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Wow, the Sky Really Is Falling March 21, 2007

Posted by David Card in Media.

A quarter does not a trend make. That said, this is one scary quarter.

The Journal quotes SoundScan:

    In a dramatic acceleration of the seven-year sales decline that has battered the music industry, compact-disc sales for the first three months of this year plunged 20% from a year earlier, the latest sign of the seismic shift in the way consumers acquire music.

This is not a “seismic shift in acquisition.” This is music returning to its traditional role: a few percentage points of consumer entertainment spending, as opposed to its artificial run-up in the CD re-purchase, albums-over-singles, Boomer-fueled bacchanal that was the ’80s and ’90s.

We’ve been saying for some time that digital music and ring tone sales wouldn’t make up for the CD’s decline. If this trend is a trend, it’s way worse than that. The music industry is desperately uncovering new revenue streams (licensing, extorting charging webcasters, music subscription services, ad-supported everything). But it’s clearer than ever it must use new media and technologies to develop and market artists. Drastic cost-cutting, that is, not just revenue growth.

And the industry has to spread artist development risk more efficiently. That means that radio probably does have to pay, or share revenues. And artists have to get paid at the back end, not in advance. It’s not just the labels who’ll die if this continues.

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