Every [two weeks?] Jamie Hale takes a long, hard look at the music industry and the blog scene that feeds it. Here, he releases those findings and makes snarky, sarcastic remarks. Admittedly, both Jamie and Knox Road are a part of this scene. So sue us.
Take a ride with me, if you will, on one of the saddest rides of all: the Music Industry’s Carousel of Demise. Here, you can see many of the big record companies riding around and around, grabbing as much cash as they can, as it flies out of their pockets while the ride gains speed. The carousel won’t run forever, it will stop once all the riders either die of exhaustion or figure out a way off the thing, but right now, very few companies have any good ideas.
This week, the National Association of Recording Merchandisers (NARM) teamed up with market research company The NPD Group to release a study on what kinds of people buy music and how they do it. It’s an attempt at figuring out how to market music to different types of music consumers. The results were overwhelmingly unsurprising:
Music discovery is alive and well, according to a new NPD Group/NARM study released Thursday. But there are some concerns that digital platforms too easily provide free content without doing more to convert consumers’ attention into sales.
GET OUTTA TOWN.
Alas, it’s true. Most people don’t like to go out and buy Compact Discs anymore, nor do they like buying the $8 MP3 version. This is probably why Amazon gave Lady Gaga’s last record out for pennies, the attention they all got for it was well worth the loss in sales (that or the number of people who flocked to the sale actually boosted profits, but either way). Yet, according to the survey, there are still a couple of groups forking out the dough on music. Who exactly are these people?
The highest value group, the “committed” music consumers, account for 10 percent of consumers but 46 percent of spending. With a [mean] age of 32–the youngest of the five groups–they spend $267 per capita on music products (four times the average) and $139 per year on concerts.
The second-most valuable group, the “converts,” accounts for about a third of population and a third of spending. With an average age of 34, these consumers are likely to buy CDs and downloads.
In other words, we’re looking at people in their 30s (on average), who like technology but still enjoy the good ol’ days of music consumption, when it was overpriced and nearly impossible to break into (I’m looking at you, Brendan Fraser, Steve Buscemi and Adam Sandler). Underneath those two groups, there is one lump of the three other varities of music consumers, and if you’re thinking “young people who care enough about the industry to buy all their music instead of downloading it for free,” you’re entirely incorrect.
The 55 percent of consumers who aren’t terribly interested in new methods of music discovery represent just 18 percent of consumer spending on recorded music. NPD calls these groups the “comfortable,” “casual” and “content” consumers. They tend to be older, don’t spend much on music and tend to find new music on TV and radio.
The only remotely surprising part of this quote is the “TV and radio” part. According to the study, AM/FM radio is the top source of discovery for 60 percent of respondents. Another 49 percent listed TV as their top source. We can just assume that the remaining one percent uses internet sources, like blogs. For those older folks who like their music like they like their government, purchased (politics zing!), it makes sense for big record companies to continue aiming at pop music stations and popular TV shows to market their acts. But that doesn’t mean sales will necessarily increase a single dime.
The question then becomes, How do we force the younger generation to pay for music? The answer? You don’t. Record companies tried going on the offensive by shutting down file sharing sites and fining downloaders. They then tried to play it smart, by offering incentives to buy, like bonus material. Interscope and Amazon even took the big gamble with Gaga’s 99-cent album. Now, it looks like they’re looking for their next move.
But maybe the best move of all is to just accept that the music industry will never be as profitable as it once was. Record companies keep looking for some kind of silver bullet – a way to strike down venomous online file sharing once and for all. But they are unfortunately up against a behemoth, and one that is only growing larger as the world begins to forget the way things use to be.
As their core consumers age, and it’s clear by the study that they already are, these labels will have to either bleed dry or accept fate and change. It’s by no means impossible for record labels to do well these days, simply look at all the successful indie start-ups that are slowly rising to prominence. The difference is in your expectations.
While the smaller label is expecting a crowd of downloaders, and creatively trying to rope in as many of them as possible (look at the resurgence of vinyl), the big labels are trying to get back to bygone days of major profits and corporate jets for all. It’s simply not realistic. I’m not in favor of the bankruptcy of these big companies, but I am in favor of bringing in new leadership who sees the writing on the wall, and quietly scales down operations and expectations.
The ones who figure this out sooner rather than later will be the ones who can get off that Carousel of Demise mostly unscathed. The others, the indignant ones who insist on conducting studies like this, will stay aboard until they throw up all over themselves or the ride spins viciously out of control. So I urge you, Big Record Companies, to just give up the charade and accept your fate! After all, nobody wants to see Columbia Records’ battered body covered in vomit and pennies. Nobody.
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