"record Sales Can't Get Music Companies Off The Hook"

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Record sales can't get music companies off the hook

 

Five years ago the BPI, the UK record labels' trade body, had some gloomy news: only one-third of the music acquired in the country the previous year came through legitimate channels. One third went in pirate discs, and the other through illicit downloads. Hearing the news at the time, I observed to Peter Jamieson, then head of the BPI, that his members' business was doomed. How could it survive being eaten by ever-cheaper CD-Rs and the ever-faster rise of the internet?

 

Half a decade later, my forecast hasn't entirely been validated. The BPI put out a happy press release yesterday saying that the albums market didn't do as badly as had been predicted. Instead of the double-digit declines "which some analysts had forecast", there was "a modest volume decline of just 3.2%" in 2008 - and that singles sales grew by 33%, helped by downloads. For singles it was, the BPI says, "the biggest sales year on record in unit terms."

 

That's so clever. See what they did? They turned a fall into an upturn, and made you forget to ask: "So, album volumes declined. But what about the value of albums sold? How did that fare?" Because albums, not singles, are where the labels really make their money - and with big blockbuster albums in particular.

 

So I went and asked. The numbers above come from the Official Charts Company rather than the BPI's members, so don't have the sales value. But digging back, the BPI provided statistics which showed that trade deliveries of albums fell in 2007 to the same level as 1994, as did the total market value of trade deliveries, even including music DVD sales, which only began in 2002.

 

That's hardly encouraging. Then you look at retail sales, and things are cliff-edge bad. From 2004 (the furthest back the BPI could find figures for in a hurry) to 2007 (the most recent full figures) the value of retail sales of albums fell from £1.76bn to £1.2bn, and the whole market value (singles, albums, digital and music DVDs) from £1.95bn to £1.39bn. That's a 29% fall, or a compound 8% each of those four years. And that's excluding 2008, where as the BPI already told us, fewer albums were sold.

 

It's starting to look like a rout. And there are even more discouraging signs. The death of Zavvi and Woolworths, the former a prime source of at least a bit of musical serendipity - you're looking for one thing but you find a different album which, because of its cover or proximity to an artist you like, catches your eye - means that supermarkets will have an ever-tighter grip on physical CD sales. In 2000, the BPI notes, independent retailers, specialists and "multiples" sold 86.4% of albums in the UK; by 2007, that was down to 67.7%. The rest was with supermarkets (13.6% in 2000, 24.5% in 2007) and online retailers (zero, by my calculation, in 2000, 7.7% in 2007).

 

Clearly, supermarkets, whose range is limited to those CDs that sell as quickly as baked beans, are going to squeeze the life - and variety - out of the CD. It's what they do to everything they sell. If you've got a hit, then Hallelujah. Otherwise, forget it.

 

The problem that the music industry still faces is persuading people to pay for its digital-only products. But there are signs that it is beginning to win - even if, in the process, it is having to accept that life in the digital world won't be nearly as well-paid or profitable as it was in the physical one.

 

What the music industry really needs, then, is to encourage us to buy digital downloads like they were going out of fashion. Amazon's MP3 offering, and soon Apple's DRM-free offerings, will tempt people more than ever. The BPI needs to hope for a digital future - because the physical past has died.

 

 

Source Charles Arthur, The Guardian, Thursday 8 January 2009