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Columns > Dan Greenhaus

Published: 2006/03/16
by Dan Greenhaus

Record Companies Keep Getting Dumber

In a recent article in the New York Times, the continuing insanity displayed by record companies and their executives reached a new low. In an effort to spur consistently lagging CD sales, the geniuses at record companies have now come to the conclusion that it is not ILLEGAL downloads that are hurting sales figures, but rather LEGAL downloads that are doing so. As a result, the decision was made to withhold some hit singles from services like Apples Itunes until the actual CD is released, believing this tactic will finally be the silver bullet that will help lagging sales figures.
The insanity continues.
I challenge anyone to assemble a group of people who are more obtuse, and who lack business skills to the degree of record company executives. Id imagine it to be a near impossible task. Even though people have been clamoring for years for the ability to download music, now that weve given it to them, and its proven successful and profitable, lets take it away because our arcane method for robbing the public to get rich is in jeopardy? Its almost fictitious in its absurdity.
The real kicker to the article comes later, when the writer opines, in response to a recent CD that sold well, note that Island Def Jam offered a discount to retailers who stocked the album, allowing it to sell at stores like Target for $7.98 last week. $7.98? Not that long ago, youd be lucky to get a CD on sale at The Wiz for $15, down from the list price of $20 or so. $7.98 is practically a giveaway and surely had as much, if not more, to do with the albums sales numbers than the withholding of legal downloads.
At the same time, one cant help but sympathize, to some degree, with the record industry. The number of gold, platinum and multi-platinum albums has decreased somewhat steeply in recent years. Total album sales fell from 666.7 million in 2004 to 618.9 million in 2005. They are trying everything to protect their artists from piracy; however they are doing so while doing everything they can to protect their inflated-for-years bottom line. Their refusal to acknowledge that their monopoly over the consumer and their outdated business model has both long since been eradicated is not only contributing to the decrease in revenues, but a strong case can be made that it is fueling it.
Consumers arent a stupid bunch. They never have been, and they never will be. People realize when they are getting ripped off, and when they figure out a way to avoid getting ripped off, they take advantage of it. And its been quite a long time since people realized, for the most part, $20 albums are a bad buy. In the pop world where hit singles drive record sales, the advent of technology has removed the necessity of purchasing 10 or 12 song albums for $20 when you can buy the one song you care about for $1. But rather than embrace a sure-fire money maker, record companies continue to turn a blind eye to the giant elephant in the room when talking about how single song downloads are cannibalizing CD sales.
In a wide range of instances, the rest of the music on the album is far less desirable. And they know it. Everyone knows it.
Consumers are done paying $20 for CDs. They are done paying $15. And thanks to Apple, Napster, Grokster and the rest, they are done paying for bad music they dont want, just to get the music they do.
The record company knows where this is going. They know how this is going to end, just as the consumer knows where it is going to end. Music is going to have to get better. The explosion of the Indie scene is validation of this. Much like alternative music acted as a rebellion against 80s rock, the Indie scene of today, and to a smaller degree, the jamband world, are rebellions against music that has been forced upon the public by record companies that dont care nearly as much about artistic integrity as they do about making money. One needs look no further than sales by Eminem or Mariah or other artists that put out quality, full length albums to demonstrate that people are willing to pay if you give them what they want. With over one billion songs downloaded legally at Itunes, fans have spoken loud at clear. If you make good music, well pay for it. If you make crap, well download it illegally because we wouldnt pay for it anyway.
One of these days, the record companies will listen.

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