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Music Sales Down: What's the Plan? Is There a Plan?

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trashed CDsMusic sales dropped 14% according to a recent Nielsen Report. This drop includes both physical and digital sales of songs and albums. Even iTunes dropped by more than 10% according to the report. The big hit was CD sales dropping by nearly 20%. Who then survived? Streaming and the LP came out on top. In the first six months, streaming was up a clear 50% followed by LP sales up 40%.

So what's the plan to keep the music biz healthy financially? Is there even a plan? If so, I haven't heard of it. Steaming services are replacing radio and purchased media. Disposable and portable are in. The desire to have and to hold the music seems to be a dying trend. The listening fans just stream it when they want to hear it. There is no reason to purchase the music itself.

The problem is that the purchases kept not only the artists but the labels and songwriters fed. Streaming royalty rates are no where near what physical media sales return. Audio is an integral part of the daily lives of most Americans. According to Nielsen’s Audio Today report, more than 244 million of us (aged 12+) listen to radio each week; that’s nearly 92 percent of the U.S. population. Listeners enjoy music from various streaming formats on their digital devices too. There are lots of portable choices today where the listener doesn't have to buy the music and frequently, doesn't even need to subscribe to a pay service either.

The new listener isn't buying. That is a significant problem for the industry. Free is king but, free doesn't pay the creators of the music. Sales pay the creators. An entire generation grew up with the "music is free" model and changing that attitude probably isn't a realistic option. Even the RIAA failed with suing their customers to get them to pay game.

It is easy to monitor the impact of dropping CD sales. Watch the CD Player market. Thrift store shelves are packed with CD players as they were years ago with Cassette and VHS tape players. Retail stores have them at cheap prices and a small selection at that. The players are rapidly becoming obsolete. If they are obsolete, then the media format they use is also becoming obsolete. CDs are fading from the music scene.

What is surprising is that the LP is making a comeback. This format basically died a rapid death with the advent of the CD. The LP was large however, it contained large artwork, bigger liner notes and frequently additional materials that the small CD format could not easily adapt to. A few of us retained our large vinyl collections because the music was never released in alternate digital formats. If we wanted to continue to listen to the music, we had to play our records. Discounting the "Vinyl is Better Than CD" argument, we are seeing LP sales increase. Sure, those sales remain almost insignificant but the large rise in the past six months has been a trend we've monitored for more than a couple of years. There is a growing population of LP enthusiasts out there. The new Heavy Vinyl made from 180 grams or more of virgin vinyl do sound excellent but it may be a combination of new recording technology and the fact the vinyl is virgin vinyl - not recycled.

The news and blogosphere has been filled recently about the small royalty payments the streaming services are providing. Songwriters get just pennies for thousands of plays. Unless streaming can up the royalty payments to physical media levels, artists, songwriters and producers are going to suffer. There is a lot of listener pressure to keep the rates low and an equal amount of pressure from the artists and songwriters to get them up where they should be. This a battle I foresee will last a while.

While it is true that top artists can make a fortune on the annual tour circuit playing for large audiences at concerts and festivals, this certainly represents a small percentage of the artists out there today. May have day jobs just to make ends meet.

So, what's the plan to insure financial stability in the music creation business? What is being done to offset the large drop in sales and to benefit in the up swing of streaming and other portable methods? I haven't heard a peep out of anybody on this. These Nielsen Reports should be a wake up call.

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