Rolling Stone Writes Obituary For The Recording Industry's Suicide

from the at-their-own-hands dept

Yeah, it's not like most of the folks outside of the recording industry didn't recognize this years ago, but Rolling Stone has pretty much summed up the situation in the recording industry by writing what is effectively an obituary for the industry's suicide. There's nothing really new in there, but it hits on a few key points. The music industry is still doing great. There's more music available. Sales of products to listen to music (iPods, etc.) are flying off the shelves. The publishing business, which licenses music to things like TV shows is growing. Concert revenue continues to grow. All of these things were easily predictable back in the Napster days if you recognized that free music made everything else more valuable and expands all those other industries. It's just that the recording industry was unable to recognize this in time to change its business model. The article highlights how its almost entirely the recording industry's own fault. They had a chance to sign a deal with Napster and they backed out, sending people off to tons of other file sharing tools, that were often more underground (just as everyone predicted).

The amazing thing, however, is that the recording industry still doesn't recognize that it did this to itself. The current head of the RIAA, Mitch Bainwol, still insists that piracy is destroying the music industry -- when nothing is further from the truth. The article also quotes his predecessor, Hilary Rosen, who instead blames everyone else. She blames the retailers and the musicians for not letting the record labels change their business models. Of course, she leaves out the part where she lead the charge to sue customers and get Congress to put in place anti-consumer laws that simply drove people away. So, no, there's nothing really new in the article -- but to have the industry's bible declare that the recording industry sealed its own fate is certainly a milestone. Now, can we move on and start focusing on ways to continue to build the new music industry?


Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    Nick, Jun 29th, 2007 @ 3:41am

    I think it's shocking that the labels are trying to negotiate a slice of the merchandise revenue from concerts, according to the article. At least that used to be a pretty sacrosanct revenue stream for bands, beyond the reach of the labels who already got a hefty cut of album sales. Can't wait for the next article in the series and whether RS brings up whether the labels are needed anymore.

     

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    Kevin, Jun 29th, 2007 @ 4:18am

    There's a major distinction here

    You need to distinguish very clearly between the "music industry" and the "recording industry". The music industry is a superset of industries related to music including, recording, distribution and sales, iPods/CD players, radio, concerts, merchandising, etc. The recording industry is just that subset concerned with making and selling albums.

    The music industry for a long time was focused around the recording industry. But in the past 10 years, other aspects of the music business have become more valuable while the recording industry part was been withering. So as stupid as the RIAA may seem, they really are just trying to protect their business model while compensating for their dwindling relevance.

     

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  3.  
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    Angry Rivethead, Jun 29th, 2007 @ 4:27am

    *aa Is stupid.

    Most of the reason I pirate these days is not because I'm cheap, or a dot-communist, it is out of principle. I buy band Tshirts all the time and have even made flat out donations to bands. I just don't want my money going to an organization as sucky as the *aa. Plain and simple, its like donating money directly to a junkie so they can go buy more drugs. I will buy music/movies again again if:

    a.) Eliminate all DRM and give artists a bigger cut (as far as music is concerned). Its totally ridiculous that the RIAA seems to think they can pay an artist LESS of a royalty when they sell a digital copy as opposed to a hard copy. And when I purchase that song, I want to be able to play it on whatever I want, whenever I want.

    Movies in theaters are just dead for me. Theres no sense in paying $40-50(for 2 people) to go to a movie and still have to sit in a nasty seat and deal with other people. One can acquire a decent home theater system for under $2000 including TV etc that I can watch whenever I want in my underwear. Movie theaters were a good idea up until big TV's and sound systems got real cheap and maintained good quality. The final nail in the coffin is the not-yet-mature high def, which gives the last holdout of benefit of theater: resolution in your own home. Yes yes I know its not QUITE the same but phukket, for the price and convenience, its good enough. Give me a DRM free download of a high def movie, kill two bird with one stone: No more high def format war and no more having to buy an $800 one-trick-pony player when the computer I already own does the job.

    I'll stop rambling now...am I too far off the mark with my assessment of the situation?

     

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  4.  
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    fuse5k, Jun 29th, 2007 @ 5:17am

    kevin is right...

