The music industry has mostly itself to blame for declining revenues, a new study by research firm Mintel reports. Major labels have been quick to blame consumers, but slow to listen to their needs according to the report. Retail music sales, at $12.5 billion in 2005, are predicted to fall to $10.5 billion by 2010.
"The growing distance between the music industry and its consumer is due to a number of factors," said Justin De Santis, analyst for Mintel. "These include lawsuits against individual consumers, payola, and, most recently, restrictive use of digital rights management." De Santis believes that labels have a negative stigma to overcome, brought on by battles against illegal downloaders, radio "pay-for-play" scandals and homogeneous artist offerings on radio stations. The introduction of iTunes and similar sites has slowed the decay, but not stopped it according to the Mintel study. Even though technology is starting to work for the industry rather than against it, labels still face the challenge of meeting the demands of a diverse consumer marketplace.
In an effort to keep up with the digital marketplace, labels have marketed artists to sell single songs rather than complete albums. The Mintel reports concludes that this strategy has contributed to the lack of strong up-and-coming musical talent in the marketplace that exhibit "staying power".
The report continues that while illegal downloading has hurt the industry, big labels have relied on obsolete strategies for over a decade and have been late in exploiting emerging technologies. As a result, the bond between independent artists and their fans have become stronger. Although the music industry is just starting to use digital distribution to its advantage, overall sales will continue to decline unless companies learn to adapt more quickly to changing technologies.
According to De Santis, "The current renaissance of underground media has further driven the consumer away from the major labels and has contributed to the downturn in their sales."
Read some spirited debate from Hypebot readers on the future of the major labels here and join in.