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Self Inflicted Wounds
CD sales are down: Why Napster isn't the culprit
2001 may not be the year the music died, but the pop biz did develop a nagging headache, and it's not going away. The recorded-music industry's first slump in more than two decades continues this year; the number of discs sold is slipping and so is the appeal of last year's stars. Britney Spears' latest album has moved 4 million copies—a big number, but less than half what its predecessor did.
The Recording Industry Association of America, which represents the five major labels that dominate CD retailing, would like to blame much of the slide on Internet music-file swapping. Yet there are many other causes, including the fact that the big five are all units of troubled multinationals—AOL Time Warner, Vivendi Universal, BMG, EMI, and Sony—that are focused on short-term gain and have no particular interest in the music biz. There's also been a recession, of course, and resistance to CD prices that have grown much faster than the inflation rate. Perhaps the most important factor, however, is the major labels' very success in dominating the market, which has squelched musical innovation.
...Meanwhile, younger fans lose interest quickly and often don't develop strong loyalties. They're less likely to investigate a breakthrough act's previous albums or buy its next one. The genres that appeal to under-25 music fans continue to sell, but individual performers fade quickly.
This is a huge problem for the big labels, who still base their marketing on long-term stars who release multimillion-copy blockbusters. One album that sells 10 million copies is more lucrative than 10 that sell 1 million, because once a CD takes off, the only fixed costs are manufacturing and shipping, which are trivial compared to production and marketing. And long-term careers make each album less of a risk, since the most loyal fans will buy everything an artist releases and profits are high on back catalogs that keep selling.
Yet maintaining superstars is hard and getting harder. They require large advances, high royalty rates, and massive production and marketing money. And they keep demanding such things even when their careers tank (notable recent examples: Michael Jackson and Mariah Carey). The risk that a contemporary superstar's latest album will bomb is high, since attempts to reach the widest possible audience can easily lead to banality and overexposure.
=In the past, there were many ways to crack the biz: local radio stations, strong indie labels, regional clubs and promoters. Today, there are only a variety of separate-but-unequal circuits (alt-rock being the biggest) whose performers rarely break into the big time. (Of course, many of them don't want to, and some are major-label refugees with no intention of going back.) In erecting bulwarks around their domains, the major music businesses have left no entrance for the serendipity that kept the pop industry lively (and profitable) for decades. Yet the barbarians at those padlocked gates are the only people who can save the major labels' dwindling empires.
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