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How Consolidation Shut Out the Adults
By Eric de Fontenay (Founder & Publisher)
(more articles from this author)
2003-06-06
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"... even if digital file sharing were to disappear tomorrow, the record labels and retailers would still need to overcome important underlying causes of recent market declines."

While this broad conclusion by The NPD Group should be no surprise to Mi2N readers, one of the major underlying causes identified might be an eye-opener for some. According to the research group, the steepest decline in music purchases is not among file swapping teenagers but law-abiding consumers 36 in age and over, which constitute 45% of CD sales.

The first surprise to some might be that 45% figure, especially considering all the advertising and marketing resources leveraged towards younger demographics. But what's certainly more alarming is that this valuable demographic is not substituting one source of music (CDs) for another (downloads) but simply abandoning the market, with half attributing their decreased music purchases to the availability of "less music they're interested in buying."

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How can this be? Hasn't FCC Chairman Michael Powell assured us that further media consolidation would bring more choice and diversity to consumers? The fact is that the prior deregulation of the broadcast radio sector under the 1996 Telecom Act is a major factor behind adult consumers dropping out of the music market and foreshadows the trend in other media industries. Just like the over-consolidated recording music industry, radio's prime concern is the bottom line: reaching the most lucrative listeners for their clients, ie., advertisers, at the lowest cost. Whether this leaves certain sectors under-served, such as less ad-attractive adults or niche genres such as Bluegrass, is simply attributed to their unprofitability, just like those 95% of signed artists deemed unprofitable by the recording industry.

The insidious aspect of all this is that radio consolidation may be a major cause for the recording industry's focus on the youth market. If radio is the major marketing outlet for selling CDs and radio playlist are increasingly dictated by the needs of advertisers, consequently so will the recording industry's releases. Why release a CD for the 36+ age group if radio won't even play it?

The problem is that these conglomerates are unable to serve the entire marketplace while crowding out prospective companies able to fill those under-served segments. This is not just happening in radio or the broader media market but also in retail where retail conglomerates such as Wal-Mart are crowding out traditional and niche music merchandisers. Do we expect Wal-Mart, the music industry's top censor, to be able or even willing to serve the entire spectrum of musical tastes across the various demographics?

Related MusicDish e-Journal Articles:
» Re: How Consolidation Shut Out the Adults (2003-06-12)


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