GA Russell Posted May 30, 2007 Report Share Posted May 30, 2007 Here is an article from two months ago that I just found tonight. I have somewhat recently mentioned that teenagers I know are more interested in video games than in pop music. I feel that that fact could be a reason for the decline in sales of music aimed at teenagers. That is not mentioned in this article, but it fits right in with it. http://www.businessweek.com/investing/insi..._cd_im_jus.html March 21, 2007 Music CD, I'm just not that into you Aaron Pressman There's a fascinating if flawed story in the WSJ today about the decline in sales of music CDs. There's much to and fro about what's behind the drop. The industry as always wants to blame piracy. Critics want to blame poor quality of product, bad marketing tactics and digital rights restricting technologies. There's even some far-sighted commentary about changing business models. But this article, and similar ones you've no doubt read a thousand times in recent years over declines in music sales and movie attendance, miss the boat. And it's a pretty big and obvious boat at that. There are only so many hours in a day for each of us -- the consumers of entertainment -- to consume entertainment. Various new forms of entertainment that catch on have to displace some of the time we spent on our former diversions. While CD sales are down, the number of households with DVD players more than tripled over the past five years to 84 million and sales of DVDs rose to 1.1 billion from 313 million in 2001. Does anyone really think that consumers could buy 800 million more DVDs, worth $10 billion or more, without cutting back on some other entertainment spending? Similarly, the number of households with broadband Internet connections almost quadrupled to over 36 million. At $30 a month, that's another $9 billion a year right there. The number of households with access to video on demand hit 24 million in 2005, ten times the 2001 level. And now Internet video is just starting up (Ironically, there's a review in another section of the WSJ today touting Apple's new Apple TV device to bring video and music purchased and downloaded from the Internet to your TV). For investors, the lesson is that it's tough to buck the odds. Established players almost always fail to adapt to change. It's the nature of a free market. Today's WSJ story about music sales reminded me of the accelerating drop in old-fashioned film sales that Kodak has experienced over the past few years. So you won't be surprised to learn that if you look at the five-year stock market performance of the 130 or so sub-industry sectors tracked by Morningstar, radio, film and TV producers, broadcast TV, advertising and media conglomerates are five of the 12 worst performers, the very worst. Here's the context: The S&P 500 averaged a 6% annual gain over the past five years, the small-cap Russell 2000 rose 12% a year and even the Lehman Brothers Aggregate Bond Index climbed 5% annually. Meanwhile investors in media conglomerates saw their stocks rise less than 3% a year, in advertising just 2% and in TV broadcasters less than 0.3% annually. Owners of film and TV producers lost 1% annually and radio investors burned down the house losing an average of 9% a year over the past five years. Ouch. Ironically, given all the complaining that the Motion Picture Association of America does about piracy, my entire "it's just that simple" thesis is spelled out in the back pages of very informative research report that the group issued on the state of the 2005 U.S. entertainment industry. If you flip near the back to page 51, you'll see a table of how many hours a year the average consumer "spends" on various forms of commercial entertainment. In the four years from 2001 to 2005, overall time spent on these pursuits rose to 3,482 hours per person from 3,356 hours, about a 4% increase. But that didn't benefit all forms of entertainment equally. Here's a table I've created from the MPAA report showing the change in hours per person spent by activity: Cable and satellite TV +125 Consumer Internet +52 Home video +29 Broadcast and satellite radio +26 Wireless content +15 Video games +12 Consumer books 0 Movies (at the theater) -1 Consumer magazines -3 Daily newspapers -14 Recorded music -50 Broadcast TV -65 You get the same picture when you look at the average dollars spent by entertainment consumers (from a chart on page 53). Overall spending per person rose to $890.77 a year from $675.35, a healthy 32% increase. Spending on television (cable, video on demand etc) plus home video (DVDs) soaked up more than half of the total increase. Throw in Internet spending and you've accounted for 90%. No surprise then that spending on newspapers and recorded music actually declined. Quote Link to comment Share on other sites More sharing options...
