Thursday, January 1, 2009

A Very Quiet Revolution

"Who would’ve thought ringtones would work - and that people would pay more than they pay for a regular song?" - I can't remember who...

I'm sure you saw some of what was coming in the music business but did you notice it happening?

The New York Times writes:

"Since the industry’s peak in 2000, album sales have declined 45 percent, although digital music purchases continue to grow at a rapid rate.

Just over a billion songs were downloaded, a 27 percent increase from 2007, and some record companies say they are finally beginning to wring significant profits from music on Web sites like YouTube and MySpace.

Record companies counter that album sales alone do not give a full picture of the complex new economics of the industry. Rio Caraeff, the executive vice president of Universal Music Group’s digital division, eLabs, said other income, like the fees collected when users stream a video online, had become an essential part of the pie. Twenty percent of Rihanna’s revenue, he said, has come from the sale of ring tones."

It has been easy to say for the last decade that CD sales were likely to be decimated by the digital thing in general, and the jury is still out on whether digital will be a positive or negative for the music industry long-term. My view is that there is plenty of money to be made in the business. Streaming video, ringtones, the rent vs. buy vs. steal nature of the online industry are all wild cards but change will continue.

So far Apple is the big winner of course.

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