With Internet and digital music, everyone is talking more and more about the music industry's issues, of the losses in the profits of the record companies. In the majority of the cases, the blame is put on downloading and the illegal broadcoasting of music, but is it true?
If we pay just a bit of attention to the people who complain, it quickly appears that they are always from the major label companies who show huge losses in their turnover and sales.
To understand these losses, the earnings distribution on the sale of one CD has to be analysed. At the present time, the majority of CDs are brought out at €23 (besides « prix verts » or other discounts). These €23 are divided as it is shown in the pie chart.With such a distribution of the shares, it is logical that the record companies' losses are higher in case of decrease of the sales. However, is this decrease in the album sales really linked to downloading?
Many studies answer NO to this question. The real reason seems to be rather the price. When people buy a cd they take the risk that they will not like the whole album. With the current price of music, many people are no longer prepared to take this risk, so they turn to illegal downloading. Once they have listened to the music and the risk has been eliminated, music consumers will go to buy lawfully. As for the others, it is not because they managed to obtain their music free of charge that they don't want to pay, if they had not obtained it illegaly, they would have done without it easily.
Of course, the major companies do not hesitate to remind everyone of the decreasing sales, however they deliberately forget to talk about the music industry more generally. Indeed, it appears that the cultural attraction for music is stronger every year. The number of consumers is expanding but the label companies do not make more profits.
For instance, legal downloading also has a negative effect on the turnover of companies. The earnings distribution is different in the case of digital music and the labels do not earn as much as with the classic Cds.
In addition, many people now look to the free and lawfully alternative broadcasting means, with websites such as grooveshark, deezer and youtube.
In conclusion, from the point of view of the record companies, the music industry certainly seems to be underoing a crisis, however it is not a problem concerning the demand but concerning the offer.
Nicolas V.
It appears that this trend is true for many of the arts industries : music but also video (cinema, shows...) and book. I would like to highlight what is going on concerning the last category, as I simply know more about it. From my point of view, it is the exact same thing that for the music industry :
ReplyDelete1. prices are now considered as excessive by the consumers : around 8€ for the pocket format and more than 20€ for the large format (and the pocket format is usually published around one year after the large format – when it is published)
2. apparition of a digital cheaper version with the 'e-book' : you can buy legally on the Web and read it on different platforms (such as computers and digital tablets) ; an e-book costs around 3€ and some are freely legally available
3. it is now very easy to illegally download or read books (including comics) on the Internet
What do the bookshops do to fight against this fall in their turnover in terms of 'real' books ? Diversification. More and more bookshops are now stationary shops too and some are even reaching the market of the board games. A diversification that has proved to be a success.
The book industry is just one example but I think the best recipe for companies which are facing crisis is either innovation, or diversification – and even better, both.
Sarah Fragoso
The way we’ve been listening to the music has changed over the past 10 years. The booming computer and iPod sales business is not helping the music industry. This can be justified by the simple fact that people find much easier to download a song so that they will have on their cell phones, iPods, or computers. Buying a CD is much more about loving the artist so much so that you want the CD for the record sleeve. There we can understand that is just marketing and apparently “practicality” became much relevant than marketing especially in our Google generation where you can find anything you want on somebody through the network.
ReplyDeleteBittam Sarah
A lot of parallels can be done here. As Sarah Fragoso said this is true for books but also for Cinema and DVDs. This is a real vicious circle because sales are decreasing so companies decide to increase prices but more prices will increase, less people will go to cinema or will buy a dvd. All big companies only see short-term profit with no sight on future. Our capitalistic system is based on this but the thing is people can’t allow this much longer and turn into new ways of doing and enjoying leisure more cheaply. I don’t say illegal downloading is a good thing but this is an alternative solution when you can’t afford to pay 10 euros for a ticket of cinema anymore. The only good thing here is to think that girls are lucky to be girls because we can keep on being invited by guys to the cinema without paying anything (when they are real gentlemen of course).
ReplyDeleteSarah Bencheikh