A Desperate Need for Shifts in the Record Industry

We’ve all heard it. The music industry is dying, sinking, disintegrating, whatever. Executives should no longer look at CD sales as the lifeblood of this industry. There is disregard for copyright with the advent of file sharing and illegal downloading, yet the bigheads at the label refuse to change their business models in order to give way to a new channel of revenue. We find consumers downloading digital singles rather than the purchase of a tangible album in a jewel case from their local music stores (which are already on the brink of extinction). Why hold on to the life raft that cannot float?

The New York Times has recently written an article on how the album is no longer a commodity. Strong sentiments do hold true to some extent, as we see in the article (http://www.nytimes.com/2007/03/26/business/media/26music.html?ei=5090&en=7a35acc488a8c811&ex=1332561600&partner=rssuserland&emc=rss&pagewanted=all )labels have already begun signing artists for singles at a time (no longer option periods for albums). The actions are logical, since ringtones and downloads are purchased at one song at a time. The average consumer only purchased an album because of the 1-3 songs that they really really liked on the CD, anyway. iTunes main revenue is through the sales of singles purchased at $0.99. Album recording costs are extremely inflated, album marketing is extremely risky, etc….but why not focus on one hit? Would it be possible to sign one hit, record one hit, market one hit, sell one hit, and profit from one hit? It does beg the question of how a band or artist would perform only one hit on stage and then exit stage right, but it does present an opportunity worth looking into.

In ties with the New York Times article, Techdirt.com offered a plausible business model in an article here “If Albums Are Dead, Why Not Offer Playlists?” ( http://www.techdirt.com/articles/20070326/005758.shtml ), suggesting Playlists. Why? Because with the rise of the iPod, MySpace playlists, iTunes, and file-sharing there has always been: The Playlist. We use playlists to entertain parties, burn CD’s and keep us interested on-the-go. It seems highly logical since most consumers now lack the attention span to listen to albums for even 3 songs through. We prefer CD mixes over the album when in the car. We are entertained by the house DJ with his cherry-picked selection of singles and remixes. ITunes offers playlists for sale, made by iTunes staffers and users alike. Every playlist’s price is marked proportionate to the number/popularity of songs combined, and sell moderately well if arranged well. The proof is in the “Now, That’s What I Call Music!” pudding, arranging a mix of the season’s/year’s top singles arranged in an album form. It seems as if the bigheads have their work cut out for them, if they choose to shift. What do you think?