Last week the WSJ had a fascinating article explaining why Lady Gaga is the new role model for the music industry.
What fascinated me were the stats showing how the music industry is the model for the rest of media in getting hammered by the digital revolution.
Top selling album of 1999 -- Millennium by the Back Street Boys -- 9.4 million copies. Top selling album of 2009: Fearless by Taylor Swift, 3.2 million copies.
Employment in the music industry? "The upheaval of the last decade has forced the major record companies to cut their work force by 60%, according to a recent report by the Recording Industry Association of America." http://online.wsj.com/article/SB10001424052748704094304575029621644867154.html
In a sense, the music industry has done well. Best-seller sales are down 65% and employment is down only 60%. That means the industry has found new revenue sources. But the big picture is horrible. Despite everything the industry did, it is barely one-third the size it was a decade ago.
I suspect that every industry that crosses the digital divide faces a similar fate -- more than half of the jobs and revenues go away. That's happened in photography. It probably happened in the travel agency business. It will happen in Yellow Pages and newspapers and book publishing.
Nobody designs a business plan to cope with that kind of collapse. Neither Harvard Business School nor McKinsey would craft an industry plan around such a scenario.
But, that's what is happening in large swaths of our economy.
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I think you're right about the implications of Lady Gaga to the music industry -- and that has nothing to do with her music or wardrobe. The problem with a shrinking music industry is the implication that holds for radio. The record business has had something of a symbiotic relationship with radio -- and I'm not talking about payola. Radio has been a critical way that listeners discover new music and purchase music. The way people discover new bands and new music is changing, and neither the music industry nor the radio stations have figured out how to take advantage of the situation. The exception, of course, is talk radio. Well, conservative talk radio, which continues to flourish even as music stations have seen ratings decline and even as Air America declared bankruptcy recently. Even satellite and HD radio are not succeeding the way one might have thought. However much doom and gloom for both industries, I don't see radio going off the air...this year. Please check out my blog article, Video May Have Killed the Radio Star but Radio Will Continue to Survive -- For Now (ly/bptd9i).
ReplyDeleteNorman: You forgot to mention Sports Talk, which is also a successful format.
ReplyDeleteBut I've stopped listening to music on the radio. I use Pandora. I get what I want and if I listen to an indie channel, I hear new music. I don't know how Pandora will survive. But it is certainly in position to kill Top 40 radio stations.
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