Monday, May 20, 2013
By ROD HARMON Deputy Managing Editor
Last week, it was announced that the music industry posted a whopping profit of 0.3 percent in 2012.
That may seem like a miniscule amount to you, but it's absolutely music to the ears (pardon the pun) of those in an industry that hasn't enjoyed a revenue increase since 1999. In fact, revenue dropped by almost 50 percent cumulatively during that time.
To put it in perspective, the last time the music industry made money was when Bill Clinton was president, Britney Spears was a new artist, and it was a big thing to own a cellphone that didn't have an antenna.
CD sales, which drove the majority of the music industry's profit before the free-fall, are still dropping. But Internet streaming and digital downloads are finally at a point where they're helping, rather than hurting, the industry.
"At the beginning of the digital revolution it was common to say that digital was killing music," Edgar Berger of Sony Music Entertainment told The New York Times. Now, it could be said "that digital is saving music."
What Berger -- and any other music executive, for that matter -- probably won't admit is that the industry not only held a gun to its own head, it pulled the trigger. Over and over and over again.
Back in the '90s, sales of CDs were at an all-time high. Merchandising of T-shirts, posters and other products had moved beyond a few folding tables at concerts to mall kiosks and big-box stores. The cost of an average concert ticket rose steadily over the decade (and would continue to rise into the '00s). The music industry was making money hand over fist.
So what did the industry do? Record companies colluded to raise the price of CDs, which averaged $19.99 for new releases. Then they stopped issuing singles so that if you really wanted that hit song, you had to buy the entire album.
Artist development? Sooo '70s. If artists didn't sell a million units right out of the gate, they were dropped. A&R veterans and label heads who had nurtured artists for decades were given the boot in the wake of mega-mergers that resulted in a handful of companies controlling the bulk of recorded product.
Then came Napster, and the music industry's response was to sue anyone who downloaded music for free while resisting licensing their songs to new platforms such as iTunes because they were selling them for less than $1 each.
In short, the "digital revolution" didn't nearly kill the music industry as much as greed with a capital "G."
But it wasn't just the music industry that embraced this model of profit over quality and customer service. Big-box stores, retail chains, the auto industry, the media industry and more all took part in the race to maximize profits in the short term at the expense of putting out consistently good products and services, and devoting some of their profits to R&D to facilitate future growth.
When consumers began to balk at spending more for less on everything from CDs and books to home improvement items, profits began to fall. The corporations made personnel cuts, outsourced services outside the U.S., and gradually but steadily diluted their products. So profits fell more, more cuts were made, etc., etc.
So farewell, Circuit City. Goodbye, Newsweek magazine. So long, Borders, EMI, HMV, Tower Records and other old friends. The recession may have hammered in the final nail on your demise, but your coffins were prepared long before.
I don't wish the music industry (or any other industry for that matter) ill will. I really don't. And I am sincerely happy that the music industry may have finally turned a corner.
I just hope those in charge don't forget what put it in the corner in the first place.
Deputy Managing Editor Rod Harmon may be contacted at 791-6450 or: