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New Study Concludes Music Industry Has Itself To Blame For Declining Sales

The music industry has mostly itself to blame for declining revenues, a new study by research firm Cd_manyMintel 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.

Sonybmg_25"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" scandalsWmg 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.

UniversalIn 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 Emi_1 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.

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1 Comment

  1. The post below sort of confirm my suspicion. The Major labels are really irrelevant. It may be able to push Ne-Yo or Prince album What? 200K-400K copies of them?
    people can push 250K-500K download for some reasonably good indie songs.
    Of course this doesn’t directly translate to $$$, which what the labels only care about. But give it some times. somebody will figure out a way. Nobody knows how to make money on the internet either in the early 90’s.
    http://apple.slashdot.org/apple/06/04/01/226209.shtml
    http://apple.slashdot.org/comments.pl?sid=181952&cid=15044000
    Exactly my point. It’s really a whole different ball-game now. I’ve been playing ball with a bunch of indie labels and artists, and we’re achieving some pretty stunning distribution numbers. Some of the top features on my MP3 blog have been downloaded over 60,000 times each. My own music had a quarter-million downloads last month — and this is for electronic music, where 10,000 record sales is considered a hit.
    My friends in Taxi Doll [taxidoll.com] are just an indie group going it alone (as of this writing), and they’ve managed to got their music into films staring J-Lo and Harrison Ford. They’re taking advantage of digital distribution and free downloads to help them get the word out, and they’ve got plans to expand the strategy in the future.
    Why are people still talking about the music industry like it’s 1997? Whole genres have broken off from the major outlets, and started hacking it alone. There are tons of indies on sites like Beatport [beatport.com] and CD Baby [cdbaby.com] selling digital downloads and CDs with no DRM. Imagine that — music producers giving people what they want, rather than force feeding them crippled songs.
    There’s a huge undercurrent in the music industry right now, and the storm is brewing. The old industry is a sinking ship. Some of us have been saying it for years, but the day of reckoning is coming quickly, now.

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