, just look at the sales of all things music related. the outlook for music never looked better: new artists are everywhere and there are more channels for promotion and distribution than ever.

the business of selling CDs is doomed, and the institution that was built around those sales is doomed along with those declining sales. people just aren't buying them in the quantities that they used to. the CD is no longer the source of revenue it once was.

as more and more people flee the failing institution (consumers, artists, promoters, etc.) and return to the general industry associated with music, the general industry will eclipse the institution, and we will once again view these distinct entities as one.
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:Lobo Santo, 27 Jan 2009 @ 11:23am

Re:
That's easy ese' Just put the super-high quality mp3s on a data track at the end of the music. Everybody gets what they want.
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Ima Fish, 27 Jan 2009 @ 11:24am

Re:
"but I agree with the artist. The CD provides a much better experience than the mp3 ever could"

You can agree with whomever you want. But as the fans are the ones doing the purchasing, they'll be the ones making the decision.

And if you want to serve the fans/customers as best you can, it might be a smart thing to give them what they want rather to impose what you want.
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Ima Fish, 27 Jan 2009 @ 11:26am

Re: Re:
"new artists are everywhere and there are more channels for promotion and distribution than ever."

And thanks for proving my point exactly. I could not have put it better myself. It's a simple fact that the labels are no longer needed for either promotion or distribution. Thus, they are dead. If you can think if any other function the current music industry serves I'd love to hear about it.
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Sandy, 27 Jan 2009 @ 11:27am

Well they're trying to save their asses. Midem attendance was WAY down this year and it wouldn't surprise me if it closed its doors in the next few years.

Interestingly, a few years ago they started hassling people going to Cannes but not buying a badge. A lot of industry people rent a suite in a hotel or just have their meetings in lobbies or restaurants so they were sending people out to look for "pirates." Why pay €650 for a badge to go to an overpriced city and sit in a depressing tomb of a building when you can hang out at the cafes and do your business there, no?
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Sandy, 27 Jan 2009 @ 11:35am

Re:
People are still buying cds, just not in the quantities that they were in the past, before digital. I work for an indie label/distributor and while our sales have dropped, they certainly haven't plummeted as the media might have you believe. The difference being that the majors hold a lot more sway over the record shops and when they take a hit this is what you hear about. Indie labels are springing up to pick up the slack where the majors are dropping, and as I don't know anyone in this side of the industry with bloated salaries and inflated expectations they are surviving.

Of course many of them are also exploring digital, aren't so lawsuit happy and offer more guidance/service to their bands, making them an asset to the artists.
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solvency ii, 27 Jan 2009 @ 11:44am

The internet owns the music industry now. I love it. dies dinosaurs die!
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phibble, 27 Jan 2009 @ 11:47am

Re: Re:
I do, we mostly offer mp3's (some are even free) but we also offer CD's for those who want to sell them.
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Eponymous Coward, 27 Jan 2009 @ 11:59am

Re: Re:
There's no need for that, just rip the CD in a lossless format. Not that I'm advocating physical copies, mind you, you could just as easily burn a Lightscribe Cd and print out the inserts from a digital file if you really, really need the physical copy.

Our poster-boy, Trent Reznor, gave a midway solution when he released Year Zero, providing a .PDF booklet of the album art and notes with the download. Does it provide the tactile interactivity of a physical CD/case with accompanying art? No, but I did spend time looking at the art, reading the lyrics/notes, etc., and I could have printed everyting out and made a case to go with my burned CD. Interestingly, he even provided a reason to get the physical album, having it printed with a color change ink that revealed a code when it was warmed from playing.

Yep, all that written and no real stance taken.
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david, 27 Jan 2009 @ 12:01pm

I guess it depends on the fan.

I don't find the artwork and cd to be a draw, but for some albums (especially acoustic guitar and piano) I can hear the difference between an mp3 and a flac that I've ripped myself (even if a "richer" sound is very hard to explain). So, until we start seeing lossless downloads as the standard, I won't be abandoning cds entirely.
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SteveD, 27 Jan 2009 @ 12:09pm

Midem videos
Anything on when those session videos might go up, Mike?
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SomeGuy, 27 Jan 2009 @ 12:28pm

Re: Re: Re:
Actually, I think there is still a place for Lables. I'd first dispute that they can't be useful for promotion, even if they aren't currently or aren't needed. Any band CAN use the Internet, but if a Lable worked with that instead of fighting it they could present artists with different ideas and 'proven' methods, and let the artists worry more about the music and less about the business. It's not necessary, but it's a potential avenue Lables could look at.

Similarly, part of the problem right now is that a Lable is rather meaningless. No one knows what Lable and given artist is signed to, and it wouldn't matter even if they did. A Lable could change this. If a Lable focussed themselves on signing similar artists -- based on genre, attitude, message, whatever -- then knowing that Band X and Band Y are both on The Lable becomes useful, informing you that if you like Band X you might want to check out Band Y.

There's also still a little bit that Lables can do with distribution -- running servers and seeding torrents or what have you -- but it's slim pickings, really. Most of these are things that bands CAN do for themselves, but just like I CAN rewire the lighting in my house, paying someone else to do it for me means I can put my attention elsewhere.

