The Music Industry is Just Dandy!
The music industry is often described as in a slump, in danger or under threat from a host of factors, foremost being file sharing & burning. And Best Buy's announcement that total revenue for the first quarter of the year at its Musicland stores had declined 15% as compared to the last quarter only reinforces the perception that the music industry is in decline. While seasonal "softness in both mall traffic and CD sales" were a factor, it still contrasted with a 1.3% increase in sales at Best Buy stores.
But are CD sales an appropriate measure for the health of the music industry? Or more relevant, what exactly do we mean by the term 'music industry'? As discussed in the media (including in this publication) and at music conferences, this usually refers to the major recording labels. To some, it may even include the various retailers actually selling recorded CDs. In this context, CD sales would certainly be an important indicator of the business & financial health of the 'music industry.'
But music is much more than a disc. The music industry, in fact, encompasses a variety of sectors where music is the core product. And many of those sectors are doing "just dandy." While overburdened with debt, much as the labels, broadcast radio has seen revenues and profitably strengthened while CD sales weakened. The same company that dominates the broadcast market has also benefitted from record-breaking ticket prices, concert attendance and profits. If you ask Clear Channel on the prospects for their music business, they'd have to reply "just dandy." Ironically, the euphoria over file sharing may at least be in part a factor for driving fans to over-priced events while legitimate bootlegging give artists a much-needed cash infusion.
Nor have performing rights organizations fared too badly. ASCAP, for example, recently announced it had distributed $587 million to its members in 2002, "a new record amount for any performing rights organization, anywhere in the world." And much of that increase cam from another growing market, the cable industry, which contributed $79 million in special distributions from settlement payments.
And the entertainment industry has nothing to complain about as Best Buy stated that, "strong increases in the Company's comparable store sales of DVD movies and video gaming offset comparable store sales declines in CDs."
What does it all mean? Probably that the real music industry, much as the movie & video game industries, is really growing at a healthy rate while the CD sub-market is going the way of the 8-Track, cassette & vinyl as digital music increasingly attains defacto status. A problem for major labels & brick-&-mortar retailers, not for the real music industry.
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