Music industry in crisis

NEW YORK, USA The U.S music industry has taken a blow in recent weeks as it has been revealed that just under 5 million albums were sold in the last week of May 2010. This represents the lowest number of CD sales since Nielsen Soundscan started compiling data back in 1994.

What does this mean for major and indie record labels? Billboard.com recently interviewed Universal Music Group distribution president Jim Urie who stated that   We think this is the lowest week ever, or at least of the soundscan era . The bleakness is a reality and what labels also face is the shortfall in sales from digital downloads.

One example of how the music industry has turned upside-down is Lady Gaga s recent music video hit Telephone which was highly geared towards brands being integrated into the story. Despite the innovation of the video, it is just one of many major artists funding their video through corporate sponsors. Labels in the States and in other markets across Europe and Asia are grappling with the fact that people don t want to pay for their music anymore, however it would seem that music promos might be making a comeback.

As the cost of creating music videos fall, it also allows more creative freedom for labels to experiment and push out edgy material over the web as opposed to MTV, BET and other networks that have to abide by certain restrictions. In the UK the BBFC overlooks videos before they are released. Marketing a video has never been cheaper, and so, independent artists as well as mainstream ones turn to the web to push their material out, as well as labels, but do they get a return? Well if it s cheap to market and to create a promo, then yes.

However, youtube promos of the latest music singles give people free music on a daily basis, and with copyright infringement viral, there is no stopping the massive decline in CD sales and the sub-par digital track sales. You can spend a whole day with a full library on autoplay with youtube, or spend less than 20$ a month and get an entire library of limitless music through spotify. Even if the labels come together and countries force ISPs to stop illegal filesharing, you still have youtube, and hundreds of other video platforms streaming free content 24/7. A whole generation of kids and listeners in their 20s have been culturally educated to accept that music is free because of the changes in technology. Advertising revenue on youtube is also abysmal; as many youtube users with millions of hits choose to opt out of having ads run on videos.

So how do artists make money? Concerts and private events. These continue to be the main source of revenue, but without the cash in the bank from CD and digital sales, it is hard for new talent to get off the ground without significant investment from a label.

What we will see in the coming years is a declining diversity of music accessible to a mainstream audience as there will be fewer major artists, and more competition on the internet for listeners. A shift in technology will be the likely savior of the music industry and as you can see, Hollywood is already turning to 3D films to stay in business.