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The Ugly Divorce of FM Radio and the Music Industry

Posted By Barry Ritholtz On February 22, 2005 @ 8:46 am In Finance,Music | Comments Disabled

Excellent discussion over at A/V revolution [1] by Jerry Del Colliano on the The Ugly Divorce of FM Radio and the Music Industry [1].

My favorite quote perfectly sums up what’s been long with the recording industry forever:

"The
record industry hasn’t had it as good as radio in recent years. While
radio was booming in the late ‘90s, the music business was dealing with
new technology the only way it has historically known how to do – by
fighting anything new.
"

The rest of the piece is filled with arguments that readers of this blog will surely be familiar with. Its well worth the read.

Here’s an excerpt:

"The value proposition of selling an album with one or two hit songs on a $16.95 disc is no longer competitive with the music consumers, especially the all-important Gen Y audience. DVD-Video movies cost a little more than $20 and offer an entire feature film containing an audio and video experience that lasts over two hours. Instead of embracing music in surround sound and higher resolutions at lower prices, the music business is now trying to reinvent itself by selling songs one at a time on legal download sites. Some progress is being made on that front, but it will always be competing with free downloads – a tough battle. Until the music business addresses increasing the quality and the value of their discs, they will be losing market share year after year as they cling on to the antiquated compact disc and continue to believe in the questionable download model.

Hollywood movie studios, in contrast, are getting ready to sell all of their catalog movies all over again on either Blu-Ray, HD-DVD and.or Windows Media 10. High-definition video is a good enough reason for mainstream consumers to buy their movie collections all over again. Little mention of how to sell music on Blu-Ray or HD-DVD has been made public, despite the format’s likely launch later in 2005."

Good stuff. Glad to see that many of the non-mainstream positions we have been staking out are penetrating  into the rank and file. Is it only a matter of time before someone in the industry figures out whats wrong and how to deal with technology — or am I too optimistic?

What’s a solution to the industry’s woes? How about the recording and broadcast industry stop working against their own interest:

"The record business is unquestionably its own worst enemy, but it needs to look to their former best friend, FM radio, as a way out of their troubles. They need to find a way to sell music on discs that are an excellent value and can compete favorably with HDTV-oriented discs that are only months away from hitting store shelves with two-hour-long movies configured for consumers’ enjoyment. Radio offers free advertising – worth hundreds of millions of dollars per year – to the music business, which is essential in breaking and developing new artists, even with new broadcast technologies like Internet and satellite radio. If major labels focused more on creating and nurturing talent, as they did when they were most successful, and less on fighting over signing high-priced established bands and has-been solo artists, they would be able to offer radio the better content they crave. More records are guaranteed to be sold. More people would tune in for morning and afternoon drive radio. Radio and the music business would both win, no matter what the new technology challengers do."

We’ve [2] been [3] discussing [4] this [5] for [6] what [7] seems [8] like [9] forever. [5] Glad to see someone else picking up the baton . . .

Source:
The Ugly Divorce of FM Radio and the Music Industry [1]
Jerry Del Colliano
The Audio Revolution, February 17, 2005
http://www.avrev.com/news/0205/17.radiorecords.html


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URLs in this post:

[1] A/V revolution: http://www.avrev.com/news/0205/17.radiorecords.html

[2] We’ve: http://bigpicture.typepad.com/comments/2005/01/ipod_shuffle_ne.html

[3] been: http://bigpicture.typepad.com/comments/2004/12/how_did_terrest.html

[4] discussing: http://bigpicture.typepad.com/comments/2004/02/radio_consolida.html

[5] this: http://bigpicture.typepad.com/comments/2004/07/clear_channels_.html

[6] for: http://bigpicture.typepad.com/comments/2004/08/little_stevie_t.html

[7] what: http://bigpicture.typepad.com/comments/2004/08/anticompetitive.html

[8] seems: http://bigpicture.typepad.com/comments/2005/01/radio_execs_fea.html

[9] like: http://bigpicture.typepad.com/comments/2004/11/the_internet_is.html

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