Wednesday, March 21, 2007

Music CD sales shrinking constantly

Paul Kedrosky provides a couple of valuable nuggets of information:
-this chart
-this quote:
"In recent weeks, the music industry has posted some of the weakest sales it has ever recorded. This year has already seen the two lowest-selling No. 1 albums since Nielsen SoundScan, which tracks music sales, was launched in 1991.

One week, "American Idol" runner-up Chris Daughtry's rock band sold just 65,000 copies of its chart-topping album; another week, the "Dreamgirls" movie soundtrack sold a mere 60,000. As recently as 2005, there were many weeks when such tallies wouldn't have been enough to crack the top 30 sellers. In prior years, it wasn't uncommon for a No. 1 record to sell 500,000 or 600,000 copies a week."

The system for getting music to listeners has rendered the CD distribution system completely obsolete, in my view. The music industry incumbents are resisting this, of course. To me, the biggest source of resistance from the music industry lies in two areas. One is that their investment in CD-production facilities have been fully amortized and so the marginal cost of producing CD's is trivial. Protecting those CD profit margins is at the top of their list. I would venture that the CD-duplication plants are essentially worth scrap value at this point, except for marginal revenue from CD production. The second source is the traditional system where A & R people would spend tons of money on throwing promotional parties, expense account meals, payola and so forth. These people don't want to see their gravy train derailed.


Lee_D said...

Great points, both of those, Scott.

Great blog. I will be back to read more!

Scott said...

Thanks for your kind words, lee_d...tell your friends:)...