CDs Are Dead. Well, almost.

Four or five years ago I spent hours up-loading all my Christmas CDs onto my computer (purchasing a few new digital downloads as well) and creating multiple unique Christmas Playlists in iTunes.  I bought a nice set of stereo speakers for my iMac and used that computer as my primary listening device.  I also secured the proper cable so that I could listen to Playlists through my home entertainment system, using my phone.  But because I did not have an auxiliary connection in my car, I continued to play CDs there.  It was a bit of a bother to keep so many CDs in my car and a hassle to switch them out so often.  But that was my first step into the digital music age of listening.

PandoraThis year has been very different for me however; and I suspect, different for many other music consumers.  With the rising popularity of Pandora, Spotify and similar internet radio or music streaming services, my Christmas playlist has expanded exponentially this year.  I’ve played maybe 2 Christmas CDs, but I’ve listened to more Christmas music than ever before, thanks to Pandora.  Touch the Spotify or Pandora app on your phone and type in any artist, style or song, you can imagine, and like magic, you’re immediately listening.  No more trips to the store to shop for CDs.  No more browsing Amazon.com to order CDs that will be shipped to your door.  No more searching the iTunes Store and paying 99 cents to download song after song. It’s a different day for sure!

According to Strategy Analytics’ latest “Global Recorded Music Forecast”, it is predicted that digital music sales in  the U.S. will for the first time exceed physical sales for the year 2012.   Download purchases have been on the rise and physical CD sales on the decline.  That will continue.  But that’s not all.  Streaming is growing faster than digital sales are growing!  The IFPI estimates that the number of users paying to subscribe to a music service leapt by 65 per cent in 2011 to 13.4 million worldwide.  Not only do I personally believe that the CD will be close to dead within 7 years, but I believe streaming of songs will overtake song downloads by that time as well.

So what does that mean for us as music creators?  If we earn our living only from the sales of music, then we need to be thinking right now about new income streams (other than sales) that might be available to us from consumers of our music.  Certainly, live concerts have been a large income stream for the music industry over the last several decades.  It’s interesting to note how many artists have placed a new focus on this stream as of late.  Not only have concert ticket prices continued to rise in a depressed economy, but I would guess the number of concerts coming to your area in the last couple of years has almost doubled.  That’s exciting for the music consumer.  Music fans are buying the tickets and the artists are making a living again.  As music sales have declined, older artists have hit the road again, seeking that live concert stream of income.  I’ve personally enjoyed several concerts in the last few years from bands that I thought I’d never get to see again!

Another stream of income that we will find ourselves depending on more and more is license revenue.  Owners of song copyrights have always made their living from license income.  But in today’s new music market, master recording owners are also seeking licensed uses of their masters more than ever.  These may take the form of television ads, video game uses, professional sporting event uses, film trailers, movie uses, television show uses and even merchandise licensing (toys, games, etc.).   Of course, now that more content owners are pitching for these uses, placements are more difficult.  And license rates may tend to come down as the music pool increases.

Streaming services such as those mentioned earlier (Spotify, Pandora, YouTube, etc.) also pay license fees for the music used.  Although there seems to be continuous legal battles and arguments over license rates for such services (the services feel they pay too much, the content owners feel they pay too little), at least we all agree that some kind of license fee is being, and will continue to be, paid.

Experts say that although less music may be sold this year than say, ten years ago, still more music is being “consumed” than ever before.  That has certainly been the case for me personally, especially as I have been listening to Christmas music this year.  In doing so, I’m discovering new recordings that I may have never come across browsing through the rack at Target, or at the long-gone local record store.  The real question however, is whether or not I will actually go purchase those new songs that I’m enjoying, or will I simply continue to listen to them through a streaming service.  That argument continues within the music industry and only time will tell the complete story.  But from what I’ve seen so far, the younger generation is listening without buying.

So, as I enjoy more Christmas songs this year than ever before, I certainly ponder the gift of God’s only son, which we celebrate during this season.  But I also ponder these questions that will affect our livelihoods.  As I make New Year’s resolutions, I will also be making plans to open up new streams of revenue that can be derived from my music content.

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Do It Yourself

So, what’s the big deal about a deal?  I mean, in today’s market do you really need a publishing deal?  A record deal?

I’ve been a music publisher for 25 years and I can tell you that yes, there are serious advantages to landing a publishing deal (a record deal may be a different story).  And I’ll go through those with you.  But at the same time, I want to make one very important statement …

Publishers are looking for hit songs and hit songwriters.  Period.  They are not looking to find amateurs to develop into superstars.

Why, you say?  Isn’t that the way the music business has always worked?  Then, how do I get my start?  Well, let’s begin with the the first question …

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