Oh, about that whole “Please help us, our industry is being killed by illegal file sharing? Sorry, our bad:”
“With album sales rising and the phenomenal growth of ringtones and legal downloads, plus record-breaking years for merchandising and publishing rights, it seems the death of the music industry has been greatly exaggerated.
According to recent record industry figures, UK sales rose by 4% in the first half of last year. The Publishing Rights Society reported that performance royalty collections (everything but record sales) in 2003 were the highest since records began in 1914.
In the US, Billboard Boxscore reported that the number of live music events worldwide was up by 25% in 2003 (generating £1.2bn in North America alone). Legal sales of downloadable songs topped 2m units a week for the first time last week. Apple’s iTunes service has sold more than 30m songs, and has yet to celebrate its first birthday.
Moreover, the astonishing growth of the ringtone market continues to take everyone by surprise. Estimates as to its true size vary widely from a conservative £600,000 from Jupiter Research to a bullish £1.9m by the ARC Group.
And all this is happening in the age of illegal filesharing.
But hey, this doesn’t mean we need to roll back all of that anti competitive legislation, do we? Its all right if we keep extending copyright far far beyond the original intent of the constitutional framers, um k? (Hey, we got a business to run).
Don’t blame our legislative affairs department — they were only doing their jobs. OK, maybe they did it a bit too well. Just because we in the music industry played Congress for a bunch of chumps, getting them to do our bidding doesn’t mean that any of that needs to be undone. We bought the Congress fair and square, and are entitled to keep our ill gotten legislative plunder.
That whole P2P thing? Also our bad:
“It also looks as if digital downloads are the saviour of the industry rather than their destroyer. As John Ingham, of O2, pointed out during the debate: “When videotape came out, the film industry fought it tooth and nail. Today, video and DVD outstrips cinema.”
So, despite years of executives bemoaning the death of the music industry, we are instead in a situation where people are spending more on music than ever, thanks largely to the music being available in more formats than ever.
If anything is in crisis, it is the record industry. The wider music industry is far from it.”
Whoops . . .
The Guardian Thursday February 26, 2004
Simple analysis: the 2004 Presidential election will turn on economic issues — notably, jobs.
Complex analysis: While a number of other issues will continue to get media play — the Iraq situation, the National Guard story, Gay Marriage — I’m not convinced that these are outcome determinative. They will very likely reinforce partisan views, perhaps moblilize one side or the other. They may impact some (but not many) swing voters. Perhaps the negative issues softens up the incumbent up a bit, and distracts his team from pursuing their own media agenda.
But none of these are unequivocably conclusive.
Tactical considerations aside, these are not the strategic issues (and I’m all about strategy) which will swing an election. More likely, these issues offset to some degree the awesome advantage incumbency gives a sitting President. But I remain unconvinced they will swing the election.
On the other hand: Two charts demonstrate where Presidential vulnerability lay. The first, from Thursday’s WSJ, shows the increasing job losses in rust belt state Ohio. As much as the Dems would like to blame this on W., its part of a longer term trend going back decades. The past few years do look particularly awful, however:
This is not the chart which will swing the election. Manufacturing jobs have been leaving the Mid-West for a long, long time. And while it probably is not a good election strategy to say, “Hey, that’s global trade for ya!” — just ask Greg Mankiw — this is by no means a new phenomena.
The economy slows, CD sales slow.
The economy recovers, CD sales recover.
If I am going too fast for you with this complex and sophisticated economic argument, please let me know. I can’t make this explanation any simpler, but perhaps I can find some crayons or blocks for you to play with.
The simple truism above is well known to everyone outside of the music industry. For unknown reasons, the music industry and the RIAA act as if they are exempt from the business cycle. Most sectors of the economy suffer during recessions — the exceptions are “interest-rate sensitive” groups, like Autos, Home, and Durable Goods, which benefit from the falling rates which usually accompany economic slow downs.
As we have been discussing for quite sometime now, sales of discretionary entertainment products like CDs are not an exception.
Despite the high, illegally price-fixed costs of a CD, you don’t yet need to take out a mortgage to buy one. So there is simply no reason to believe that CD sales have ever benefited from a broader economic slowdown. Yet judging strictly from the public statements of the recording industry over the past 3 years, one would never have even known that a post tech-bubble recession happened from 2000-2003. They simply never mention it. The New York Times, in an article about the continued uptick in music sales (“CD Sales Rise, but Industry Is Still Wary“), never reaches the issue of the economic weakness during the past three years.
As the economy weakened, so have CD sales:
Annual CD sales
Source: New York Times
Not surprisingly, industry sales are running parallel to the broader economy.
Indeed, in the aftermath of the world’s greatest speculative bubble, during a recession and a bear market which saw the Nasdaq lose 80% of its value, the sector only saw a 12% drop in sales during the same period. Its hard to undestand why music executives are wringing their hands over this; Most businesses would have been thrilled with “only” seeing their business off by 12% during this period.
Since then, we have seen an improving economy. Although consumer confidence remains shaky — mostly due to anemic job growth — we have seen a general improvement in spending. This has been especially true in the second half of 2003, as the hottest part of the Iraq war passed.
As the economy continued to gather strength, sales of CDs recovered. The last quarter of 2003 saw a marked marked uptick in total album sales.
In an apparent bid to completely confuse their readers, the NYTimes today has 3 separate stories on lagging job creation and the economic expansion.
The first one, in the Business section, answers the issue with a resounding No:
“Job growth is likely to remain tepid even as the economy moves ahead, according to a survey of professional forecasters by the Federal Reserve Bank of Philadelphia. Indeed, the bank said yesterday, the economists’ outlook for employment has grown gloomier even as their predictions of economic expansion are becoming more robust.
Economists have been puzzled for months by the sluggishness of the employment market. The new forecast suggests that they have come to terms with the pattern established in this recovery: fast economic growth being driven by even faster expansion in productivity, with businesses meeting demand by squeezing more output from their current employees instead of hiring more workers.”
The second article is decidely more rosy.