Interesting music read

Bob Lefsetz's last rant as seen here

The complaint of the major labels is very real. Their business is evaporating. Last week's sales were off 12.9% from the comparable week in 2004. This on top of sales decreases for the past half decade. Which now seem to be ACCELERATING!

First explanation. Dearth of superstar product. Only one problem here. No one's figured out how to BUILD a superstar in 2005. Oh, the majors WANT ONE, they're praying for MANY, but the hits just don't keep coming. The formula was solid. Get the act on MTV. All over radio. And in every publication known to man. Unfortunately, no one's paying attention anymore. MTV gave up on videos. Radio's become so predictable that the younger generation has tuned out. There's no central place to break a record.

This is not a music business condition. It's an American business condition. It's the result of choice. Everybody's off in his own self-interest world. And, the barrage of hype from other worlds just rolls right off him. Think of the movie business. Have you noticed you stopped paying attention to the new releases? That you no longer watch "Ebert & Roeper", barely peruse the reviews? BECAUSE THERE'S JUST TOO MUCH DAMN PRODUCT! (Never mind that most of that product sucks.)

You don't read about this in "BusinessWeek". But the customer is fatigued. He's only got twenty four hours in a day. He just can't pay ATTENTION to all the marketing messages. I remember when new release day was a personal HOLIDAY! When I'd trudge down to the record shop and check out the new albums. Now, there isn't a single album I'm waiting to hear. I figure they're all crap. I wait for someone I trust to weed through the detritus and tell ME what's good. All the old filters? They're bought and paid for. Eliot Spitzer only confirmed what the public already knows. That big league infrastructure is a domain of publicists and hand-outs and people on the take. That there's no entertainment NEWS, just fabricated stories. And, if people truly want real news, they go online. To gawker.com. To awfulplasticsurgery.com. Where renegades not beholden to the system speak their truth.

But be clear, it's not just a disgust with business as usual. We live in a Tower of Babel society. The center no longer holds. There IS no center! Jessica Simpson is not the Carpenters, she's not even Olivia Newton-John. There are vast swaths of the public who don't know who she is and don't CARE that they're out of the loop. As for Lindsay Lohan singing...you can complain she's got no talent, but your protestations are cries in the desert. The ONLY people paying attention are prepubescent girls, everybody ELSE knows Lindsay's got no talent and doesn't give a **** whether she had her boob implants removed or not.

Think about this. This is HELL if you're a major label. You're all about the machine. Ramping up records to TAKE OFF! But they can't take off. Let's just happen to say you get a record moving on Active Rock. That track ain't never gonna cross to Top Forty. There's no path anymore. That record begins and ENDS at Active Rock. The format's not a starting place, it's its own little BACKWATER! Budget accordingly. Don't plan to make a profit after one million, because you're never going to REACH one million. Not the way of the last twenty years, through ubiquitous exposure. That game, if not completely through, is completely MARGINALIZED!

Everybody knows a real musician plays. Nobody thinks all the so-called divas have any talent. And, they might want to buy rap music, but they certainly don't want to hear it performed. Then again, rap music has got a home. In da club. That's where they break acts today. It's like the rock road of thirty five years ago.

But what if you're not a rap act. What can you do? Either you've got to be satisfied selling a whole bunch fewer records, OR you've got to attack the market a different way. Everything's viral now. That doesn't mean you should hire a viral MARKETING team. What that means is word SPREADS, but slowly, from one trusted source to another. I tell you, you tell your friend, top down marketing is on the decline, because of the lack of trust. So, it comes down to quality. How can you reach one person who will tell everybody else. Reread "The Tipping Point" for instruction. BUT, major labels don't want to start a trend, they want an act to emerge FULLY-GROWN! Like Britney Spears. They want a new act to DEBUT at number one. What they call artist development is reaching platinum in a year. Whereas the old artist development, building something credible over time, is the only game that's left. But, it's a game the majors don't want to play and aren't prepared to play. Because revenue comes in VERY slowly and it takes A LOT of people to fuel the enterprise.

