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Never Mind the Music
Posted By Barry Ritholtz On February 19, 2004 @ 2:37 pm In Finance,Music | Comments Disabled
If you want to know why the music industry has been such a disaster, take a look at this article from CFO magazine: “Never Mind the Music .”
Are the music industry’s problems caused by piracy? Actually, No (‘though I must hasten to point out that the issues of illegal price fixing and restraint of trade/competion are somehow missing from the article):
“Fast-changing consumer tastes, shrinking margins and the general economic downturn were all hitting the music business hard.”
Indeed, music consumption is probably higher than it’s ever been,” says Mark Mulligan, a London-based senior analyst at Jupiter Research. He cites not only piracy in all its forms, but also legitimate downloading, computer games, DVDs and mobile-phone ring-tones among the many ways that music is now consumed.
With the traditional music business not expected to recover for at least another year, theories abound about the future shape of the industry. Some experts predict [big rock star] concerts are a sign of the times—big revenue streams coming from multi-platform exploitation of mega-star contracts. Alternatively, given that digital downloads are now outselling traditional singles sales, some analysts see the industry moving inexorably towards an all-digital world.
The chart suggests to me that we are merely returning to pre late ’90s levels of sales.
Oh, and there’s that whole lack of competition thingie . . . and the minimum advertised price rule, recently found illegal . . .
Never Mind the Music 
by Janet Kersnar, CFO Europe
CFO, February 12, 2004
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