August 20, 2009
You can make money off online music
By Robert Cyran, breakingviews.com
Downloaded songs should soon surpass traditional formats, but the spoils will have to be shared.
(breakingviews.com) -- Free downloads nearly killed the record business. A generation of youthful customers got used to the idea that music should be given away. Compact disc sales fell around 15% annually year after year.
Yet the peak of this trend now appears to have passed. That leaves an unusually clear landscape for growth in paid-for music downloads.
These now account for 35% of all U.S. songs sold, according to market research firm NPD Group. What's more, they are growing at up to 20% per annum, while CD volumes are shrinking at about the same rate.
That means the number of online songs sold should surpass traditional formats by the end of next year. Of course, since downloaded songs are somewhat cheaper, it will take a few years before revenues will follow if current trends hold.
Moreover, downloaded music sales shouldn't be any less profitable. A CD costs $6.40 to manufacture, distribute and sell in a store according to research firm Almighty Institute of Music Retail. These costs disappear when music is distributed online. An album that costs $16 in a store is about as profitable as one downloaded for $10.
Unfortunately, this doesn't mean happy days are around the corner for companies like EMI and Warner Music (WMG). The industry may once again think about growth, but the spoils will have to be shared quite widely.
About 70% of all download sales occur on Apple's iTunes. The tech company demands a cut of the proceeds, and its dominant position means it has sway over music producers. Apple (AAPL, Fortune 500) has been largely able to resist pressure by record labels to increase the price at which it sells music.
Musicians also have increased bargaining power. Bands can more easily distribute music online themselves -- or threaten to and demand better terms from labels. And the big retailers aren't going down without a fight. Geriatric glam-rockers Kiss just signed an agreement with Wal-Mart (WMT, Fortune 500) that gives the retailer an exclusive album to sell while the band gets a bigger share of profits.
Music sales may once again grow. But that doesn't mean the big music companies will return their prosperous heydays.
Article List
• August 13, 2010 - The Tennesean - Anita Wadhwani: Nashville indie record stores' sales spin in right direction• January 3, 2010 - Delaware News Journal - Delaware music shops get creative to compete with downloads, chain music stores
• September 24, 2009 - Los Angeles Times - L.A. independent record shop is still in a groove
• August 20, 2009 - CNN Money - You can make money off online music
• June 14, 2009 - New York Times - Retailing Era Closes With Music Megastore
• May 13, 2009 - Medill Reports - Resurgence in vinyl helps record store in recession
• April 26, 2009 - Los Angeles Times - In a digital age, vinyl albums are making a comeback
• April 18, 2009 - Charlotte Observer - Record stores band together
• April 17, 2009 - Detroit News - Record Store Day spins profits and good beats at Metro Detroit shops
• April 17, 2009 - Associated Press - Record Store Day celebrates indie retailers
• April 10, 2009 - Detroit News - Street Corner Music moving to Oak Park plaza
• April 10, 2009 - Toledo Free Press - New record store shakes up Adams Street
• January 8, 2009 - OC Register - Closing date for Virgin Megastore at The Block
• October 28, 2008 - Reuters - AC/DC back in "Black" with global smash
• September 23, 2008 - Chicago Daily Herald - Independent music stores haven't yet disappeared from suburbia
• June 23, 2008 - New York Times - For Tom Petty Fans, the True Sound of Vinyl, Also Captured on a CD
• April 19, 2008 - Lafayette Journal Courier - For some, record stores live on
• April 19, 2008 - New Jersey Star Ledger - It's Record Store Day. Play it again, Sam!
