The Rise And Fall Of The RIAA

from the predicting-the-end dept

We recently had a post questioning whether the RIAA's legal campaign was a success or not. It seemed like there was plenty of evidence that it has been an incredible failure. Separately, we had a post about Radiohead's Thom Yorke, suggesting that the major record labels were going out of business in a matter of months. While we felt that was a bit of an exaggeration, one of our commenters, Ccomp5950 compiled data on RIAA label sales, along with some helpful notes about what other factors were going on at the time:

Year: $ in Millions
1992: 9024
1993: 10046.6 (CD players started to get more affordable towards mid-year)
1994: 12068
1995: 12320.3
1996: 12533.8
1997: 12236.8
1998: 13723.4
1999: 14651 (Work made for hire controversy)
2000: 14404 (Napster sued into bankruptcy)
2001: 13700 (Ipod came out October 2001)
2002: 12,614.2 (Price Fixing lawsuit hits RIAA)
2003: 11,854.4 (Grokster lawsuit, "induced infringement" introduced) (Mass lawsuits by RIAA start(AKA: The education campaign))
2004: 12,345.0 [Revenue Physical / Digital] (BMG gets out of the music business, sold to Sony later on: Big 5 becomes Big 4 for RIAA)
2005: 12,296.9 [91%/9%]
2006: 11,758.2 [83.9%/16.1%]
2007: 10,370.0 [77%/23%]
2008: 8,768.4 [66%/34%] (RIAA declares it's going to stop mass lawsuits with member money problems and EMI almost bankrupt)
2009: 7,690.0 [59%/41%] (Massive layoffs hit RIAA around Febuary: Blames piracy)

Sources:
http://www.azoz.com/music/features/0008.html (statistics from 90's to 2001)
http://76.74.24.142/81128FFD-028F-282E-1CE5-FDBF16A46388.pdf (Statistics for 97 to 2007)
http://76.74.24.142/A200B8A7-6BBF-EF15-3038-582014919F78.pdf (2008-2009)

It's a great list, but I felt it could be even more powerful as a graph, so I just threw the following together, based on the info above: And, that, right there, does a nice job painting a picture on the decline and fall of the RIAA and the major record labels. A few points are worth highlighting:

• If you're not familiar with the "works for hire" scandal, you can read the full background here. Basically, a Congressional staffer by the name of Mitch Glazier snuck a tiny unnoticed amendment into a much larger bill in the middle of the night -- supposedly at the request of the RIAA -- without telling anyone. It effectively changed the definition of music recordings into "works made for hire," which was really important, because it meant the RIAA labels could hang onto musicians' copyrights for much longer, avoiding termination rights that let musicians reclaim their copyrights. Just a few months later, Glazier left his low-paying Congressional staffer job for a $500,000 job with the RIAA, which I believe he still holds ten years later. Thankfully, people quickly recognized what he had done and Congress had to go back and fix Glazier's sneaky wording. However, it is worth noting that the peak of this chart is right when Glazier inserted his infamous four words.
• As we discussed last fall, now that musicians do have termination rights, they're lining up to use them and take their copyrights back from the labels. They can start getting the copyrights back in 2013. If you're looking for a date when the bottom totally falls out for the RIAA labels, that may be it. When the rights to their back catalog starts to drop out, this chart looks even worse. The RIAA won't give up easily, of course. The latest stunt they're trying to pull is to "re-record" albums, claiming that it creates a brand new copyright, that gives them another 35 years before termination rights are applicable. That is, of course, ridiculous, but the RIAA will likely try to fight it out in court for many years to extend that 2013 deadline by a few more years. Of course, all that money on legal fees could have gone to innovating, but that's just not the RIAA way.
• Note that digital music sales is not even close to being a savior. The total is still dropping rapidly.
• Of course, many have argued that the rise and fall may have a lot more to do with CD replacements of previous formats -- and this chart certainly suggests that could be an explanation. The big jump happened right when CDs became affordable, and people needed to go out and replace their vinyl and cassette (and 8-track!) collections. After a few years of that, it makes sense that the market should drop anyway.
• Once again, it's important to point out that the chart above is not the entire music industry, but a limited segment of it: the RIAA record labels, mainly comprised of the big four record labels. It doesn't take into account all of the other aspects of the music business -- nearly every single one of which has been growing during this same period. It also doesn't take into account the vast success stories of independent artists and labels doing creative business models and routing around the legacy gatekeepers.

