RS: The Record Industry's Decline

[vansmack]

I finally got around to reading this (I printed it out and left in my bag for over a month - sorry if this is a double post as I may have heard about the article from someone here).  Interesting read.  
 
  http://www.rollingstone.com/news/story/15137581/the_record_industrys_decline/print
 
 A lot of the same stuff, but a few things I never knew, like:
 
   

 And among the biggest, they say, was the labels' failure to address online piracy at the beginning by making peace with the first file-sharing service, Napster. "They left billions and billions of dollars on the table by suing Napster -- that was the moment that the labels killed themselves," says Jeff Kwatinetz, CEO of management company the Firm. "The record business had an unbelievable opportunity there. They were all using the same service. It was as if everybody was listening to the same radio station. Then Napster shut down, and all those 30 or 40 million people went to other [file-sharing services]."
 
 It all could have been different: Seven years ago, the music industry's top executives gathered for secret talks with Napster CEO Hank Barry. At a July 15th, 2000, meeting, the execs -- including the CEO of Universal's parent company, Edgar Bronfman Jr.; Sony Corp. head Nobuyuki Idei; and Bertelsmann chief Thomas Middelhof -- sat in a hotel in Sun Valley, Idaho, with Barry and told him that they wanted to strike licensing deals with Napster. "Mr. Idei started the meeting," recalls Barry, now a director in the law firm Howard Rice. "He was talking about how Napster was something the customers wanted."
 
 The idea was to let Napster's 38 million users keep downloading for a monthly subscription fee -- roughly $10 -- with revenues split between the service and the labels. But ultimately, despite a public offer of $1 billion from Napster, the companies never reached a settlement. "The record companies needed to jump off a cliff, and they couldn't bring themselves to jump," says Hilary Rosen, who was then CEO of the Recording Industry Association of America. "A lot of people say, 'The labels were dinosaurs and idiots, and what was the matter with them?' But they had retailers telling them, 'You better not sell anything online cheaper than in a store,' and they had artists saying, 'Don't screw up my Wal-Mart sales.' " Adds Jim Guerinot, who manages Nine Inch Nails and Gwen Stefani, "Innovation meant cannibalizing their core business."
 

That just blew me away....

[miss pretentious]

yeah. i read that article too. and the timing couldn't have been better/worse. the week i read it, we found out the only two records stores (ocean's II and record & tape traders) in annapolis are closing their doors by the end of the year.
 
 from our story -
 After three decades selling music on Main Street, Ocean's II owner David Kneas will close the shop this fall, looking for a business model with a better financial outlook.
 
 "No use lingering in a business that's nonexistent," he said. "iPods were the greatest disaster for the music business in history, even worse than cassette recorders."
 
 For every $1,000 in sales, Mr. Kneas said, he takes home only $200, and when his landlord offered to let him out of his lease, he decided to close as sales flagged. The store will probably close in November, he said.
 
 "I'm going to go after the 400 and 500 percent margins of coffee, alcohol and jewelry," he said. "People will gladly fork over $12 for two cups of coffee and give the coffee shop $11.50 in profit."
 
 Both of the independent stores outlasted the other chain stores that once dotted local shopping centers and malls. Last year the Tower Records at the Annapolis Harbour Center and the Sam Goody in Westfield Annapolis closed as music sales shriveled."

[vansmack]

Well that's fucking brilliant.  
 
 The reason they didn't embrace Napster was because record shops would close, but guess what?  They're closing anyways and now nobody's making a buck!  I still can't believe how badly they bungled this from the get go...

[danknugz]

you could shut down a million FYE's and i wouldn't give a fuck, but unfortunately, its always the small guy that suffers. independent record stores are few and far between, and this is one of the reasons why.

[thirsty moore]

I worked for RIAA in 2000.  They had no interest in helping out Napster.  Hilary Rosen's speaking some kind of nostalgia shit.

[walkonby]

ipods are to blame?  nah.  the consumer is to blame.  you and everyone else who thinks downloading is neat.  the computer is the death of mankind.  arnold knows.

[vansmack]

The music industry
 
 A change of tune
 Jul 5th 2007
 From The Economist print edition
 
 Faced with shrinking profits, record labels are touting a new approach
 
 
 IT HAS become a familiar refrain. For years record labels, citing tumbling CD sales blamed on internet piracy, have decried the decline of the music industry. The reality is rather more subtle, as Edgar Bronfman, the chairman of Warner Music, a big record company, pointed out last month. �??The music industry is growing,�?� he told an investor conference in New York. �??The record industry is not growing.�?�
 
 Indeed.