But it gets worse for the major label. Because their model is to sell recorded music. As an album. The album is dead. History. Oh, believe me, acts will still make more than a single. But, the music will be released constantly on the Web. This is the only way they'll be able to keep their fans' attention. But how will you acquire this music? How much will be charged? All we know for sure is everybody will have a lot of music and it will have a low aliquot per track price. That's DEFINITIVE! The buck a track iTunes pricing is as irrelevant and FALLACIOUS as the $100 videotape. Yup, that's right. Videotapes used to cost a C-note. Because studios didn't get a cut of rental revenue. But then, when formats changed and the price dropped, DVD became an OWNERSHIP format. But don't equate movies with music. They don't make a thousand movies a year, whereas that many music tracks are cut every day before lunch. Which brings us back to the original point, who's gonna wade through the ****? And, we all don't have the same taste, so you've got to be able to LISTEN to all the recommendations to decide what you want to keep.

Which brings us to piracy. Is piracy hurting the major labels? Sure, but less than they say. I'm not talking about PHYSICAL piracy, the counterfeiting of discs, I'm talking about P2P and burning. You see, a great percentage of the material traded is on a TRYOUT basis. The threshold of acquisition is so low that you might as well go through everything everybody recommends. This is good for music, but bad for the labels as they see the market. They've lost control. What's a track worth? How are they going to stop this? Even though it CAN'T be stopped.

Call it the iPod effect. There are now enough of the players out there. It's like broadband. Remember when the goal was to keep the site simple, because of 56k surfers? Now, **** the slow surfers, if they can't afford a broadband line, they can't afford to buy your product ANYWAY! There was a tipping point. At about 25% broadband penetration. Now, at approximately 50% broadband penetration, we've got video ALL OVER the Web. It's even being SOLD! (Remember how long it used to take to DOWNLOAD a tiny clip back at 56k?)

People no longer want the CD. At ANY price. And, as we've seen above, a buck a track makes no sense. It doesn't fit their desire. To check out and own more music. Sure, there's rental, i.e. Rhapsody & Napster. But the dominant iPod is not rental and we're an ownership society. This battle cannot be won. So, the major labels are geared up to sell a product nobody wants in an ineffective manner. That's like driving a truck towards a cliff.

Sure, catalog will be worth something once the new paradigm is monetized. But how long will they leave the P2P money on the table. How long until they realize everybody ALREADY is acquiring a vast personal library far exceeding the size of all those previous? You know the major labels are off their game because they can't seem to generate stars anybody wants to see. Billy Joel can sell 50,000 seats at an indoor stadium in SYRACUSE and Eminem and every other hot rapper TOGETHER can't even sell out an arena in a metropolis. Wow!

Will we have stadium shows in the future? I'm not sure. I wouldn't bet on it. Then again, modern word of mouth is on steroids. Because of e-mail. You can reach more people very quickly. But, as stated above, the main criterion is quality. And, development is VERY slow. For once you push the button on something, you kill its credibility.

The game has changed forever. We're seeing the evidence now. With lousy CD and ticket sales. It's not just a matter of hanging in there. The days of yore are NEVER coming back. No matter how many people the RIAA sues. No matter HOW low you make the ticket prices on new acts. One must get down in the pit with the people. Where they live, on the Internet. And, you must KNOCK on their door, not beat it down with a battering ram. And ASK them whether they'll check out your new stuff. And, not bug them thereafter, hounding them to buy a remix album or the same album one more time with two new tracks. You're going to have to leave it in the consumer's hands. And, if the consumer likes it, if Mikey likes it, he'll tell everybody and will buy EVERYTHING you're selling. This is the majors' worst nightmare. Because they have very little control. But the dirty little secret is they've ALREADY lost control.

More Lefsetz here : http://www.rhino.com/rzine/columnists/lefsetz/index.lasso

 

There are more good reads if you follow the link. FYI.

 

Selling By Track
by Bob Lefsetz

It reminds me of the year 2000. Only this time the dupes aren't the venture capitalists, but the labels themselves.

Back at the turn of the decade, Silicon Valley financiers believed technology triumphed. They believed if they built it, people would come. And people did. It's just that the labels didn't. And, without licenses, all you've got is lawsuits.

With the suit of Hummer Winblad, no Silicon Valley investor will touch music. Therefore, the labels believe they have won. They've come up with a better system than the P2P of the techies. Sale by TRACK!

Sale by track is death.

If the singles business was so good, why did the labels kill it? If you could make so much money selling individual tracks, why did the labels focus on albums?

When the 45 ruled, the business was a fraction of the size it is now. You just couldn't make that much money. It's only when the Beatles arrived, and the album became desirable, and then FM radio SOLD the album, that the business blew up. THAT'S when all the conglomerates got in.

So, I ask you, what's different now that you're distributing said singles on the Web? It reminds me of the dot com era. When everybody thought if you distributed something via the Internet, you'd make a lot of money. Funny how the economics didn't translate. And all those companies went bust.

