Why Music Sales Are Down?

Yesterday (Feb 02, 2006), there was an interesting article in arstechnica dealing with surveys of music listeners who more or less said it "music costs too much, and it sucks" and there are several references to this topic on www.digg.com and elsewhere. The article and its discussion were equally interesting. I have been wondering about this phenomenon myself and I completely agree with that sentiment (not that anyone cares) of the majority of music listeners.

Back in the day, cassette tapes used to cost $6-8 depending on the artist and when CDs came out, they were the "new, new thing" and were hence priced a few dollars more for the novelty. The prices for manufacturing and stamping out CDs were quite high relative to cassette tapes and we all remember how expensive blank CDs and CD burners were. Today, the cost of manufacturing CDs (and DVDs) have plummeted to ridiculously low prices, and yet, we are paying $12-16 bucks a pop. There's no reason why they should be expensive. The greedy music companies continue to gouge the consumer and are suddenly surprised when people are "stealing" music! If making and selling CDs is so expensive, how come DVDs are priced a couple of bucks more than the CDs and people continue to buy them.

I admit that during the original Napster days, I too downloaded a bunch of music, but that did not prevent me from actually buying CDs. I own a lot of CDs and I appreciate a good product when I see/hear it. I have purchased a lot of SACD recordings too, although the market for them seems to be restricted to classical music. No matter, I like them and I will continue to buy them. However, today the popular music business is more of marketing and re-packaging. There's not a whole lot of new music going around. Most albums have one or two good tunes and the rest are throwaway tracks. The same goes for the bland radio play we hear. The same 15-50 tracks are played repeatedly. Why then should I spend my hard-earned money on the useless CDs or listen to boring, predictable radio? I would rather buy them from iTunes with an interesting pricing model of $0.99 per track and listen to them on my iPod.

That said, I think the iTunes pricing model from Apple is still too expensive. Granted, Apple has to re-process all the music, store them on a central server, create a payment mechanism, pay the royalties to the artists etc. However, my gripe is that in as far as the electronic medium is concerned, once an MP3 is available, the marginal cost of selling and additional song is negligible. I would certainly purchase more MP3s say at a price of $0.49-0.69. This would make the price of an entire album roughly the same as that of the cassette tape.

The record companies have always faced new technologies in the past. For example, vinyl records, CDs, mini discs, cassette tapes and recorders, VCPs (you remember them, don't you?) and VCRs, AM radio, FM radio, satellite radio, cable companies, DVRs and DVDs. What makes the advent of the internet and/or iTunes any different than the changes in the past? The companies have always found a way to make money, and this time around it's no different. Here's what they should be doing -- encourage newer technologies, price the products appropriately, encourage new artists, and market it well. Don't tell me that the problem is stealing. If that's the case, why do you think people go to concerts? Concerts sure are raking in the cash. It's no secret that most artists today make a bulk of their money touring. Do it right you record companies, and I will be lining up to buy new products. It's that simple!