     

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  5.  
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    Nick, Jun 29th, 2007 @ 5:38am

    Suicide indeed

    I remmember in the late nineties, internet boom 1.0, I was working for a small net marketing company, (who are still around and doing well).

    Absolutely EVERYONE in the industry was saying that music was the ideal product - there was no need to see before you buy, it's identical the world over, the shops are large and expensive, and with 100% digital delivery you could save a fortune in costs resulting in higher margins for the industry AND lower costs for the customer. Everyone's a winner, right?

    The music industry was arrogant and complacent beyond belief, and wanted things exactly the way they were, thank you very much.

    I truly believe that this was the point they lost it. With no digital product of their own available, they completely lost control of formats, and effectively let a DRM free MP3 format become the de facto standard. Companies that tried to make player were threatened with being sued out of existence. An approach of threat that remains until this day.

    I think a secondary and much less publicised factor is an extreme failure to be fair to musicians. Look at the track record of failing to pay up - particularly for the little guys.

    The RIAA and their allies are a bunch of evil slimeballs who hate their customers, and fail to play fair with the creators they depend on. With customers and suppliers loathing them, it's a wonder any are still around.

    The music industry will rise from the ashes in a few years if it can learn to genuinely represent all musicians, not just the cash cows, and deliver something that customers actually want for a fair price.

    Personally I am still boycotting Sony after their root kit.

     

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  6.  
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    Steve R. (profile), Jun 29th, 2007 @ 5:56am

    New Business Plan Needed for the Recording Industr

    CNBC interviewed a person who edits a music industry focused magazine. My details are sketchy because I was only incidentally listening as I was getting ready for work. In short this guy said that live concerts are now where the money is. The music industry has evolved from CDs to promote a band to the sale of CDs as a secondary revenue stream to the live concert. He clearly stated that the industry as a whole does not comprehend this shift in market focus and has failed to adapt.

     

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  7.  
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    Wyndle, Jun 29th, 2007 @ 6:59am

    Re: Suicide indeed

    Personally I am still boycotting Sony after their root kit.

    It is not just their music line. I have heard and read complaints from every one of their electronic product lines. They are trying to rely on their brand name while putting together cheap equipment and the result will eventually kill thier brand name. Think of it as a reflection on the entire *AA culture. Sony is a member of both RIAA and MPAA. They are just applying practices learned to all aspects of their business and it is starting to show.

    Ten years ago I would have given a small body part to get my hands on a Sony HDTV but now I avoid all of their products like the plague. I hate that BluRay seems to be on top with the format war, it just means that I have to wait for a reliable company to produce a player that I can afford so I can really enjoy my 57" non-Sony 1080P screen.

    The MPAA is not as agressive as the RIAA because they have better control of their respective "properties" but rest assured, once more people start making quality shorts and getting recognized and moving into indy films the MPAA will have to compete with the YouTubers and MySpacers.

    Scary DAve for president!

     

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  8.  
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    Nasty Old Geezer, Jun 29th, 2007 @ 7:11am

    Re: There's a major distinction here

    Kevin -- That is exactly the point many people have been making for a long time. "Protecting" the business model simply assures that the recording companies will vanish. Those companies have to adapt and change, or perish.

    This is not a threat, simply a prediction based on a lot of history. Read Jared Diamond's "Guns, Germs, and Steel" for an excellent perspctive. (Bill Gates also recommends this book. Whether you like Gates and MS or not, there is no denying he is a successful competitor.)

     

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    citizenj, Jun 29th, 2007 @ 7:38am

    Re: Re: There's a major distinction here

    Dad? What the heck are you doing in here?

     

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  10.  
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    Sanguine Dream, Jun 29th, 2007 @ 7:59am

    The thing is...

    The RIAA does not seem to have caught on yet. For years musicians have been getting cheated out of their respective fortunes and that dates at least as far back as the old jazz musicians of the early 20th century. Some of them played nightly shows for decades but died penniless. And while it is not that bad today it is still a known fact that musicians hardly get anything from an album sale. Most of what they get is from merchandise, concert ticket sales, and other areas.