The Apple iTunes Music Store is a colossal failure as a replacement of the physical CD business. But, after reluctantly agreeing to its establishment, now the labels are believing THEIR OWN hype and seeing it as their savior. When nothing could be further from the truth.

Today the L.A. "Times" announced Amoeba is forming an online label. Watch them lose their shirt. Just like Hummer Winblad and the NEW, money-hemorrhaging Napster. Rule one of business, you've got to deliver what the people want. And the people don't want copy protected single tracks in any vast quantity. The people wanted what the original Napster delivered. All you can eat. But, the labels were scared of that. And have substituted this fallacious new system.

Variable pricing at the iTunes Music Store is like variable pricing at Disneyland. They USED to have that. Then the park realized they could make A LOT more money by giving their customers freedom. To not plan their day, not deciding how to allocate their E tickets, but just riding what was DESIRABLE!

How come theme parks figured this out DECADES ago and the record labels still haven't?

At best, record labels are good at spotting talent. And marketing that talent. And distributing it via brick and mortar. They know NOTHING about Internet distribution. Why can't they leave it in the hands of the techies? Why do they insist on driving themselves out of business?

You've got to sell people the bundle. The EQUIVALENT of the album.

It's just like cable TV. Get everybody in for one price. Who gives a **** if someone gets a deal by watching HBO 24/7. There are always fringe idiots that take advantage of the system. But the average person has a life, and flat fee pricing works out.

As for people logging on and taking everything they need and ending their subscription... Disneyland and HBO learned it's incumbent upon them to always construct new attractions, so people come back, so they DON'T disconnect. They build religion. They try to be in BED with the customer for life, not just have a one night stand. If labels keep coming out with great new stuff, people will STAY CONNECTED!

It's entirely laughable watching the industry drink its own kool-aid. If DRM was such a good idea, why do ASCAP and BMI allow restaurants to play whatever they want? Shouldn't they have to pay for each track? And not bring a CD from home?

To start a label selling 99 cent tracks is to burn your money. There are some decent acts on that new Warner e-label Cordless, but the online store is doomed to failure. Because the price is too much of an impediment to acquisition. Charge people a couple of bucks a month and let them take whatever they want. THEN you'll see these acts blow up. As fans e-mail and trade the tracks, spreading the word.

Think about it. The best way to sell music is via word of mouth. And this is what the labels are trying to kill. The public is doing their marketing work FOR THEM, FOR FREE! Yet the labels are too stupid to see this. Just place a toll on this behavior. A low one. Hell, do they charge you a thousand bucks a month to subscribe to cable? That's what it's worth, with all that programming. But, spread over TENS OF MILLIONS OF CUSTOMERS, it's only a HUNDRED bucks per month, and the purveyors are making A TON OF MONEY!

The major labels want network TV and network TV only. They want to leave all the money of cable on the table. Fearful of the future.

The old pricing model is history. Just ask any kid with a hard drive what a track is worth. 99 cents? Are you kidding me? You're telling me that hard drive is worth TWO THOUSAND DOLLARS? Because it's very common for a kid to have two thousand tracks on it. Which he can give in minutes to a friend. Music IS priceless. But it's got to be sold like SCHOOL! Everybody must pay so everybody can partake. Everybody is educated, everybody listens to music. Why do the labels want to KILL the spread of their wares? Learning is priceless, but with taxes spread over the entire society, it's cheap. Everybody with an ISP should pay for music. And then the pot should be divvied up a la ASCAP and BMI.

I just can't listen to one more label exec tell me how the digital sale of singles is going to save their business. It just doesn't MAKE SENSE!


I don't know if I buy his whole cable analogy. I don't know who gets to decide what each individual band makes.

 

His point wrt this is that the average joe has a life and will not d/l the world.

The truth is that the price has to compete with free. A d/l service that has thousands of WAVs (including out of print music) would differentiate. My problem with P2P and Usenet Groups is that I have to be patient and wait for the stuff I want to be available.

 

Ipsos-Reid: Only 2% of Consumers Care About Legal Issues With Downloading Music
By Richard Menta 12/8/05

Only 2% of people who paid a fee to download music from the Internet cited that the contentious legal issues surrounding online music distribution concerned them. This statistic comes from Ipsos-Reid's latest research on the consumption of digital media titled "Cultivating Desire: Investing in Market Insights to Reap Digital Content Profits". This particular paper focuses on ways for content providers to tap into the Internet as an evolving distribution mechanism of mass media. The shockingly low number should come as a warning to the Record Industry Association of America (RIAA) who have so far sued thousands for file sharing in the expectation that they can scare consumers in buying instead of trading. First, this is not a way to tap into this audience and second the tactic isn't working.

