Jim Carroll

Music, Life and everything else

What’s beyond the cloud for the record business?

No doubt, most OTR readers with a keen interest in the ins and outs of the music business have seen this chart, which details the massive changes in global record sales from 1973 to 2009, by now. That chart chronicling …

Tue, Mar 1, 2011, 09:47


No doubt, most OTR readers with a keen interest in the ins and outs of the music business have seen this chart, which details the massive changes in global record sales from 1973 to 2009, by now. That chart chronicling the so-called death of the music industry (someone needs to introduce the sub-editor to the live industry) then gave way to this chart and I’m sure there’s another chart in the works. Not forgetting, of course, this spreadsheet which shows what this means in terms of the money going into the act’s pocket.

I wonder if I’m the only one who is all charted out at this stage. It’s not as if there’s anything new in the data or the analysis. We’ve known for ages that the CD boom was when the record industry made out like bandits and it was this boom which meant they didn’t take the arrival of tech and telecoms’ companies on the music patch all that seriously. Instead of meetings, they sent legal letters and we know how that one turned out. We also know that revenue from digital downloads is not enough to make up the losses from reduced physical sales because the business’ cost-base is too high. And we also know by now that streaming and cloud services are not bringing as much cash into the coffers as digital downloads. The bottom line is getting squeezed every which way.

Now, if I know this and you know this, we can assume that the record industry also knows this. In fact, that line is a little facetious because I know from talking to folks who still work in the industry that they know all about the new world order. They’ll point to increasing revenues from YouTube and Spotify and talk about better deals for the labels with acts (read deals which are 360s with a smile). They’ll also mention sadly about more cutbacks and lay-offs. The labels, we know, are adjusting to the new reality.

However, one thing we’ve learned again and again about the record industry over the last 15 years is that it’s prone to short-term thinking. All of its current woes come from wrongheaded decisions made in the 1990s to keep the CD boom going. Indeed, the labels could argue that the CD boom is still in train as nearly three-quarters of all music sales in the United States in 2010 were round plastic discs. Hell, there are probably some deluded executives in gold disc-bedecked offices wondering what everyone is on about and counting down the days to until their retirement. Crisis, what crisis?

I wonder, though, if any record industry exec has begun to think about what comes after streaming and subscriptions. What’s beyond the cloud for the record industry? If there’s one thing we now know, it is that the tech sector are the ones who are calling the shots and further innovations are inevitable. Music may be moving to the cloud right now – though I hope there’s a back-up plan if something like this happens to your music collection – but there will be life beyond the cloud. If there’s to be a record industry 3.0, it will also need to be in that space. And the best time to start planning for changes is long before such obsolescence sets in. In other words, the planning needs to start now.

But what will that future be? It’s doubtful that a post-cloud world will see a return to the dominance of physical products like of old. That game is over as it was once played so we’re unlikely to have a renaissance in record shops in 2025. While there is probably a lot of years and shekels for the business in the streaming and subscription model, that too will come to a close and it will be time to shuffle on. Perhaps it’s at this stage that we’ll see the record business as we’ve known it finally moving towards the exit door. Around then, we’ll probably see the final merge between the various middleman (records, publishing, live, management, agencies, catalogue and all other revenue streams yet to be invented) and a more streamlined model emerge. Or perhaps we can really look forward to a 78 RPM record revival.

But if the record industry wants to have any relevance in that world, it needs to start working on its future gameplan now. It can’t do like it’s always done and start to panic when someone else has taken over its patch. That’s not going to wash any more. It’s time for the record business, if it’s serious about a long-term strategy, to start plotting and planning for what’s coming down the tracks.