    A few years ago the RIAA had the golden oppotunity to take the lead in digital music for better (offering it at a reasonable price and not locked down) or worse (as soon as digital music appeared start locking it down with DRM) but for some reason they didn't and now they wanna cry foul because they aren't making the lion's share of profit anymore. And now that the RIAA execs realize that concerts and merchadise are on the rise (but not realizing its becuase the RIAA itself has driven many people from buying albums) they could take advantage of it for better (by using the music to promote the concerts and merchandise). But instead they decide to go for worse by just reworking contracts so that they will start getting the lion's share of concert and merchandise sales too.

    And when you get down to it what does a record exec really offer these days? About 20 years ago execs had a lock on music because back then it was not cheap to produce and distribute your own music. But now even though it's not as easy as a building a home theater it is MUCH easier to produce and distrubute you own media. So what does that leave? Industry created hype and poser fanbases thats what. The industry is on its last legs and is desparate. the will resort to any tactic not matter how questionable, immoral, or illegal it may be to stay afloat. The tighter the close their fist the more money that will slip through their fingers.

     

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  11.  
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    charlie potatoes, Jun 29th, 2007 @ 9:48am

    my own private piracies...

    once a week or so I will download a song (usually from 20 years ago) and listen to it a couple times. then i delete it. if this service was not possible i would do without. for a number of reasons i have never been much of a buyer of music for myself. i do buy music as gifts however...If the RIAA gets too pissy i will simply stop. and that includes buying. ive said this over and over. it's music...not protein..not oxygen, not water. we do without it for a month and the bastards would come around. you have to hit them where they live. we never seem to graps the power of the people and the power of simple embargos which our forefathers used so successfully in our colonial period.

     

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  12.  
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    Mike (profile), Jun 29th, 2007 @ 9:55am

    Re: There's a major distinction here

    You need to distinguish very clearly between the "music industry" and the "recording industry". The music industry is a superset of industries related to music including, recording, distribution and sales, iPods/CD players, radio, concerts, merchandising, etc. The recording industry is just that subset concerned with making and selling albums.

    Yup. In fact, I've been careful to do that for years... including in the post above. You'll note that sometimes I refer to the recording industry and sometimes the music industry while making it clear the two are very different.

    The article does the same thing. The recording industry is in trouble. The music industry is doing great.

     

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  13.  
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    CharlieHorse, Jun 29th, 2007 @ 10:58am

    too bad riaa, you had your chance(s)

    and instead of doing "the right thing" ... riaa chose the model that pretty much defines why large corporations get labeled as robber barons and heartless money-lusters ...

    imho - the point is not to kill off the corporations - as they generally provide useful products and services at reasonable prices for the most part (with some obvious exceptions - please ... I know) - the point is that these same corporations must adapt to changing marketplace conditions - and must therefore be willing to change their business models - or die.

    what is pissing off the consumer is the threats and allegations that are being leveled at them by these same corporations. threats of lawsuits, cries of "piracy" , while at the same time these corporations are not responding to the demand and desires of their (soon to be former) consumers. the consumers found a way to make life easier for themselves - and the recording industry had a chance - nay, years of opportunity, to adapt and capitalize on new distribution methods - yet, they chose to try and strangle off this new mechanism - one which was clearly absolutely loved by consumers.

    not surprisingly, it was a non-recording industry company, Apple, that finally showed the way it could be done. and whaddya know - consumers willingly pay a nominal (read: reasonable) fee to download music. bingo. new business model - oh, and did I mention it is an astoundingly profitable business model ? Apple is raking in the cash by the wheelbarrow.

    so, I say again, too bad riaa, you had your chance(s), so long and thanks for all the fish ...

    PS - what an incredibly exciting and amazing time if is right now for the small recording studios, indy artists, and small publishers - who no longer need these giants for distribution and production ... how freaking cool is that ... THAT's what real competition brings about in the marketplace ... OPPORTUNITY.


     

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  14.  
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    JimmyZ, Jun 29th, 2007 @ 11:18am

    Off with their heads!

     

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  15.  
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    Don, Jun 29th, 2007 @ 11:19am

    Re: There's a major distinction here

    You need to distinguish very clearly between the "music industry" and the "recording industry".

    Actually, I'd go a bit further. I'd say there an increasing large gap between the RIAA (mostly the major labels) and the rest of the recording industry as well. There's a big reason a lot of independent labels refuse to join or have left the RIAA, and that an increasing number of big name bands are leaving major labels for independent, non-RIAA affiliated labels.