Of course, the continued growth of activity on the various file sharing networks attest to that. These lawsuits are part of a dubious awareness plan among the major record labels to take control of online music delivery. According to ths Ipsos research, either consumers are rejecting that notion or the word is not getting out enough.

But 2%? Even allowing for the normal statistical deviations this is a tiny response. The fact that this number arrives from interviews with those who buy their music (and thus theoretically should have nothing to fear) doesn't remove the fact that the great majority of those who buy music from iTunes and other services also trade them on eDonkey and KaZaa. There are 10 millon file traders at any given time on the various P2P networks, which demonstrates the magnitude of file sharing. If the Ipsos research is accurate, the collective response from this group is 'you can't catch me'.

That may be true. Your personal chances of being sued by the RIAA are equal to winning the lottery. Divide 15,000 lawsuits by over 70 million US file sharers and the odds of being selected are pretty remote. That's little solace to the likes of Patricia Santangelo and Brianna Lahara who won this lottery.

So will the record and movie industries sue even more people? Will they create more public relations spots with Madonna to chastise users on the evils of file sharing? If they do the research suggests that they will only widen the growing disconnect between them and the consumer. It is this disconnect that Ipsos reveals will most derail attempts to "Reap Digital Content Profits"

The Ipsos report has other findings which we shall soon report on.

 

R.I.P. CDs
Consider the alternatives to compact discs: iPods, satellite radio and hours of free or cheap digital music to download legally. Begone, bright discs and pesky cases! Begone!

Aidin Vaziri, Chronicle Pop Music Critic
Monday, November 28, 2005

They're overpriced, ugly and don't even make good rearview mirror ornaments. Now that we know they are also potentially poisonous to personal computers, thanks to Sony BMG's rogue copy-protection technology, there's really no reason to buy another compact disc ever again.

With sleek iPods rapidly becoming the hi-fi system of choice, satellite radio offering hundreds of specialty stations, and the Internet overflowing with all kinds of free and cheap legal digital music, suddenly the thought of owning an awkward polycarbonate plastic-coated disc that holds only an hour of tunes by just one artist seems positively prehistoric -- even if it comes with a hastily produced "bonus" DVD.

It's clearly time to move on. Think about it: No more nails-on-chalkboard-style skipping. No more secret tracks that scare the stuffing out of you 15 minutes after you think an album has stopped playing. No more fumbling around with those impossible-to-unwrap jewel cases. It was fun while it lasted. The music industry has declared war on its customers. Now it's time to fight back. Below we explain the 10 best ways to get the most out of the next musical revolution.

1. MP3 blogs: The Internet isn't just a great place to find amateur p*rn and clips of fat kids acting out scenes from "The Phantom Menace." It's actually an incredible resource for discovering new music and the best sites to do that at the moment are MP3 blogs such as The Hype Machine (hype.non-standard.net) and Largehearted Boy (blog.largeheartedboy.com), which offer daily, no-nonsense links to free music available online. Meanwhile, personal blogs such as Stereogum (www.stereogum.com), Sixeyes (sixeyes.blogspot.com) and Said the Gramophone (www.saidthegramophone.com) hand out iPod-friendly tunes along with smartly written previews. For those with a couple of hours, weeks or months to kill, a staggering list of MP3 blogs is available at the Tofu Hut (tofuhut.blogspot.com).

2. Online radio: While terrestrial radio stations choke on corporate policies, automated playlists and buzz-killing commercial breaks, online radio stations are becoming a safe haven for anyone who just wants to hear some good music. One of the best is Los Angeles-based public radio station KCRW (www.kcrw.com). Its daily "Morning Becomes Eclectic" program, hosted by Nic Harcourt, never ceases to amaze, mixing everything from indie rock and world beat to classical and jazz. Where else can you hear the Arctic Monkeys, Johnny Cash and Bebel Gilberto back to back? Another great station, Cincinnati's WOXY FM (www.woxy.com), set up shop on the Internet after it was bumped off the air. Now it reaches a worldwide audience with an adventurous mix of alternative rock. San Francisco's contribution to the online radio market is SOMA FM (www.somafm.com), a listener-supported portal providing eight channels of mostly electronic-based music.

