This is why the new music industry is smaller than the old music industry. And why it may always be smaller than the old, physically-dominated industry of yester-decade. Because even when you stack up every digital sale, ever, in all of history, it still pales in comparison to CD sales. The markups on physical are just that much better.
Here’s a breakdown using US-based revenue stats from the RIAA, which first started counting digital sales in 2004. The US market has been, and remains, a strong digital music adopter.
Exhibit A: All Digital Sales versus All CD Sales (All Time)
CD Sales (1983-present): $197.8 billion
All Digital Sales: 2004-present (counting started in ’04): $22.7 billion.
That is, cumulative CD sales are nearly 9 times greater than all digital sales, ever. But is that an unfair comparison? After all, CDs had a two decade lead. So let’s do a straight comparison since 2004.
Exhibit B: All Digital Sales versus All CD Sales (2004-present)
CD Sales (2004-present): $57.7 billion
All Digital Sales: 2004-present (counting started in ’04): $22.7 billion.
Exhibit C: Here’s Another Way to Look at It…
Well as a DJ there was a lot of very good music 10 years ago but since everything turned into some type of rap and hip hop and auto tune…why pay for it….
Its McMusic cheap throwaway disposable, good for 6 weeks
And record execs KNOW THIS!
EVERYTHING has turned into hip hop and autotune? Really? No offense, but it sounds like you’re a little out of touch.
This DJ “out of touch?”
not “true”
Explain Macklemore & Ryan Lewis? They have an album that took them “FOUR” years to complete? what exec would be ok with ONE Album every “FOUR” years before this? they used what it took in order for them to have a song in a current movie that is not about HipHop yet has a HipHop song…
Next watch at least One Show On Regular Network TV and count how many commercials have some kind of HipHop Vibe…
then
work on explaining the Psy “Gangnam Style” phenomenon
over a “Bbbb-Billion views…a billion?
Last I will end with this…
Jabawaakies Las Vegas..HipHop has a Show IN VEGAS
stay true, too be true!
about.me/true
TRU Entertainment
TRULY Independent Records
DJ? DJ?
What kind of a DJ are you?
What kind of music do you play? and where do you play it?
I think you are a con-artist.
DJ? No way…
ditto on that..
A retired DJ?
A DJ who only plays old folks home?
A ‘home based’ DJ?
There is some great music coming out still.. You just have to look for it, and not rely on the spam the Labels ‘think’ is good.
I would like to see this number in units, not revenue. Of course the music industry made more money when A-list artists sold CDs for $21.99 at Strawberries.
Not a big fan of these comparisons. It totally disregards that CDs are digital. This is a physical vs. logical sales comparison of digital media.
(Area under the curve, much?)
Perhaps a better comparison would be the first 8 years of the digital product against the first 8 years of the CD product.
The CD was a much easier change for the consumer, as the CD was conceptually swapped in place of the LP or cassette. Digital requires a jump into a whole new hardware world and a whole new way of manipulating computer files which lots of the public still isn’t comfortable with.
Perhaps a better comparison would be the first 8 years of the digital product against the first 8 years of the CD product.
Look at the last graph. 8 year mark = 92 or 93? Much bigger than digital in 2012.
Pedantic I know, but that is terrible maths (82 + 8 + 93???) Again, sorry for being a pedant. I’m English, it’s what we do.
Looks like ’84 was the first year CDs sold anything. Sorta like 2004 was the first year digital sold anything. So yeah, 1992 would be about 8 years out.
I’m sorry Paul, and with all due respect, I think exhibit B is unfair as well.
I’ve been in the ‘digital music’ business since more than 10 years now, starting in 2002 with ringtones and stuff like this.
We all perfectly know that until 2008 or 2009, ‘digital’ was very badly managed by major record labels (not enough focus was put on it, there was a lack of tech knowledge..etc).
I could elaborate more on this topic but the reality is that major companies started to be ‘aware’ only very recently regarding digital-related stuff (and most people out there have no clue about what they’re doing and how these things work…)
IMHO a fair comparison would be to take CD sales vs. digital sales from let’s say 2007, which gives you a 5-years overview.
Cheers,
J
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JTV Digital | affordable digital music distribution
Remember, every new format comes with a learning curve, and plenty of opportunity to get things completely wrong. CDs weren’t smoothly managed out of the gate in the early 80s, either, and big questions surrounded hardware replacement cycles, etc.
