Pulled from an article about Peter Gabriel “An Old Rocker Gets Digital” by Fred Goodman (New York Times, 10 August 2008):
“More recently, outside services like Apple’s iTunes, Amazon.com, eMusic and Rhapsody have succeeded to the point that paid digital downloads — which also include ring tones — now account for nearly 25 percent of record industry revenue, according to the RIAA. That’s hardly enough to make up for the drop in CD sales. Moreover, the International Federation of the Phonographic Industry, a trade group, says that freely traded music downloads still outnumber paid tracks by 20 to 1.”
Do the math, something doesn’t quite jive here:
- 25% of the music industry’s revenue comes from music downloads and ring tones.
- The International Federation of the Phonographic Industry says illegal downloads/trades outnumbers legal 20 to 1.
Even if one where to presume downloads and ring tones is a 50/50 split. And that the International Federation’s estimate in the USA is reduced to 10 to 1. That still means that the illegal industry is larger than the legal one, no? Or put yet another way, in less than 10 years the internet has at least doubled the size of the music business. True, not all that growth is bringing in money but most other industries would kill for that level of growth. The issue then isn’t loss due to downloads but the music industries ability to capitalize on the growth.
Some would say, the music industry’s issues are do to a drastic loss in margin. They went from selling albums with just one or two good songs for $15-20, to selling just those one or two good songs for $1-$2. Add in all the guest “anger” for having overpaid for so much crap for so long and it’s no wonder that industry struggles. What’s most surprising is that they’re surprised their gravy train has been smashed with a digital hammer. It’s not rocket science to figure out that if you treat your guests that badly for that long that eventually those same guests will figure out a way to get revenge.