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THE RECORD BUSINESS IS ONLY A
PART OF THE MUSIC INDUSTRY
The music industry is booming, but the record
business is struggling. Since the
advent of digital music, compact disc sales have
steadily declined. According to
Nielsen SoundScan, in the first quarter of
2006, the record business sold 112 million
CDs to U.S. consumers, down from the previous
year. During the same quarter in
2007, that number dropped again to only 89
million. Album sales fell 18 percent
between 2000 and 2006, after accounting for
paid digital downloads from online
stores like iTunes. Worldwide sales are down
commensurately throughout the rest of
the world.
Some attribute the downfall of CD purchases to
the digitization of music and the
advent of personal computers with CD-recording
capability, which led to widespread
copying and burning of music tracks on home
systems. Others blame the combina-
tion of high-speed Internet connections, the
advent of MP3 files and players, and P2P
file sharing for diminishing sales. But the
actual fault may lie with the record compa-
nies themselves, who vigorously battled against
new technology instead of channeling
those resources into discovering ways to make
it work for them.
THE RECORD BUSINESS HAS A HISTORY OF
CLINGING
TO THE PAST WHILE FIGHTING
INNOVATION
· Record executives argued the
standardization of cassette recorders and tapes in
the 1960s, complaining that teenagers taped and
swapped their favorite vinyl
albums, and advocated for a tax on blank
cassettes to make up for lost revenue
from bootlegged tape trading. In the 1980s,
legislators finally granted music
labels a portion of the earnings from every
blank tape sold.
· Record labels barely acknowledged the
1982 arrival of MTV--whose staff had to
beg record companies for copies of already
produced promotional videos to air
on the burgeoning music network. Before long,
MTV was the most powerful
music station on the planet, reaching tens of
millions of young music-buying
fans. MTV forced record companies to reevaluate
how they did business. Artists'
looks and potential video appeal became major
factors in executives' decisions
to sign them to a recording contract. Resources
had to be allocated for video
production and marketing, sometimes cutting
into funds previously allotted for
recording. Today, music channels like MTV,
VH-1, CMT, BET, and other video
outlets have become an integral part of a
record label's marketing strategy.
· When the CD entered the marketplace in
the early 1980s, the recording industry
began a shift from analog to digital recording.
Many resisted digitization of
music because they felt it lost the warmth and
pure organic sound of analog.
The release of digitized music on CD opened the
door for bootleggers to make
infinite numbers of near-perfect copies of
recordings. By the early 1990s, per-
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