Tag Archives for " CD "

November 3, 2016

The Chart That Tells The Music Business Story

music businessRarely does one chart say so much about how an industry goes as does this one from Fortune. It’s the revenue generated by the recorded music business over the last 40+ years, and it shows the staggering loses that it suffered with the onset of digital music, as well as how the industry has responded to the incorporation of each new music delivery technology.

As you can see, back in the late 70s the industry was fairly healthy in that vinyl sales where at their highest, supported by the first somewhat portable format (in your car, at least), the 8 track tape.

As we get into the 80s the CD takes over, bolstered at least for a time by cassette sales, and it reaches a peak around 2001. This peak is far beyond what the industry had seen before, or since, by almost a factor of 2. Much of this had to do with the fact that the prices for its products were also the highest they’d ever been.

In around 2007 we see that downloads peak in revenue, but the industry is still mostly supported by CD sales, even though they’re declining at a rapid pace, a reaction by consumers to the high prices.

By the end of 2015 CDs are still selling, but at only a fraction of their previous peak, while streaming is increasing at a rapid rate.

If we were to look at an extended chart at the end of 2016, we’ll see that streaming has an even greater growth than what’s seen here, with the general health of the music business revenue-wise beginning to return.

While it’s unlikely that the industry will see anything like the halcyon days of 1999-2001 again (unless a new hit physical format is created), at least it’s growing again. For the first time in a long time, there’s optimism in the air, although you wouldn’t know it from this chart.

Music Industry Revenue

Japan Has Way More Music Stores Than The US

Japan Music StoresJapan is a pretty small country compared to the United States, but when it comes to the music business in has a big lead in at least one category – retail music stores. In what may be a startling revelation to some, Japan currently has around 6,000 music stores while the US only has 1900, with that number falling every week.

The fact of the matter is that Japan has a CD based economy, as 78% of sales come from the round shiny discs. The US, on the other hand, is down to around 39% of its total music revenue coming from the CD, which is still larger than most of us think, but it’s a figure that continues to fall fast.

So why does Japan still love the CD so much? For one thing, even though Japan has a big digital economy in general, record labels and consumers have resisted digital music to this point (it’s only 8% of total revenue). This has more to do with the culture of Japan than anything else, as most Japanese prefer the tangible aspect of the CD and view it more as a piece of artist merchandise than a music delivery system. It’s more about helping the artists they love than listening to the music.

Another thing is that in Japan, CDs sell for between $23 and $28 and aren’t discounted, thanks to a long-standing law that sets the minimum retail price. The country also has a thriving CD rental business, something that never caught on in the US and was fought vigorously by the major labels. Japanese labels look at rentals as an opportunity to get consumers into the buying mindset, which has proved to be a strategy that has worked. That said, the rental business, why still large, is decreasing.

All this has lead to Japan becoming the second largest music economy in the world behind the US. This does seem rather artificial however, and one has to wonder what will happen should streaming actually catch on there.

One thing’s for sure, for everyone who longs for the way it was in the old days of music, Japan’s the one place on earth where it’s still like that.