• April 18, 2008 - New York Times - Record Stores Fight to Be Long-Playing
• April 18, 2008 - Dallas Morning News - Retailers hope Record Store Day turns up volume at mom-and-pop shops
• April 16, 2008 - Timeout New York - Platter Up
• December 27, 2007 - Los Angeles Times - Virgin Megastore to close shop
• December 16, 2007 - New York Times - For a "Dinosaur," an Exuberant Second Life (Looney Tunes Reopens)
• December 3, 2007 - Detroit Free Press - The same old song: Music store closing
• November 7, 2007 - Washington Post - Eagles soar past Britney to top of charts
• November 4, 2007 - The Ledger - Two Young Entrepreneurs Unafraid of Risk of Going on Records
• August 20, 2007 - Billboard - Almighty Taps Hans As VP
• June 29, 2007 - ABC News - Long Live the Record Store
• June 28, 2007 - Orange County Weekly - Locals Only
• June 13, 2007 - Reuters - McCartney's Starbucks album heats up U.S. charts
• June 9, 2007 - Billboard - Commentary: Retail Recovery
• May 9, 2007 - Columbia Free Times - High Fidelity
• March 22, 2007 - NARM Awards - Almighty Retail Named NARM Related Supplier Finalist For Third Consecutive Year
• March 16, 2007 - Chortler - Shout! Factory Has Revamped Its Website
• March 9, 2007 - PhillyBurbs.com - Internet killed the record store?
• March 4, 2007 - Sacramento Bee - New groove for Solomon
• February 28, 2007 - USA Today - Exclusives aim to pull music fans into stores
• February 28, 2007 - New York Newsday - Latin record shops thrive despite changes in music business
• February 23, 2007 - Montpelier Bridge - Buch Spieler Sails On Despite a Music Industry Decline
• November 20, 2006 - Austin 360 - In Austin, Niche Indies Rule
• October 20, 2006 - Sacramento Bee - Tower brand could survive
• October 15, 2006 - Pittsburgh Tribune-Review - Tables have turned on record stores
• October 14, 2006 - Sacramento Bee - Small labels lose valuable ally in Tower
• October 6, 2006 - Desert Sun - Record Alley remodels
• September 27, 2006 - Music & Copyright - Niche Marketing of CD albums continues to rise in the US and Physical Sales overall decline
• September 22, 2006 - CNN.com - Indie stores confront a new era
• September 19, 2006 - New York Newsday - 34 years, and that's not all, folks
• August 18, 2006 - The Roanoke Times - Plan 9 Music puts new spin on 5 Record Exchange stores
• August 3, 2006 - The Hollywood Reporter - Nervous music retailers face hazy digital future
• July 16, 2006 - New York Times - The Graying of the Record Store
• July 13, 2006 - Rolling Stone - The iTunes Holdouts
• July 11, 2006 - Roanoke Times - Record store's "last dance"
• July 5, 2006 - Port Townsend and Jefferson County Leader - Quimper Sound moves, expands to change with times
• June 6, 2006 - Billboard - NARM Nominations Announced
• May 10, 2006 - Detroit MetroTimes - Out of the Groove
• March 18, 2006 - Billboard - Indies in a bind
• January 16, 2006 - Los Angeles Business Journal - Slipped Discs
• January 6, 2006 - Los Angeles Times - Indie record stores doing slow fade out
• December 26, 2005 - Los Angeles Times - The Music Stops for Indie Shop
• December 1, 2005 - Rolling Stone - Fall Sales Dry Up
• October 13, 2005 - Desert Sun - Music snobs rejoice: Independent record stores still thrive in desert
• September 12, 2005 - Salt Lake Tribune - Twilight for Starbound Records
• August 18, 2005 - New York Post - Oldies are now singing a new tune - Music stores go digital
• July 2005 - Rolling Stone - Record Biz Still Sinking
• June 18, 2005 - Billboard - NARM Noms Announced
• March 21, 2005 - CMJ - Hart of the Matter
• February 16, 2005 - MSN - Genius Loves Company
• October 12, 2004 - Rolling Stone - Wal-Mart wants $10 CDs
• July 10, 2004 - Billboard - Almighty Institute To The Rescue
• January 14, 2004 - Creative Loafing Charlotte - Manifest Destiny
• December 29, 2003 - New York Times - on the rise of mass marketers
• November 13, 2003 - Rolling Stone - Best Buy snags rights to band's new DVD
• October 9, 2003 - USA Today - Best Buy wins sales rights to Rolling Stones DVD box set
• October 6, 2003 - Reuters - Stones Paint It Black For Retailers
• May 31, 2003 - Billboard - Retail Track
• May 9, 2003 - Hits - Rerap
