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Is the music industry imploding?
We all know that CD sales are ridiculously low, people just download music now. But the New York Times has a report that indicates maybe the music industry transition going on here is less adaptation than extinction. Digital music sales are still growing but only 6 percent world wide.
In each of the past two years, the rate of increase in digital revenue has approximately halved. If that trend continues, digital sales could top out at less than $5 billion this year, about a third of the overall music market but many billions of dollars short of the amount needed to replace long-gone sales of compact discs.
The story points to better growth in South Korea where the government has instituted a massive crackdown on piracy. But most other places, internet service providers are reluctant to police the internet to help out music labels. Labels are holding out hopes for cloud-based music services like Spotify and Rdio but the one thing those services don't really need is record labels.
Why shouldn't it implode?
Since people no longer buy music as physical objects, their main value (supplying the capital to make and distribute recorded music) no longer exists. Their secondary value as a supplier of recording equipment and engineers has been replaced by personal computers and for-hire engineers that can that job as well. Their last value was to separate worthwhile acts from bad ones (a job they did poorly) has been replaced by blogs and music recommendation services.
When listeners can find musicians over the internet, and those musicians can sell the music directly to the listeners, what justifies the industry taking a large cut of every transaction?