     

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  16.  
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    Don, Jun 29th, 2007 @ 11:28am

    Re: Suicide indeed

    Personally I am still boycotting Sony after their root kit.

    Actually there are plenty of reasons to boycott Sony"

    1) There music division affiliation with the RIAA
    2) An insistence to proprietary controls of everything they do (one of the reason betamax lost out to VHS, and why they've lost almost every format war they've been in).
    3) Decreasing poor quality of products (everything from exploding batteries to recalls on multiple digital camera models)
    4) Unethical business practices (including the aforemention rootkit, and underhanded viral marketing campaigns - see PSP)

    Sony should get sort of award for turning what was once probably one of the most respected names in the business world into a company that now vies with the likes of Microsoft as one of the most hated.

     

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  17.  
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    shun, Jun 29th, 2007 @ 12:00pm

    I'm lovin' Sony

    I am not such a Sony hater as I used to be. They sacrifice goats, and that's important to me. At any rate, they are on the right track. Pretty soon, hopefully, these companies will be what the world's major religions are today : a laughing-stock when you look at their words and practices, but dangerous when given credibility and taken seriously.

    Sony's just pre-emptively declaring their support for Satan. At least they're being honest.

    We in civil society have a duty to behave in ways that dis-empower these corporations and empower the communities and people that make our world better. Right now, that means giving money to someone, or boycotting. Hopefully, soon, we'll realize that money is the reason we are in this mess.

    Think about it : who pays the lawyers that sue our kids? Who is paying Sony to produce films and music which consolidates Sony's hold on our culture? All of us lazy consumers need to do something different for the situation to change.

    Or we can just wait for the collapse of the world financial system; then everyone will be SOL.

     

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  18.  
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    Don, Jun 29th, 2007 @ 12:11pm

    Re: too bad riaa, you had your chance(s)

    PS - what an incredibly exciting and amazing time if is right now for the small recording studios, indy artists, and small publishers - who no longer need these giants for distribution and production ... how freaking cool is that ... THAT's what real competition brings about in the marketplace ... OPPORTUNITY.

    Which is why the RIAA has resorted to tactics like spinning off Soundexchange who then went about getting the webcaster rates hiked to the point of driving most of the smaller broadcasters out of business.

    1) Soundexchange gets to collect royalties from ALL artist, members and nonmembers alike (and an "administrative fee" on top of it). Whether the artist want them to or not. Whether the artist give them permission to or not (BTW, THIS is an example of REAL copyright infringement that copyright was originally designed to protect against, and far more THEFT that any acts of "piracy" committed by file-sharers).

    WINNER: Soundexchange/RIAA

    2) To collect these royalties, nonmember must join Soundexchange and pay a fee or else Soundexchange gets to keep the artists money (they wonder why people accuse them of extortion and racketeering, hmmm this sounds like a good example of extortion and/or racketeering to me). And again, an example of REAL copyright infringement that copyright was intended to prevent (someone else profiting off the works of others without their permission or consent) regardless of how "legal" it is.

    WINNER: Soundexchange/RIAA

    3) Major labels artist barely benefit from this increase, since most of them have had to relinquish their rights as part of their contract deals. It's the RIAA and major labels who benefit most in these cases.

    WINNER: RIAA/Major labels

    4) Forcing the smaller broadcasters out of business hurts the independent artists (who often sill own their copyright) and independent labels, since these are the ones generally dependent on those broadcaster for revenue (from airplay) and more importantly the added exposure that airplay brings, since most major outlets (like a Clear Channel) largely play almost exclusively major labels artists (thanks to tactics of those major labels like their very well documented history of payola to get their artist exclusive play). And the elimination of those smaller broadcaster simply drives traffic to the larger broadcasters who promote mostly major label music.

    WINNER: RIAA/major labels

    Despite claims that elimination of this increase is nothing more than an effort for a money grab from the big outlets like Clear Channel, AOL, or Yahoo, the whole purpose of this increase is really a money grab from the RIAA, and way to forcibly eliminate competition and put increasing pressure on smaller artists and labels to join the RIAA and major labels while forcing them to join Soundexchange (and profiting off of them whether they join or don't join).