3. Digital music services: Owning music is so last century. With everyone bent on cutting the clutter, it makes sense to sign up with a digital music service that puts a head-spinning, commitment-free music library at your disposal. Rhapsody (www.rhapsody.com) and Napster (www.napster.com) -- formerly an illegal peer-to-peer service -- are the big ones, giving subscribers more than a million songs to choose from and providing interactive radio for those who just can't decide what they want to hear. They both tend to lean heavily toward more mainstream releases, but neither allows much room for the kind of boredom that sets in after listening to your Billy Idol greatest hits CD for the 789th time.

4. MySpace music: MySpace

.com (www.myspace.com/index.cfm?fuseaction=music) is an enormous online social networking site that was recently purchased by Rupert Murdoch's News Corp. for $580 million. It counts more than 37 million members, most of them falling into the coveted teen demographic. So it only makes sense that the place is simply bursting with music. Both upcoming acts and major labels use it as a way to reach new audiences, with artists like Nine Inch Nails, Madonna, Black Eyed Peas, Neil Diamond and R.E.M. even going so far as to put up exclusive previews of their albums before they hit the streets. For the more adventurous, there are more than 55,000 unsigned bands of varying quality, just begging for anyone to listen. You have to figure anything's got to be better than the new Scott Stapp album.

5. Satellite radio: Howard Stern is moving to Sirius (www.sirius.com). Mercedes-Benz plans to make the satellite radio service a standard feature in its luxury sedans. Snoop Dogg appears in TV spots for XM (www.xmradio.com), while the company has wired JetBlue planes with more than 100 channels of its programming. We don't know much about the stock market, but it seems like a good idea to invest both money and time in what has to be one of the fastest growing entertainment services in the world. Offering more variety than even a 60-gig iPod and more unpredictability than the wildest shuffle imaginable, these subscription-based services are simply a must-have for anyone with a daily commute of more than five minutes.

6. iTunes Music Store: This is the obvious one. Despite restrictive file formats that allow only a limited number of transfers for purchased MP3s, there's a good reason why it is the most popular download service by a mile. With simple across-the-board pricing and lots of exclusive content, the Apple Music Store is the example nearly every new music service will follow from here on out.

7. Hit the clubs: The best way to experience music, of course, is to ditch the fancy gadgets and go straight to the source. In the Bay Area, we're fortunate to have an abundance of excellent live music venues that cater to nearly every whim. Whether it's the Lovemakers at the Fillmore, Armand Van Helden at 1015 Folsom or Zion I at the Independent, there's enough going on on any given night to prevent anyone from missing those old CDs.

8. BitTorrent: People used to exchange live Grateful Dead and Bob Dylan bootlegs on crummy tapes by seeking out fellow traders through cheaply produced fanzines that came out once every four years. Now they just point-and-click toward the legally nebulous BitTorrent (www.bittorrent.com), a computer program that allows users to share huge files over the Internet. The exchange of torrents, which can contain anything from music and software to the latest "Star Wars" movie six hours before its official release, is said to be responsible for one-third of the Web's traffic. The entire recording of Dave Matthews Band "Live at Golden Gate Park" on crystal-clear digital audio? No problem. The latest Coldplay concert video that Chris Martin hasn't even seen yet? There it is. The Strokes' latest album four months before it hits stores? Better call your attorney.

9. Amazon.com free music downloads: To entice people to buy new music, Amazon (www.amazon.com/exec/obidos/tg/browse/-/468646/) has an incredible free music downloads page loaded with MP3s from new and old releases spanning practically every genre imaginable. There is so much good stuff available from the likes of the Arcade Fire, Alison Krauss and Beck, you might be forgiven for never getting around to actually purchasing anything.

10. Rock it old school: Let's be honest, somehow R.E.M. never sounded better than when it was blaring out of the college dorm room boom box with all that tape hiss in the background. Led Zeppelin's "Black Dog" doesn't make nearly as much sense as digital ones-and-zeros as it does on a slab of dusty, crackling vinyl. And the 7-inch single of Blondie's "Dreaming" still sends shivers down the spine.

All the classic albums made before the CD revolution hit in 1982 -- some might argue the only albums anyone really needs -- are abundantly available in vinyl form, most for less than the price of one lousy Black Eyed Peas song on iTunes. Try garage sales, street corners, the bottom shelves at Amoeba, or, better yet, buy up entire lots of records and tapes on eBay. Fortunately, there's a booming market for retro-themed record players in stores like Restoration Hardware and Target, while once sleek Walkman cassette players are practically spilling off the electronics shelves and into the bric-a-brac aisles at Goodwill stores everywhere. Going back to basics has never made more sense.