The bigger point is that digital pays less, the margins just aren’t as good as physical. And the energy pored into digital produces fewer returns. So bore me with all the zero-cost, infinite distribution arguments, it’s just a low-margin format that doesn’t bundle well, doesn’t have the benefit of scarcity, and is far more prone to redistribution (also know as theft).
Hey, do you think that execs at the majors ever truly read the same data as presented here?
I mean you are completly right about the miniscule monetization of the digital formats (be it downloads or streaming services). So are they illiterate or just plain dumb?
In addition to that, European digital offer is a joke regarding the back catalogue offers and with a lot of regional restrictions.
Also keep in mind that when the CD was introduced it took a couple of years for a critical mass of artists to agree to release using the format. And there was a learning curve on the mastering and manufacturing side, as well. The CD as an optimized format didn’t hit its stride until the mid 1980s. File-based music formats, on the other hand, were introduced by consumers themselves, in the form of ripping (from CDs) and that began a decade before the iTunes store existed. The mp3 file was, essentially, a mature delivery format before the major record labels ever got involved with it.
Ok, Let’s see…
How many Compact Disc Manufacturing Companies Has Gone Out of Business Over the Last 10 years?
How Many “new” Compact Disc Manufacturing Companies Has Started Business over the Last 20 years?
We have all heard of CD baby….name their Competition?
Most major Label Artists Do Not Sell Physical CD’s at Shows..
Yet Every Other Artist Does…
Correct Me In The Event I Am Misnformed?
All and All Who Really Runs the Music Industry?
Major or Others?
stay true, too be true
about.me/true
TRU Entertainment
TRULY Independent Record
seriously? 10 years vs. 30? -_- come on.
How about adding another exhibit that includes the massive upfront advances that Spotify and Pandora have paid to the major labels that haven’t trickled down to the artists and rightsholders.
CD sales are revenue maximizing to sellers
because of bundling. Typically, the “hit” is bundled with 10-12
other songs, which you must pay for to get the hit. Albums of 5-10 hits are
rare. Downloadable music adopted an unbundled strategy from day one,
which was detrimental to sellers. To ramp up revenues, sellers should
consider re-bundling, i.e., album only sales.
with the exception that bundling tracks is a very common practice in the digital world as well.
there are a lot of albums on iTunes out there where you can’t buy some (or all) of the individual tracks since they’re tied to the full album purchase.
also with the new iTunes pricing at 1.29 per track it has become more interesting to purchase the full album at 9.99
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JTV Digital | affordable digital music distribution
your point about bundling is meaningless and out of date.
1. Artists and music creators have rarely complained about the un-bundling effect of single track sales on iTunes etc. Despite the de facto apparent loss of income from people cherry picking single tracks as opposed to being obliged to buy the whole album to get the track they want, the unbundled system is generally seen as fair and evolved.
2. Over the last few years thee has been a remarkable increase in the number of people buying the whole album on iTunes and Amazon mp3 – and yes this often includes bundled bonus tracks and an artwork pdf.
And…most of contemporary / pop albums contain a lot of tracks that have no interest at all.
So from a user standpoint cherry-picking tracks from the iTunes store (or any other digital service) is a huge step forward.
They are not forced to buy a full somehow boring album to enjoy a few valid songs only…
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JTV Digital | affordable digital music distribution
It’s not about DJ or EDM or old folks boogie (Little Feat) or any other style of music — it’s about the numbers. They are pretty easy to break down. One example > 2002 or so “Who Let The Dogs Out” sold approximately 3 million units — for that one song – so gross sales to the record company were roughly 30 million give or take. IF that song had hit in 2008 – and everybody actually “bought” the track (a big if) the record company would have grossed roughly 70% of $3 million. AND – if that song was released in 2013 and everybody JUST streamed it via any number of sources – say Spotify — the label would have grossed around $750k — these are absurdly rough figures and I apologize to any of the accuracy critics I may have offended – but the trend is easy to spot. We are dealing with a paradigm shift. And what it means for labels and artists in the short run is that revenue is down. What is really hard to predict is the NEXT technology that might change the paradigm?? What if there was a really high-quality digital recording-delivery system that music fans were willing to pay for in order to get the music they want? We see a little of this in the resurgence of vinyl. People will buy a vinyl record to listen to at home and then stream the song on their phone. What makes this article interesting is that for all the hype on digital – the money is bad. More shocking is that digital has still not outsold the 10-year run of 8-track tapes!! Written while listening to Bop Skizzum
This is KEY folks. DDs will NOT build your career.