    And this is just one example of why after years of being an loyal supporter of the much of the entertainment industry, I've come to see the RIAA as little more than a criminal organization that gives payoffs to politicians to make their activities "legal". I have no respect for the "rights" of any organization that so blatantly tramples the rights of anyone and everyone else - artists, consumers, and competitors alike - in their efforts to make a buck by any and every means possible.

     

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  19.  
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    Bob, Jun 29th, 2007 @ 5:55pm

    Economic value was never there

    Rosen and others see that 2001-03 period as disastrous for the business. "That's when we lost the users," Rosen says. "Peer-to-peer took hold. That's when we went from music having real value in people's minds to music having no economic value, just emotional value."
    This was not a leap, but rather a logical next (and small) step as the result of the 'advances of technology'.

    TV has no economic value to anyone. We watch it every day for free (or for a flat fee if you choose have cable). Even with cable, you don't pay for each show. Who would pay $5.00 every time they watched a 1/2hr sitcom or the news? No one would and ratings would plummet, as music is doing now.

    Music has never had economic value on the radio. You listen for free and jump from station to station to find the song you want - all with no cost associated. Push a button and your radio gives you free music. So now it's 'click a mouse' and your PC gives you free music. It's an imperceivable difference to most people.

    The economic value of music was trumped up by the RIAA and now they are unable to maintain the house of cards. Yes we buy music and we can see some value. But free alternatives were always there and the mp3 is just the newest vehicle to get free music to your ears.

    You had your chance, you were blinded by your greed. Now it's too late... oh well !

     

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  20.  
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    Ryan, Jun 29th, 2007 @ 8:09pm

    I Love It

    I love how not a single response here yet supports the RIAA in any way. I'm still a fan of the MPAA due to the fact that they don't sue 100 random people a day for no reason to keep their business going.

    Its hopeless for them now, im sure more than half of the country feels the same way. Even with this corrupt government, in which the people DON'T get what they want, (see the state of MA on gay marraige) there is going to be a change eventually. The outcome of trials involving the RIAA has turned from their favor over the past few months, and the trait will continue.

    I'm glad, personally. I pirate music every chance I get. I hope they read this so they can track it to my IP and sue me, because I will die before I let them win.

    3,000 songs sit on my secondary hard drive, and those are the ones I decided to keep. Along with the 100s of CDs I've sold at 10 dollars each, I'm an evil bastard aren't I?

     

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  21.  
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    Brandon Eubanks, Jun 30th, 2007 @ 11:45am

    media change or change

    I've been saying this for years maybe media execs will listen eventually. RIAA, MPAA, and similar companies. You've giving it to consumers for years. I can't count the number of times I've had to re-purchase content because your industries have chosen to place the content I've purchased on mediums which are prone to failure. Your industries have simply not provided an easy means of reacquiring said content when the mediums eventually and lets face it eventually fail. The internet makes this not only possible but also required. Next with the pricing of your content you have failed to realize that the internet changes things forever, you can't put the genie back in the bottle. The internet means you have access to a far greater sea of potential customers. Your pricing should change to reflect this, but so should the way that you have in the past bundled content that would not have sold on its own together with content that would. Do you really think I want to buy a cd for 15 bucks with only one song I like, or pay for cable for the 3 channels I actually watched while subsidizing the other 42 which have not use to me? Your can either try to hold onto your old ways and watch your revenue take a crap, or you can embrace change and watch your revenue grow by offering the consumers what they want your choice...but its my money

     

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  22.  
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    Lucretious, Jul 1st, 2007 @ 4:19pm

    Gotta love how not one of these shysters mentions the musicians.....its all about them. Also notice how the RIAA wants to keep piracy in the limelight as THEIR current business model gets to charge....what.....$3000 per song?

    Keep pushing those stereotypes......

     

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  23.  
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    Lord Lunch, Jul 2nd, 2007 @ 12:38am

    Re: Re: too bad riaa, you had your chance(s)

    SoundExchange and the flunky CRB Endangers Entire Music Industry

    Are Copyright Royalty Judges educated men or mere motley-minded, brainless barnacles scraped from the rotting bottom of a Cornish fisherman?

    The question begs thoughtful ponder in wake of the three stooges, er, judges’ diktat crucifying small Internet radio broadcasters on a cross of gold.