E-mail Aidin Vaziri at avaziri@sfchronicle.com.

 

27% can not be a happy number for the major labels.


Music: The Rise of the 'Yupster'
Newsweek

Jan. 9, 2006 issue - Music fans, rejoice: "list season"—that wintry instant when our nation's critics whittle a year of records into tidy top 10s—has come again. According to the album-review aggregators at Metacritic.com, Bob Dylan scored highest in 2001. Tom Waits took '02, '03 was Led Zeppelin's year and Brian Wilson owned '04. So who's winning this round? Some guy named Sufjan Stevens. That's "SOOF-yawn"—in case you haven't heard of him.

Stevens's success (and the dinos' decline) neatly sums up a year that saw "indie" rock suddenly selling to scenesters and suits alike. In November '04, Conor Oberst—the genre's poster boy—snagged the top two spots on the singles charts, and Death Cab for Cutie's 2005 record "Plans" debuted at No. 4 on the Billboard 200. Despite a dip in overall sales, indie labels now claim 27 percent of the music market—their largest share in recent memory. "This year, there's a real consensus around 10 records," says Adam Shore of Vice Recordings. "And they're all this type of indie rock."

Connoisseurs are crediting "Yupsters"—Yuppie hipsters—for the change. (Need help? Take a look at "The O.C.'s" Seth Cohen, who stocks his Range Rover with Death Cab discs.) For the past decade, indie records sold primarily to obsessives because, without major-label distribution, the music was tough to find. But now a few clicks and an iPod are all it takes for would-be Yupsters to indulge any curiosity. Just ask Metacritic's eighth-ranked act: Clap Your Hands Say Yeah. A year ago they were unsigned—and unknown. But hot MP3 blog Stereogum.com posted a track in February. In June, Pitchforkmedia.com gave their debut a rare 9.0. Now they've sold 50,000 CDs—one of which provided the cube dwellers of NBC's "The Office" with the soundtrack for a recent BBQ. "We're at a crossroads," says Stereogum's Scott Lapatine. "Indie bands are gaining in popularity—and indie Yuppies are using the Web to discover them."

Expect the hybrid to thrive in 2006. Audi now advertises on Pitchfork. John Varvatos crafts custom Converse. Apple is set to unload as many iPods in the next three months as it sold between '01 and '04. And on Feb. 6, Sufjan Stevens will vie for indiedom's just-invented answer to a Grammy: the New Pantheon Award. Who knows? Come next list season, you may even be able to pronounce his name.
—Andrew Romano
© 2006 Newsweek, Inc.

 

Fan Memo to Music Industry: Lower Prices
Feb 2, 4:45 AM (ET)
By DAVID BAUDER

NEW YORK (AP) - Music executives love to blame illegal downloading for their industry's woes. But, based on the results of a new nationwide poll, they might want to look in the mirror.

Eighty percent of the respondents consider it stealing to download music for free without the copyright holder's permission, and 92 percent say they've never done it, according to the poll conducted for The Associated Press and Rolling Stone magazine.

Meanwhile, three-quarters of music fans say compact discs are too expensive, and 58 percent say music in general is getting worse.

"Less talented people are able to get a song out there and make a quick million and you never hear from them again," said Kate Simkins, 30, of Cape Cod, Mass.

Ipsos' telephone poll of 1,000 adults, including 963 music listeners, from all states except Alaska and Hawaii was conducted Jan. 23-25 and has a sampling error margin of plus or minus 3 percentage points.

The music industry has spent several years in turmoil, as downloading and the popularity of iPods upend its traditional business model. A total of 618.9 million CD albums were sold during 2005, sharply down from the 762.8 million sold in 2001, according to Nielsen Soundscan.

At the same time, 352.7 million tracks were sold digitally in 2005, a category that wasn't even measured five years ago. Digital sales of music and ring tones offer new revenue opportunities, but often at the expense of more lucrative CD sales.

Although buying music digitally hasn't exactly become widespread - only 15 percent of poll respondents said they have done it - there appears to be a growing acceptance of this type of transaction. The poll found that 71 percent of music fans believe that a 99-cent download of a song is a fair price or outright bargain.

Even though millions of tracks are downloaded for free each week on peer-to-peer networks, a sense of queasiness remains.