Filed Under: record labels, recording industry, sales
Companies: riaa

The Onion Puts Out An Equally Accurate Report On Recording Industry Revenue Issues

from the sounds-about-right dept

Ah, leave it to The Onion to successfully encapsulate the state of the recording industry with a report that is basically as accurate as most of the reports that come out of the RIAA these days:

The Recording Industry Association of America announced Tuesday that the combined revenue brought in by Warner, Sony, EMI, Universal, and countless independent music labels in 2009 totaled $18. "The music industry is back," RIAA representative Doug Fowley said. "Not only was Kenny Chesney's Greatest Hits CD purchased at a Knoxville, TN Borders for $12.99, but we also had two songs downloaded through iTunes, and our ringtone sales reached three." Fowley added that as long as no one returns or exchanges the CD, the music industry would continue to be a vital and creative force in American culture.

Filed Under: earnings, recording industry, satire

How Can The Music Industry Be Dead When More Music Is Being Produced And More Money Is Being Made?

from the woe-is-me dept

Kyle sent over yet another musician, named Nathan Harden, pulling out the "woe is me" schtick in an article claiming that this generation "killed rock 'n' roll." It hits on all the usual debunked points and only quotes industry sources on the major label side of the business, assumes that the only way to make money in the music business is by selling albums or songs, and doesn't even realize what a huge contradiction it makes in the process. It starts out by quoting record sales stats, but ignoring all of the recent studies that show that money hasn't gone away, it's just shifted to other channels -- and those channels are ones where the actual artists get more money. It's true that the major record labels are making less -- no one denies that. But it's folly to claim that this means the death of rock 'n' roll or music at all. Another recent study showed more music being released today than ever before in history. That doesn't sound like a dying industry at all. In fact, this guy effectively admits that when he complains:

On my own MySpace page, I can upload my own band's music to the web in a matter of minutes, and sell it to anyone in the world with an internet connection. Theoretically, it has never been easier to be heard. Yet hundreds of thousands of other musicians are competing for attention online.

But wait... just before that you were claiming that rock 'n' roll was dead. And yet here you are admitting that there are so many other musicians putting up their music as well? The two things do not compute.

As far as I can tell, Harden's real complaint isn't that rock 'n' roll is dying, but that a major label won't just turn him into a rockstar. Instead, he might have to actually do some work to build up a fan base, and that's icky:

Without support from a record label, musicians must master the intricacies of search engine optimization, social networking, email blasts, and twittering -- not to mention traditional tasks like booking shows. Not surprisingly, many musicians lack such skills.

This has been discussed at length, with musicians who do that stuff pointing out that it's not that much work at all, and if it's really a problem, you work with someone (the "5th Beatle") who does it for you.

Can you, even for a moment, imagine Janis Joplin pouring over HTML manuals, or Jimi Hendrix spending hours each day spamming potential fans on MySpace? Not likely. Had those two tried to make it in today's marketplace, we may never have even heard of them.

Can you, even for a moment, imagine Jonathan Coulton going the major label route or Matthew Ebel getting a six figure advance from a major label? Not likely. Had those two tried to make it in yesterday's marketplace, we may never have even heard of them.

The fact that more musicians are making music today and being able to release it and make a living from it than ever before suggests that things are actually looking much better, and we're far from "the death of rock 'n' roll," but reaching an incredible age of creativity, where people who had no chance at all before are now able to make music and make a living.

And furthermore, it's ridiculous to suggest that artists like Hendrix and Joplin didn't work hard to build their fanbase with what tools were available at the time.

In other words, it may not hurt Beyonce or AC/DC if you download their music. They are, after all, astonishingly wealthy. But it does hurt the record labels, which, in turn, cannot afford to sign, develop and promote as many new artists. Consequently, our music is becoming less diverse. In the long run, music lovers themselves are deprived.