    The Copyright Royalty Board’s shameful edict, should it stand, portends universal mammocking of copyright statutes entire. Why, forsooth, should any moiety of copyright law command respect when miscreated regulatory rulings make a mockery of the copyright concept itself?

    Indeed, when a confiscatory regulation crafted by contemptible coo-coos in cahoots with maggot-infested magpies has the force of statutory law, the entire statute deserves public disdain. Without qualm or compunction, the nation will scorn, ignore, and disregard all provisions of the Copyright Act.

    This is War!

    My Lords, Ladies, and all who toil in the music industry’s withering vineyards, mistake me not: the Copyright Royalty Board’s “Judges” have not merely proposed an absurdly burdensome royalty requirement on webcasters; they have literally declared war on us all.

    The death knell of a relatively small but promising sector of our industry foretells a coming plague picking us off house by house.

    But take heart. The self-satisfied smirks adorning the RIAA’s Ayatollahs and the brass asses reigning over the less than one handful of major labels shall be short-lived. Highborn priests they think themselves to be, but the brains have been bred out of them all.

    Disciples of Ned Ludd

    Witness: the RIAA’s anti-P2P crusade alienates millions while unauthorized copyright downloading grows by leaps and bounds. This is apt; the RIAA’s misbegotten Luddist policy is akin to trying to herd 1,000s of jumping frogs.

    And this latest tack, I predict, will do for the Luddites what a hornet’s nest whacked by a stout cricket bat does for the whacker.


    Should the self-anointed aristocracy succeed in getting rid of the smelly class (the yeomen, the scullions, chimneysweeps, stable boys, and chamber pot makers - anyone with an independent streak, entrepreneurial spirit, and creative energy), the rarified air reserved for his nibs in the executive suites shall grow thin, stale, then putrid with the smell of rotting carcasses – their own.

    1776 and All That

    The judicial Pharisees would be well advised to examine the informative leaves of history for a sense of what they may have wrought. Particularly should they linger at those chapters retailing the rebellious rumblings of His Majesty’s Yankee subjects 230 years ago.

    And as they ruminate on the subject of how past is prologue, yon judges should heed the thunderous garboil emanating from wounded webcasters, for they shan’t be long alone.

    Nay, I venture their plaints shall become a clarion call, summoning the masses to rally to their cause. And rally the masses shall, for ancestral bravery and American instinct for justice composes the DNA of all citizens whose overburdened backs are bent to breaking under the weight of taxes imposed willy-nilly by unelected mollycoddles.

    Men of stout hearts, feathered headdresses, and rouge-daubed faces shall figuratively board a symbolic trader in Boston Harbor. Into the sea shall they cast offending chests of tea rather than submit to insultuous taxes clapped thereupon by fatuous placemen of fartuous character.

    Viva La Cucaracha

    I call upon every member of every sector of our industry to show steadfast solidarity with Internet broadcasters.

    Our planet has suffered calamities wiping out entire species, but one creature has always managed to survive. That indestructible creature is of course the despised and lowly cockroach. This is how the RIAA and their CRB lackeys view us, thee and me.

    All right then!

    Let us henceforth assume the mantle of those ancient beings – The Cockroaches.

    Let us affix an emblem of the same wherever appropriate on our daily dress, as a badge of inspirational honor, a sign of invincibility.

    Lettuce march arm in arm, armed to the teeth with the might of right, carrying high the unfurled and proudly flapping flag of that indestructible creature, the cockroach.

    Chunk us our gauntlets in the cretinous faces of those who deign to exterminate us.

    Lock arms! Surge forward! Over the River Rubicon of No Return go we. United in sheer numbers, the bastards we shall overwhelm. And, like our namesake, we too shall prevail.

    Lord Lunch
    Hamsammich Castle
    Worecestershire, England

     

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  24.  
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    Urban, Jul 3rd, 2007 @ 7:54am

    The Pirate Party in Europe

    There are now political parties who fight RIAA and MPAA. Take a look at this URL

    http://www.piratpartiet.se/international

    Regards Urban

     

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  25.  
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    John the Lars Hater, Dec 23rd, 2008 @ 10:44am

    Take note Lars you greedy whore!!!

     

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