"Somebody is putting their art out there. They should be compensated for it," said Mickey Johnson, 41, from Charleston, Tenn.

The industry would be wise to embrace downloading, said Greg Hoerger, 42, of Minneapolis, who suggested that customers could receive five or six free downloads from an artist when they buy a CD.

For fans like Hoerger and Simkins, buying a CD for about $20 is no bargain. They'd rather download one or two favorite songs to their iPods. The digital music revolution also has other benefits, Simkins said: with the iPod, she no longer has to have cassettes or CDs cluttering her car.

The last CD she bought, a few months ago, was by the Killers. "It was on sale," she said.

Many fans also say they just don't like what they're hearing. It may not be surprising to hear older fans say music just isn't what it used to be when they were growing up. But the poll also found that 49 percent of music fans ages 18-to-34 - the target audience for the music business - say music is getting worse.

"Even if our parents didn't like how loud rock 'n' roll was, or that it was revolutionary, at least they could listen to some of it," said Christina Tjoelker, 49, from Snohomish, Wash. "It wasn't gross. It wasn't disgusting. It wasn't about beating up women or shooting the police."

The last CD she bought was Neil Diamond's new one, "because Oprah was raving about it," she said.

Overall, music fans were split on why music sales have been declining for the past five years: 33 percent said it was because of illegal downloads, 29 percent said it was because of competition from other forms of entertainment, 21 percent blamed it on the quality of music getting worse and 13 percent said it was because CDs are too expensive.

FM radio is still the main way most fans find out about new music, according to the poll. Television shows are a distant second.

Rock 'n' roll is the most popular style of music, cited by 26 percent of the fans. It runs neck-and-neck with country among fans ages 35 or over.

Rap music is the source of the biggest generation gap. Among fans under age 35, 18 percent called rap or hip-hop their favorite style of music, the poll found. Only 2 percent of people ages 35 and over said the same thing.

 

That is so 90s.

With iPods, there has been a paradigm shift. People listen to the exact music they want and not a full length store bought CD, with its hits and misses.

How many albums/CDs have you bought with 3/4 good songs on it, with the rest fill? How many times did you not buy an album/CD for a sinlge song on it, since you knew the rest of it sucked?

 

Lefsetz said that the iPod will kill the music industry. Here is more proof.

Gone are the days when the music cos could add a single new song to a GH package to sucker music fans into repurchasing the music they already had.


When All the 'Greatest Hits' Are Too Many to Download
By JEFF LEEDS
Published: February 2, 2006

More than 20 years after the rock band Survivor scored a hit with "Eye of the Tiger," the song is rising up the charts again, notching brisk sales as a single online. Since the song became available on services like iTunes about a year and a half ago, it has sold more than 275,000 copies.

It is hardly alone. While current radio hits still dominate the digital music charts, classics like Lynyrd Skynyrd's "Sweet Home Alabama," Queen's "We Will Rock You" and the Eagles' "Hotel California" are regularly ranking among the 200 best-selling tracks on the Internet, a sign of their staying power even in the accelerated culture of modern pop music. Resurgent novelties like Vanilla Ice's "Ice Ice Baby" are racking up big sales, too.

Their popularity indicates that fans are flocking to online services like iTunes at least in part to pluck out celebrated oldies, not to mention the occasional 90's alternative memento (Oasis's "Wonderwall" has sold more than 251,000 copies so far) or 80's strip-club staple (Def Leppard's "Pour Some Sugar on Me" has surpassed 216,000). All of this comes at a time when fans enjoy a wealth of new choices in how to buy and listen to music.

But the popularity of such songs raises a troubling issue for the music business, which relies in part on the huge profits generated by greatest-hits collections, perennially selling classic albums and the continual repackaging of old material. The question: What if fans who might have paid for a full album of "the very best" of an established act instead choose to pay substantially less and simply buy the very, very best song?

As recording formats have evolved over the decades, the industry has profited from the marketing of previously released music — as fans replaced their vinyl LP collections with compact discs of the same albums, for example. Since the older classics are comparatively inexpensive to reproduce and market, they typically carry higher profit margins than music from new acts. But the migration of music from shiny plastic discs to online services has disrupted the industry's cycle of replacement, and record labels are only beginning to see the effects.

In the more utopian view of the shift, the breadth of songs available online and the ease of purchasing them will prompt more consumers to buy more music than ever. With the unlimited "shelf space," record companies will be able to market everything in their archives at minimal expense, breathing new life into obscure or out-of-print material and generating new profits.

