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Here we'll explore the nexus of legal rulings, Capitol Hill policy-making, technical standards development, and technological innovation that creates -- and will recreate -- the networked world as we know it. Among the topics we'll touch on: intellectual property conflicts, technical architecture and innovation, the evolution of copyright, private vs. public interests in Net policy-making, lobbying and the law, and more.

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March 4, 2005

Thinking through the numbers

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Posted by Alan Wexelblat

Buried inside a mostly incoherent story, Sean Daly reports for the Washington Post the to-me startling fact that CD sales in 2004 increased. Climbed 2.3% after four years of steady sales declines.

I can't come up with a coherent explanation of this. On one side we no doubt have the Cartel crowing victory in their jihad against their customers. Presumably more people have been scared into buying CDs? I find this hard to believe, given that all the ratings metrics I could find indicate that downloading via P2P nets is at an all-time high.

On the other side, Copyfighters including myself have claimed that CD sales were falling because the product sucks and is too expensive. That didn't change in 04, so far as I can tell. Retail prices held pretty steady and the vast majority of Cartel output is mega-hit-oriented paptastic products just like the four years preceding (or more like the 14 or 24 years preceding, but I digress). Can a few mega-hits such as Usher's 9-million selling Confessions really lift an entire nation's sales numbers?

If both sides' main arguments are wrong, to what can we attribute the rise? One thought is that it's a general economic trend. People and the economy were generally better off in 04 and perhaps more dollars in peoples' pockets translated into more entertainment spending? But if that's true, why have people shifted their dollars back into CDs when in the preceding years they were spending their entertainment dollars on games, DVDs and movies, all of which were enjoying robust growth as CD album sales slid down?

Baffled I am... anyone want to venture a thought?

Comments (7) + TrackBacks (0) | Category: Big Thoughts


1. Donna on March 4, 2005 4:58 PM writes...

How about more people listenting to and getting hooked on a wider range of music through file-sharing? After all, the file-sharing #s do continue to rise, and no one has yet proven that file-sharing harms CDs sales.

Permalink to Comment

2. BJ on March 4, 2005 5:35 PM writes...

You don't think it's because the economy was slightly stronger and people had more money to spend on entertainment?

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3. odograph on March 4, 2005 5:38 PM writes...

Based on what I heard from friends, I'd thought that media purchases had shifted from music to DVDs for a while. Now maybe DVDs are a little bit old and iTunes is driving a return to music?

That's my guess, more of a cultural trend.

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4. Chris Brand on March 4, 2005 7:06 PM writes...

I suspect that p2p has the same effect that the radio does - people hear music they like through it and go out to buy the CD.

Remember that broadcast radio was going to be the death of the music industry too.

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5. odograph on March 5, 2005 7:25 AM writes...

I noticed a little confirmation of my "social trend" thing this morning. Dave Winer wants $2000 more music for his iPod (link).

Maybe it is more device driven that service driven.

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6. Rafael Venegas on March 5, 2005 9:47 PM writes...

Based on the sales of records, royalties may need to be paid to artists and the owners of the songs (mostly publishers that have acquired the songs in exchange for nothing). As a result of, in my opinion and experience, scams and useless record sales audits. I am a theoretical recipient of royalties from about 100 currently sold recordings from about 40 record companies, none of which has ever paid any royalty. In this atmosphere many sales figures are simply made up so as to mimnimize royalty payments.

A related problem is that music publishers that control many of the songs the songs cannot protest because about the record sales figures necause thae have their own skeletons in their closet and the record makers exploit this.

Certaily the IRS does not audit record makers sales books to determine if royalty payments were made.

Surelt record dales figures are mostly cooked up and unanalyzable. The sales published figure for bootleg records may actually be more reliable because royalties are not paid for these records.

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7. Barry Ritholtz on March 6, 2005 8:01 PM writes...

This is old news; While any sales increase was a welcome change by the industry, the final number was ultimately a dissapointment -- The first half of 2004 saw album sales up 8% gains from the prior year, so a 2.4% increase for the year means 2H sales crashed . . .

The WSJ noted that "Music companies have tried to capitalize on the DVD boom, although for the moment, they can't keep pace with movie and television-program sales. Not one of the top 40-selling DVD titles, according to Nielsen VideoScan, is a music title."

Once again, we see a floundering industry unable to make positive moves in the right direction. Oh well, perhaps the bleeding has stopped.

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