(Of course, The Lables are used to being on top of the pile, and that's definitely not where most electricians stand in the economic food chain...)
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SomeGuy, 27 Jan 2009 @ 12:32pm

Re:
I think you basically just said what Mike did. The RIAA, the Lables, they aren't the music industry. They're the CD Industry, and they're failing. The music industry is the artists, and there are more and more of them doing better and better even as the Lables cave under. if the Lables don't adjust and find something other than selling CDs, they will die. Because no one* wants CDs any more.

*for certain values of no one -- Trent Reznor apparently made money off selling CDs recently. Hell, he sold vinyl.
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SomeGuy, 27 Jan 2009 @ 12:37pm

Re:
Do you ask, literally, "Do you want to go all-digital?" Is it made clear that you mean distribution, as in CDs vs. MP3s? A question worded like that in the absence of anything else could be asking if they want to replace their instruments with a computer (a la some techno artists) or if they'd like to stop touring and just do recordings rather than performances. Just a thought.

For my part, CDs can offer a better experience, but often times don't. One artist (can't remember who) said he didn't want to sell mp3s because he recorded albums not songs and you lost something if you chopped it into pieces. I think that's a valid argument, but it needs to be clear to fans that listening to the album is an important part of your art. That's not what happens on the radio, after all. Also, you really do have to provide what the customer wants -- if you don't, you'll just make your fans upset.
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SomeGuy, 27 Jan 2009 @ 12:39pm

Re: Re:
Also: getting MP3s is better than getting CDs because CDs take up space and can get cracked, scraped, or otherwise destroyed. MP3s are generally without such limitations. CDs likewise can't be transfered to an iPod (or similar device). The tracks could be ripped, but it's a lossy operation and at that point why not skip the middleman and just buy the mp3?
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David, 27 Jan 2009 @ 12:41pm

Why do cd's still exist?
I just saw a 2 gig flash drive for $6. If they want to sell us physical items they should change over to some kind of usb flash device. It's faster, doesn't scratch and you could load it with the music you want.
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Doombringer, 27 Jan 2009 @ 12:45pm

It is an industry crisis, plain and simple
Its not a cd crisis. The real crisis is that they print 1,000,000+ cds of what those douchebags in the "biz" think will be the next big thing, and it sells the exact opposite of hot cakes. Then they are stuck with all these cds which are just worthless crap. Because only casual/mainstream listeners care about those "next big things" and nobody like that really buys cds anymore. They want to just go and click the one little song they like and listen to it for all of 10 mins, and then throw it away, and move on to the next piece of garbage. Digital music is preferred by people who arent really that into music (IMHO). CDs will always be around, just like vinyl records will always be around. Im 22 years old and I collect both. I enjoy having the physical copy in my hands with the artwork and liner notes, etc. Because nothing will ever sound as warm as an analog record, and digital mp3s rarely are the size or quality of the songs on a CD. Also if you are really into music you appreciate the time and aesthetics that goes into it, but then I only listen to more "underground" or "indie" music. Also thats why the file sharing thing is such a crock, because people who enjoy music will buy it no matter what. Even if they download it "illegally", if its worth it they will go to the trouble to track it down. Or at least I would.
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Phibble, 27 Jan 2009 @ 12:46pm

Re: Re:
Yep, in the context it's clear we're talking about distribution as it relates to selling music in the online store that we give them.

I also want to be clear that I think digital is great - I myself rarely use CD's anymore, but then again it;s really easy and quick for an artist to email me an mp3.

I don't think mp3's should go away, but I also think we should stop blaming the CD for the problems of the record industry. Greed and being out of touch with reality is the problem, not the mechanism of how the music is distributed.
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Doombringer, 27 Jan 2009 @ 12:46pm

It is an industry crisis, plain and simple
Its not a cd crisis. The real crisis is that they print 1,000,000+ cds of what those douchebags in the "biz" think will be the next big thing, and it sells the exact opposite of hot cakes. Then they are stuck with all these cds which are just worthless crap. Because only casual/mainstream listeners care about those "next big things" and nobody like that really buys cds anymore. They want to just go and click the one little song they like and listen to it for all of 10 mins, and then throw it away, and move on to the next piece of garbage. Digital music is preferred by people who arent really that into music (IMHO). CDs will always be around, just like vinyl records will always be around. Im 22 years old and I collect both. I enjoy having the physical copy in my hands with the artwork and liner notes, etc. Because nothing will ever sound as warm as an analog record, and digital mp3s rarely are the size or quality of the songs on a CD. Also if you are really into music you appreciate the time and aesthetics that goes into it, but then I only listen to more "underground" or "indie" music. Also thats why the file sharing thing is such a crock, because people who enjoy music will buy it no matter what. Even if they download it "illegally", if its worth it they will go to the trouble to track it down. Or at least I would.
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DS78, 27 Jan 2009 @ 1:06pm

Artwork?
People buy CDs to listen to the music not admire the artwork on the cover. Don't get me wrong, it's a nice touch, but one of its purposes is to catch your eye as you're browsing shelves stocked with CDs. Fans have begun to move past that now, making the cover art less important. Perhaps even scarce...
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DS78, 27 Jan 2009 @ 1:10pm

