Digital Downloads - an Ominous Sign?

Atlantic Records Says Digital Sales Surpass CDs:

http://www.nytimes.com/2008/11/26/business/media/26music.html?_r=1&hp

So is this a good thing? Another nail in the coffin of the industry?

Welcome to the 21st century my friend. The industry will adjust.

The industry will adjust but to be honest its going to kill sales, you will not see the huge sales of the 70's-90's in which so many people were making outrageous money. One you go digital it makes it that much easier for EVERYONE to compete which is a good thing for some but also the pie is cut into a million pieces. Major labels will continue to become less relevant without the need for large physical distribution.

Yes and no...majors will snap up any act that is making a decent showng on the charts, that won't change; what will change is the thrust will return to the concept of the 'hit single', and since no one will want to download 'b'-sides, filler tracks, etc., it really will be incumbent on artists to continue to come up with a string of viable hit tunes to stay on top. The art of 'cover art' will be lost forever, as will 'liner notes'...thousands will starve in the ancillary artistic community, the printing industry and the replication biz, the plastics industry will suffer as well as polycarbonate sales, and jewel cases become a thing of the past...but the labels will still be making money....that's what they do.

Why? Because they HAVE money, and will pour it into promotion....which the indies and one-offs will not be ble to do.

Yeah, this is the 21st century.. those who can adapt will succeed.

They are a sign of change.

It will be like books sales now. People buy books but only a few sell huge numbers.

They are a sign of change.

Would that be change we deserve?

Less and less money. The music bizz will shrink because music, the primal ressource, the basic product, has less and less value.

Good and I'll keep buying physical cds each time I have a pay period

Warner as a whole also reported a huge gain in digital which is a good or bad thing really depends on which side you are looking at it from. The days of if you had a song in the top 25 charts you will have at least a gold album are done.

On the bright side, as pointed out by others, artists can no longer get away with "filler" material on their albums. Gone are the days of having to shell out the full album price only to find that the rest of the songs on the album suck.

What's the good side? Except when you work for Apple?

They are a change you may need to adapt to.

...not sure if I completely agree. Look at what's selling now, the Jonas Brothers, High Musical soundtracks, Lil Wayne, and Panic at the Disco. All of their {censored} is "filler material."

...not sure if I completely agree. Look at what's selling now, the Jonas Brothers, High Musical soundtracks, Lil Wayne, and Panic at the Disco. All of their {censored} is "filler material."

For every Jonas Brothers, there is a Nickelback which prove talent is the most important thing to succeed in the music bizz.

Yes it is. Go to a new Borders stores and you'll see the digital download cd burners. As a music lover, thats what I want. CDs are basically gift requests among my friends and family.

I think the whole thing is good for any bands and companies that are embracing the changes in the music industry as opposed to trying to force things to work how they used to.

I don't think CD's will ever be completely obsolete though cause I know a lot of my friends who buy the hit first digitally, maybe get to sample a few other songs in digital format, then build up such an interest that they go buy the album which they never may have if all this digital stuff wasn't offered from legal song downloads, to even the free MySpace teasers.

There will always be loads of cash in the industry and the bigger labels I guess will just have to come up with a better, or newer equation that will have them take more from different parts of the pie like the shows, merch, and all the rest. It's a huge opening for the smaller labels and smaller guys who aren't as greedy though I'm sure.

Well, the promise of making a living off of original pop music is less these days. And it will be for some time: digital age schemes just won't be as profitable as selling records. Times change.

The changes may make it a much more friendly industry for hobbyists and part-time musicians, as well as open the road to alternate ways of making a modest living. Assuming the big industry lets some of the structure for these changes through, that is. Big industry is pretty bullying and resistant to the long tail right now; until that changes, it's up {censored} creek for everyone but hobbyists, IMHO.

Well, a huge detail that is neglected in the conclusion of the projection of revenue is that digital downloads COST LESS THAN CDS!!! If the trend is to move from a $15 item (a CD) to a $10 item (a digital download of an album) then overall revenue is going to drop... DRAMATICALLY!

I don't know the income statement of these companies but the profit margin has to increase with downloads compared to CDs. Production and distribution is a huge cost with CDs and to compeletly remove those costs for digital downloads should lead to a huge increase in profit margin. I think (this may be outdated info) that the wholesale price of a CD is $10 and the cost to the record company is $7 (which includes marketing costs which would not go away with downloads). The cost of a download is approx 30% of the price (going by Tunecore pricing - not sure what deal the majors have). Of course, marketing costs would be added to that but still, it's possible that the profit margin has doubled for digital downloads even though overall revenue is dropping like a rock.

Total quantity sold is the scary stat. Illegal downloads still are affecting the numbers sold.

EDIT: The ones who are honestly scared to death, as already mentioned, are the people connected to CD manufacture and distribution. They're losing the music business and that business will never come back.

Good Point. Alot of people never talk about how much cheaper a digitial release can be without physical product.

I think that was a pretty convoluted explanation of mine. In short, the lower price of downloads compared to CDs will lead to an overall lower revenue amount, with the odd men out being CD manufacturers and distributors and CD stores. However, THIS IS NOT A BAD THING!

The music business (record company and artist) likely have their profit margin going up (no CD manufacturing or distribution which is a HUGE cost savings) and are potentially (and likely) making more money (profit) with the digital downloads.

So, the shift to digital downloads is not bad at all financially. It is the stealing of downloads which continues to have a huge effect financially.

(note I said "financially" - the loss of album art and liner notes would suck; but that said, I still haven't bought a CD in a long time)

I don't see pirating ending soon...

I am a proponent of the pure digital media - just makes more sense to me - better format and less material.

I just threw away over 100 cassette tapes - love the music on the tapes - hate the format. I also threw away a couple hundred jewel boxes from CDs I bought (dumped them at recycle center) - I copied the music, CD's are in storage - so no need for the jewel cases (and really no need for the CDs.)

However I do have over 2,000 vinyl albums keeping for nostalgic reasons - but they take up a lot of space and weigh a ton (and there is something about listening to an album that is unlike listening to music on any other format.)

So yeah, give me the just the digital file so I don't have to keep throwing away the packaging.

Labels might also save money if they stopped investing in useless things like the Grammy awards