[LINK] Piracy is the wrong target: The Economist

[rchirgwin at ozemail.com.au]

http://www.economist.com/displaystory.cfm?story_id=3329169

According to an internal study done by one of the majors, between 
two-thirds and three-quarters of the drop in sales in America had 
nothing to do with internet piracy. No-one knows how much weight to 
assign to each of the other explanations: rising physical CD piracy, 
shrinking retail space, competition from other media, and the quality of 
the music itself. But creativity doubtless plays an important part.

Judging the overall quality of the music being sold by the four major 
record labels is, of course, subjective. But there are some objective 
measures. A successful touring career of live performances is one 
indication that a singer or band has lasting talent. Another is how many 
albums an artist puts out. Many recent singers have toured less and have 
often faded quickly from sight.

-------------------------------------------------

RC: Shrinking retail space is something I hadn't thought of... there are 
no immediate conclusions to draw for the Australian industry, because CD 
sales are rising. But there may be lessons to apply before there's 
another collapse.

Retail space is an interesting thing to consider. It's very, very 
expensive. If you only sell CDs, you have to push a lot of them out the 
door to pay the rent (a la HMV in Sydney). If CDs are one line among 
many, then there is competition from lines which have bigger margin (a 
la Target). If CD sales are underperforming in an outlet, CDs will lose 
real estate to other stock lines.

That would lead to a feedback cycle; CD sales are down >> reduce space 
 >> sales fall further. If "general" retail makes up an important part 
of the sales, it would be extremely volatile.

RC