I'm not sure what music Harden's been listening to lately, but I've actually found music to be a lot more diverse these days, because it's possible for bands to experiment and try different styles, and reach a worldwide audience. I've been listening to a reggae band from Spain the past few days. A few years ago, I never would have known they existed.

Sorry, Nathan Harden, but you've been sold the myth that only record labels make the music industry and that only through selling records does the music industry work. That's simply not true. Yes, the record labels are having trouble, but rock 'n' roll isn't dying. It's thriving by adapting to this new market.

Filed Under: music, music industry, nathan harden, recording industry

Former Music Exec Tells Book Publishers They're Acting Just Like The Recording Industry 10 Years Ago

from the don't-do-that.. dept

Sometimes I wonder if it's simply inevitable for industries facing disruptive change to react badly to it. We spend a lot of time here trying to discuss ways that various industries can avoid doing stupid, self-defeating things, and yet, inevitably, they do them anyway. Copycense points us to an article by Susan Piver, an author, who was formerly a recording industry exec, complaining that publishers are acting just like the record labels did ten years ago. However, it might not be in the way you'd expect. She's not talking about them just responding in anti-consumer ways, but in sitting back and hoping that someone else will find a magic bullet that "saves the industry" and that they can just copy:

The "somebody do something that works so we can copy it" mentality duplicates the kind of hoping-for-the-best attitude espoused by long-time executives in music who simply could not or would not question the viability of the professional cocoons they'd built for themselves. And who can blame them -- corporate mega structures are schooled in consolidation as the primary means of growth, not fleet-footed, shape-shifting responsiveness to change. But now we're in a world where getting bigger is not the answer, getting smaller is.

Piver makes a really good point, as well, that people are still looking at the music industry as if it was "killed" by unauthorized downloads -- but nothing is further from the truth:

Downloads did not kill the music business. Shortsightedness and turf-protection on the part of music business executives did. Piracy and changing distribution schema will not kill the publishing industry. Shortsighted infrastructure-protection on the part of publishing houses will.

Instead, Piver points out that, just as in the music industry, there's a ton of opportunity for those who embrace it, even as those who don't incorrectly will claim the industry is dying:

Without making friends with this beast, my guess is that in 2-5 years we'll see a publishing industry that looks like the music business does today: Super-downsized major companies selling a product line aimed at an older demographic or chopped into whatever the ring-tone equivalent will be in publishing, and a jillion new companies creating the next generation of publishers, retailers, and readers. Just like in the music business, some in publishing will be mourning the death of the business while others will be wildly excited because all they see is opportunity.

There's more good stuff in there as well, but it brings up some really good points. But, part of the problem is that the traditional (false) music industry narrative is still the predominant one. People still think that music industry is dying, even as it's thriving (it's just the recording industry segment that's struggled). And so as everyone tries to "avoid what happened to the music business" they're going to make huge mistakes if they focus on the false narratives.

Already, today, we're seeing that the publishing industry is just focusing on making ebooks available, but doing little to recognize how consumer behavior is changing in how they interact with media (which is as big a part of this market change as any new method of distribution). If the publishing industry is going to figure this out, it needs to not look for some silver bullet that brings things back to "the way it used to be," but to really spend time trying to understand what people are doing today with media -- and, actually, the music world is a good place to start, if they focus on the success stories of what's working, not the complaints from the parts of the industry that have held back.

Filed Under: books, ebooks, music, publishing, recording industry

Record Labels Screwing Over Musicians Is Nothing New; The Buddy Holly Edition

from the the-interests-of-musicians? dept

It's still amazing that anyone thinks that organizations like the RIAA or any of the record labels actually represent the best interests of musicians or even the music industry, when they have such a long history of doing things that go against the musicians best interests -- and this goes back decades. A bunch of folks have sent in this amazing recording of Buddy Holly negotiating with his record label after the label recorded a song but refused to release it. The label, Decca, had dropped him from his contract and was refusing to release the songs, including the song "That'll Be The Day." According to the story, the producer wasn't a fan of rock music, and did a terrible job on the song, and Decca refused to release it. So Holly went to re-record it at a different studio, and since Decca had dropped him from his contract, he wanted to clear the rights to use that song, but Decca refused, claiming it had money "tied up" in the recordings... even though Holly clearly offered to pay up to reimburse Decca for the costs, the label refused. Holly apparently recorded his phone call with the label discussing this: Of course, the story is that Holly went on to release the re-recorded version against his Decca contract, but did so under a group name (The Crickets) rather than as Buddy Holly to avoid the contractual issue -- but the success of the song resulted in Decca coming back to Holly and signing a new contract. Either way, the phone call highlights how labels have treated musicians for ages -- forcing them into terrible contracts.