But critics warn that the industry may be in for a long wait, and significant financial hardship, before realizing that dream — particularly as sales of CD's decline.

Album sales have dropped for four of the last five years, and while sales of digital singles are booming, that has not yet been enough to offset the drop. Music companies sold more than 350 million singles last year, a jump of 150 percent over the previous year's total. Sales of full digital albums increased even more, rising more than 190 percent to 16.2 million.

Sales of older releases, known in the music business as catalog, account for a huge share of the industry's fledgling online business. Executives at the major record companies say catalog material makes up somewhere between half and two-thirds of their sales of digital singles. (Catalog accounted for about 37 percent of CD sales last year, according to Nielsen SoundScan.)

The pivotal question now is whether the boom in catalog music online constitutes primarily a new market or a drain on an old one: CD sales. Most record executives think it is some of both, and say it is too early to measure the effect on their bottom lines.

What is clear is that the "unbundling" of albums — allowing each song to be sold individually — is allowing fans to determine exactly which hits are the greatest, and to distill even an iconic artist's repertory to a few songs.

"Even bands with deep catalogs have hits, and then they have superstar hits," said Eric Garland, chief executive of BigChampagne, a research firm that monitors activity on file-trading networks. "There may be 20 songs from Queen that people know, but really we're talking about two or three that are more popular by orders of magnitude. They're cultural staples. If I had the option to buy 9 songs instead of 12 songs on 'Meet the Beatles,' I might have done that."

Uncertainty about such piecemeal purchases is one reason some artists whose classic albums or hits compilations enjoy steady sales have so far either declined to sell their music online (Bob Seger) or sell it only in album form, with no single-song downloads allowed (AC/DC).

The music companies have also developed a way to hedge their bets: many executives these days are buzzing about "bundles," collections of tracks that may entice fans to return to buying more than one song at a time. Rhino Entertainment, the catalog division of the Warner Music Group, last year created the Hi-Five, a five-song pack of songs from a single artist that typically sells for $3.96 on iTunes.

"There are lots of newbies out there, people who don't know of any of these bands, and they could easily buy one song," said David Dorn, senior vice president of new-media strategy at Rhino. "What keeps me up at night is, how do I get you to see that, with the Ramones, you shouldn't just buy 'Blitzkrieg Bop' and be done with it?"

In many instances, however, record executives say online sales do not appear to be hurting their best sellers.

Consider the case of Queen, whose 1992 "Greatest Hits" CD has become an evergreen seller. The band's song "Bohemian Rhapsody" has sold more than 301,000 copies online; "We Will Rock You" has sold more than 202,000. Both routinely rank among the 200 best-selling digital singles. But even if some fans are buying both songs — suggesting that they might be interested in the complete hits collection — their online purchases do not appear to be cutting significantly into physical sales. The CD sold an estimated 435,000 copies last year, up about 9 percent from the year before even as the industry's overall album sales declined 7 percent.

Bob Cavallo, chairman of the Buena Vista Music Group, the Walt Disney Company division that markets Queen's catalog, said he had initially feared the effect of selling singles online. "But it seems like the young kids have to buy certain albums that are classic, core albums," he said.

Executives at Disney's Hollywood Records label say their research shows that about half of the consumers who bought Queen's most recent hits CD are boys under 18 — an audience that is also well represented among iTunes customers.

In a recent week on the Rhapsody online music service, a variety of older acts had four or more songs among the 1,000 best-selling tracks, including the Eagles, the Rolling Stones and Guns N' Roses. But the same bands have enjoyed strong sales of their hits CD's. The Eagles' blockbuster "Greatest Hits 1971-1975," for example, sold 117,000 copies last year, up about 20 percent from the year before.

Tim Quirk, executive editor of Rhapsody's music service, said he believed the bulk of these sales were coming from fans who would not have sprung for a hits CD. "If they can plunk down a buck for one song, they're going to do it," he said.

That sentiment is shared by artists like Jim Peterik, the former guitarist and keyboardist for Survivor and one of the writers of "Eye of the Tiger" — which, in addition to its online sales, has sold an estimated 200,000 ring tones. The song is available on at least five different albums in the marketplace; collectively they sold about 90,000 copies last year.

Mr. Peterik said he had been delighted by the song's success online. But he said such sales can "coexist" with continued sales of full albums. Those buying the song "are not fans of Survivor," he said. "They're fans of 'Eye of the Tiger.' "