2010 brings further decline in U.S. recorded music sales, time to face it: access will indeed replace copies.
Nielsen has just published an interesting report on 2010 recorded music sales in the U.S. Before I comment on what it all means here are some of their factoids:
- Overall Album sales (including albums and track-equivalent album sales) declined 9.5% over 2009
- Total album sales declined 12.7% over 2009
- There were 240 million physical album sales in '10; a decline of 19% over '09
- Digital music accounts for 46% of all music purchases in 2010; up from 40% in 2009 and 32% in 2008
- Most importantly, in my view, while CD sales are (of course) declining further, digital sales have slowed down to a crawl i.e. there was only 1% growth from 2009 to 2010.
- The industry's digital carrot (*very small) & stick (*very large) strategy is failing. Most people won't buy units / single tracks / downloads / copies any more - they want unfettered ACCESS, total choice and user control (ouch), utter ease of transaction while limiting their costs, and above all, fair and irresistable deals. Not that any of this is new, really - but maybe this message can start to arrive, now?
- The only legal game in town that really works as far as music is concerned, is iTunes, and that model has made Apple into the undisputed king (some would say, emperor) of digital music - software, hardware & devices - but less and less people are actually buying music this way, i.e. by-the-unit and at a significant individual price point. Plus, most of those kind souls that have indeed purchased something this way eventually stop buying as they reach certain spending limits (in my case, approx. $800). iTunes essentially punishes interest in new music because it makes us pay to download tracks we may not know, yet - hardly a model that will work for kids with tight budgets, and also a major reason why the much discussed longtail concept has not really panned out yet, as far as music sales are concerned.
- Just like - sadly but again very predictably - we are seeing with the iPad, once the initial 'wow' factor and geeky excitedness is fading, only a very small fraction of the users will continue to buy content in the 'pay per unit' way that Apple is enforcing and that the record labels, studios and publishers have been clinging on to religiously.
- The future is - as I have said many times in the past - in providing ACCESS to music, not in selling copies of it: unrestricted, unprotected, most likely flat-rated or bundled (think: ISPs and telcos.. and Facebook!), possibly feels-like-free or freemium i.e. ad supported (for a basic starter-level, at least), highly curated, socially hyper-connected, mobile, location-aware, nicely packaged (appified), with loads of extra values and upselling offers (think: downloads of live concerts, HD versions of streams, 3D etc), cross-media and multi-platform.
Let's face it, guys: there is loads of new money here, people are spending money on digital content. All you need to do is to let go out the idea of controlling distribution, selling copies and running your nice little empires that can tell 4 Billion connected consumers what to do, how to behave, and how to spend their money. You need to license the likes of Spotify, Simfy, Mog, Rdio and Google, globally, and help them turn bundled access to music and 'the jukebox in the sky' that Napster 1.0 was already hinting at, into new revenues.
This model needs to be co-created, not funded by VCs - and your strategy of milking innovative new ventures and entrepreneurs for a quick cash fix is killing the future before it even has begun.
The future is music (and most other 'content') in the cloud, where streaming will equal downloading (ouch... I can hear the lawyers are moaning), where branded content rules, where really smart / mobile / social advertising will pay for a lot of 'free' content (like it always has, btw) and where you can upsell all kinds of other music-related products to 80% of the 'people formerly known as consumers'. Not only that but you'll also save a huge amount of marketing money since you'll know who they are, where they are, what they like, and what they think (by communicating with them).
And it gets even better - they may even start to like you again.
- My free books, Music 2.0, Friction is Fiction etc
- Mobile version of Music 2.0 book (also free)
- Search for "Music Like Water" inside of The Future of Music book
- My talk on "Compensation not Control" (video) (Midem 2009)