There still is a role for labels to play in the music industry, but one of the more exciting things that's happening is that with greater alternative options, musicians are able to sign deals that are much more favorable, and are less likely to get them locked up in a situation where the labels have too much control.

Filed Under: buddy holly, decca, recording industry

Has The Recording Industry Reached The Bargaining Stage Of Grief?

from the seems-like-it dept

This is the second year that I was privileged to attend (and speak) at Midem, the big music industry conference that takes place each January. Once again, it was quite an experience, and I had so many fascinating conversations with those in and around the industry (including many folks who I have disagreed with quite publicly on the blog, who were kind enough not to take swings at me in person). Last year, in writing up my summary post, I discussed how there was optimism and opportunity, but there was still this undercurrent of anger. Even as new business models and new ideas were being discussed, it would always come back to anger at "pirates" and "piracy" and declarations of how it needed to be stamped out. While there was still some of that on the periphery, what struck me about this year's Midem was that there was very, very little talk about "piracy" or how it needed to be stopped. While there was still some chatter about things like ISPs agreeing to blanket licenses or three strikes rules, even that was a pretty minor part of the discussion.

Instead, the word that I kept hearing was "quiet." Almost everyone you spoke to mentioned how "quiet" Midem was this year. Attendance was down (apparently about 10% from last year, when I remember them saying that attendance had also been down about 10%), but that's not too surprising given the state of the economy and the general turmoil of the industry. However, it was still quite well-attended, and the thing I noticed was that there was actually quite a lot of activity going on behind the "quietness." And that activity was dealmaking. Lots of it. I talked to many people working for companies that are enabling and embracing new business models, and they were swamped with deal opportunities and discussions. Sure, the major record labels have all but disappeared from the show, but the companies that are enabling what comes next were quite busy -- just behind the scenes.

In thinking about it overall, I began to think about the famous Kubler-Ross model of the five stages of grief. You know the one: denial, anger, bargaining, depression and acceptance. I'm beginning to think that the recording industry has reached the beginning of the bargaining stage. Last year, we were still seeing the end of the anger stage, which followed a long period of denial. I think the bargaining stage is what we see with things like the pressure to get three strikes laws passed around the world, rather than suing individuals. It's what we see in the ACTA negotiations behind closed doors. While it's not as loud and as angry as what we've seen in the past, it's still a bit questionable. As Wikipedia notes:

The third stage involves the hope that the individual can somehow postpone or delay death. Usually, the negotiation for an extended life is made with a higher power in exchange for a reformed lifestyle. Psychologically, the individual is saying, "I understand I will die, but if I could just have more time..."

That sounds about right for the recording industry, doesn't it? Of course, rather than a "higher power," it's politicians around the world. I have no idea how much longer this stage will go on, but it's worth noting that the fourth stage is still depression, which apparently involves much "crying and grieving" and during this stage "it is not recommended to attempt to cheer up" those going through the grieving process. I'm not quite sure how exactly that will play out in the recording industry, but if this is accurate, then the industry will need to go through that process before finally reaching the acceptance stage that it needs to get to.

All in all, though, like the stages of grief, this is part of the necessary process, and it should be seen as a good sign that the industry at least appears to be moving through them, rather than hanging onto denial and anger completely. Midem itself was actually quite encouraging in that regard, and I'm hopeful that going forward we see more and more positive signs of an industry coming to grips with the changes thrust upon it, rather than still trying to hold back the tide. So while Midem may have seemed "quiet" this year, I think it was actually a sign of good things happening.