Re: It is an industry crisis, plain and simple
I disagree. I'm an amateur musician, and own a quite extensive collection of vinyl, tapes and cds. However, I prefer my music in a digital format. IMHO I'm not the exception to the rule.
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Doombringer, 27 Jan 2009 @ 1:13pm

Artwork?
haha yeah right! catch your eye? its supposed to be an artistic visual interpretation of the music. fans who appreciate music as art know the artwork is important, not someone like you who is a blind consumer. go listen to fall out boy.
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Anonymous Coward, 27 Jan 2009 @ 1:38pm

Re: Re: Re:
Hard drives fail quite frequently. At least a CD gives you a physical backup you can go back too. You can also rip a higher quality mp3 if you do it yourself.
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Sean, 27 Jan 2009 @ 1:49pm

MP3
When I was in a band we would take 2-3 tracks from a cd and release them on our website. We would also create "cd sleeves" (with different artwork from the cd itself) that you could cut out and put together yourself if you wanted to have a cover for it.

This was great for our fans that only wanted 1 or 2 songs or for people that had never heard us. We would place it on an "enter page" for our website.

We would do this with live recordings, studio recordings, demos, etc. It gave us a real connect with our fans AND boosted our cd sales.
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Johnny Canada, 27 Jan 2009 @ 2:01pm

Where I buy my 'on-line' music they offer several download rates from i-Pod quality all the way to CD quality it is my choice when I purchace they music.

MP3 does not have to mean 'poor quality' just download a high bit rate.

As for the comment above about 'gapless' if the artist is making what was call at one time a 'concept album' (i.e. Dark Side of the Moon) they should offer to sell it as indavidule tracks and as one large file so you can still enjoy it as the artist dreamed of.

(still looking for Dark Side of the Moon as one long track :))
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PaulT (profile), 27 Jan 2009 @ 2:33pm

Re:
"The CD provides a much better experience than the mp3 ever could (I guess I'm showing my age here)."

Maybe, maybe not. It all depends on what you actually do with the CD after you've bought it. If you take it out of the case, place into a decent spec stereo system and read the liner notes while listening, then yes it does. If all you do is rip it to MP3 so you can listen to it on your iPod, then no.

There are 2 reasons why the CD is failing - convenience and choice. Convenience, because why buy a CD if all you're going to do is rip it to MP3 then leave it in a drawer? Why not but the MP3 to begin with? Choice because instead of buying a CD with 3 songs you really like and 9 you don't, you can buy 12 songs you do like. The latter is the biggest reason why the CD is dying - most albums are only a bunch of songs rather than a coherent collection, usually with a lot of mediocre filler.

There are various different ways of mixing these concepts - from eMusic who claim that they sell more full albums than most other retailers to Beatport, who sell pricey high quality singles aimed at club DJs. The trick is to find out what works for the highest majority of the band's fanbase. Insisting on selling only via CD isn't going to help if all anyone does is rip the CD to MP3, and singles usually don't make anyone a high level of profit.

So, yes, I agree that the "happy medium" is a good aim, but it goes further than that. What works for the 14 year-old boy band fan isn't going to work for the 22 year-old clubber or the mid-40s eclectic guy, nor is what works in Nebraska going to work in central Europe. But, all these people have access to the same content, legally or otherwise. The biggest thing the music industry needs to learn is that in the digital age it cannot dictate how music is to be consumed. Once it works that out, it can started rebuilding its failing models.
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PRMan, 27 Jan 2009 @ 3:01pm

Re:
"The CD is an interesting thing. It is something the artists seem to want, but the fans seem to want digital (mp3).

On my artist registration page, I have a small survey that helps me get to know the artist a bit so I know how to promote them. One of the questions is "Do you want to go all digital". 100% all say NO! They all want the CD because of the artwork and the overall experience that the CD brings.

Whenever I have the opportunity to talk to music fans, I'll ask them if they prefer buying music in mp3 format or CD. Most (not all) say they'd rather just download the mp3 version. This is mainly because they only want a song or two, versus the whole record.

There seems to be a disconnect between the artist and the fan, but I agree with the artist. The CD provides a much better experience than the mp3 ever could (I guess I'm showing my age here). This generation has become acustomed to the "instant gratification" and less on the experience.

I think the key is to finding a way to bridge the gap and create a "happy medium" where the "experience" can be had "instantly"."

-----

I would LOVE for MP3's that I buy at Amazon to come with:

1. Multiple high-quality pictures of the band (maybe a different one on each song of the album), instead of just the album cover itself
2. Full lyrics for each song
3. Comments including all the notes that are typically in the album cover (the thanks and whatnot).

That would be great. Compared to the CD, I find the experience missing a bit as a fan as well. But not to the tune of 9 more dollars.
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Anonymous Coward, 28 Jan 2009 @ 2:40pm

Re: Re: Re:
It doesn't have to be lossy- I rip everything to flac, but there are a couple other lossless formats (apple, wma) out there. These can be easily converted to whatever lossy format you need for your iPod or whatever device.
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