Filed Under: midem, music industry, recording industry, stage of grief

Time To Recognize That The Recording Industry Is Not The Music Industry

from the remember-that dept

For a while now, we've tried very carefully to not make the mistake that is common in the press (and among politicians) to assume that "the recording industry" (i.e., the record labels) is "the music industry." The two are quite different. In fact, by almost every measure, the music industry has been thriving over the past few years, while the recording industry is in rapid decline. And yet, the two are regularly confused. So it's nice to see a new paper come out arguing that it's time to stop inappropriately using "the music industry" to only discuss or identify a small subsegment of the overall music industry. This is important -- because when you realize that the recording industry is only a piece of the puzzle, it suddenly makes you realize that the RIAA does not, in fact, represent "the music industry" at all, but rather a tiny segment of the industry.

Filed Under: music industry, recording industry

What Will The Recording Industry Be Blaming For All Their Problems A Decade From Now?

from the or-will-they-not-have-problems? dept

At the very end of an NPR story about the decade since Napster there's an amusing quote from Eric Garland of online music tracking firm Big Champagne, where he says:

A decade from now, executives may be longing for the days--when they could blame piracy for all of their problems.

Indeed. "Piracy" makes for an easy -- if totally incorrect -- scapegoat. The reality is far different. As we've seen over and over again, those who learn to properly use file sharing to their advantage don't see any "problems" from file "piracy," but actually see it as a huge opportunity. That, alone, makes it clear that piracy has never been the problem, only a failure to adapt. And yet, as we've noted repeatedly, the industry itself is actually thriving. So that raises a separate question. A decade from now, what will industry execs be blaming their problems on? Or, will the old "blame game" execs have moved on, and we'll be in a new industry that doesn't even think of the challenges it faces as problems, but as opportunities?

Filed Under: blame, piracy, recording industry

Recording Industry Making It Impossible For Any Legit Online Music Service To Survive Without Being Too Expensive

from the good-job dept

You just knew it would happen again. Every time the recording industry finally agrees to license a new music service to try to take the "sting" out of "piracy," it demands licensing terms that are ridiculous. From the execs at the labels' perspective, unless you pay an arm and a leg, you don't get to offer music. So, a few companies agree, and then realize it's impossible to make any money and shut down. In the meantime, the whole point of those legal licensed music services (to compete with "pirate" sites and services) is lost entirely. Wired is chronicling how all of the legal music sites are finding it impossible to survive and offer a free music service -- including MySpace music (which beyond not offering much of value in terms of user experience) "is struggling to keep up with its own payments to music copyright holders."

Of course, it's really no surprise that most of these sites have struggled. Beyond the ridiculously high licensing rates that the labels forced on them (often by negotiating through lawsuits), none of these sites put together a well thought-out business model. Instead, they all seemed to think that they could just slap ads on the site and that would be enough. But, of course, when you're listening to music, you're not looking at that website or paying attention to the ads -- and if the ads got too intrusive, they'd just go elsewhere. A real business model would have been setting up something more comprehensive, that gave listeners a real reason to buy associated with the music. Eventually we'll get there, but in the short-term, the graveyard of failed "licensed" music startups will grow, just as more and more "unauthorized" sites grow in popularity.

Filed Under: expense, licensing, music industry, music services, online, recording industry
Companies: imeem, myspace, spotify

No, The Music Industry Outlook Isn't Grim... Just For Selling Recorded Music

from the it-ain't-the-same dept

JJ passed along a short article from a week or so ago, claiming that the "outlook" for the music industry is "still grim" according to some industry insiders at a conference. Except... that's not really true. Once again, it seems like there's confusion between the recording industry and the music industry. Yes, it may be true that the outlook for selling plastic discs or downloads may not look so hot, but that's hardly everything that encompasses the music industry -- and claiming otherwise is not at all accurate. The recording industry has pushed this myth for years, and it's too bad the press continues to parrot the same line. Yet, when studies actually look beyond just selling the music directly, they find that the outlook isn't grim at all. Claiming that the outlook for the music industry is grim is like claiming that the outlook for the transportation industry is grim in 1910 because the market for horse carriages is declining.

Filed Under: future, music, music industry, recording industry