Eric Posted May 30, 2007 Report Share Posted May 30, 2007 My 15 year old son is a music freak and he plays lead guitar in a rock band. He has a zillion songs on his iTunes. How many CDs has he bought in the last year? Maybe one or two. It is a different world. Quote Link to comment Share on other sites More sharing options...
Jazzmoose Posted May 30, 2007 Report Share Posted May 30, 2007 Hey, there's no need to buy crap these days, so all those albums with one or two good songs that used to end up on my shelves just don't leave the store any more. Plus it's easier than ever to "try before you buy". I have this fantasy that we will all live to see the death of the manufactured 'musician' due to this, but of course the key word is fantasy... Quote Link to comment Share on other sites More sharing options...
Tjazz Posted May 31, 2007 Report Share Posted May 31, 2007 Now, if only I could cut my music spending by 50%... Quote Link to comment Share on other sites More sharing options...
Kalo Posted May 31, 2007 Report Share Posted May 31, 2007 Hey, there's no need to buy crap these days, so all those albums with one or two good songs that used to end up on my shelves just don't leave the store any more. Plus it's easier than ever to "try before you buy". I have this fantasy that we will all live to see the death of the manufactured 'musician' due to this, but of course the key word is fantasy... I feel you, 'moose. Unfortunately, there'll always be a market for "manufactured 'musicians'" marketed to people who don't really like music for itself, if you know what I mean. American Idol is a prime example of this sort of mentality... Quote Link to comment Share on other sites More sharing options...
BruceH Posted May 31, 2007 Report Share Posted May 31, 2007 Well, people have been tolling the death-nell for the album-as-artistic-statement for years now. Maybe it's finally here. But I don't know...call me a relic, but I still kind of like There's A Riot Goin' On, and Forever Changes, and Another Green World. Even Kind Of Blue and Such Sweet Thunder somehow work better for me as a whole than as isolated, random files on my ipod. Don't know why, but there you have it. Quote Link to comment Share on other sites More sharing options...
Kalo Posted May 31, 2007 Report Share Posted May 31, 2007 Well, people have been tolling the death-nell for the album-as-artistic-statement for years now. Maybe it's finally here. But I don't know...call me a relic, but I still kind of like There's A Riot Goin' On, and Forever Changes, and Another Green World. Even Kind Of Blue and Such Sweet Thunder somehow work better for me as a whole than as isolated, random files on my ipod. Don't know why, but there you have it. I feel that, my friend. Quote Link to comment Share on other sites More sharing options...
The Magnificent Goldberg Posted May 31, 2007 Report Share Posted May 31, 2007 I had a strong feeling that all these different kinds of entertainment were provided by the same firms - so it wouldn't matter that, as one branch declined, another forged ahead. And look at the money - for a 4% increase in time spent enjoying whatever, you get a 32% increase in cost. Oh ho! Someone's doing very well out of all this. MG Quote Link to comment Share on other sites More sharing options...
BruceH Posted May 31, 2007 Report Share Posted May 31, 2007 Hey, there's no need to buy crap these days, so all those albums with one or two good songs that used to end up on my shelves just don't leave the store any more. Plus it's easier than ever to "try before you buy". I have this fantasy that we will all live to see the death of the manufactured 'musician' due to this, but of course the key word is fantasy... I feel you, 'moose. Unfortunately, there'll always be a market for "manufactured 'musicians'" marketed to people who don't really like music for itself, if you know what I mean. American Idol is a prime example of this sort of mentality... Watch out, Moose! He's tryin' to feel you!! Quote Link to comment Share on other sites More sharing options...
Noj Posted May 31, 2007 Report Share Posted May 31, 2007 Well, people have been tolling the death-nell for the album-as-artistic-statement for years now. Maybe it's finally here. But I don't know...call me a relic, but I still kind of like There's A Riot Goin' On, and Forever Changes, and Another Green World. Even Kind Of Blue and Such Sweet Thunder somehow work better for me as a whole than as isolated, random files on my ipod. Don't know why, but there you have it. Many more albums are not great start to finish than ones which are. Quote Link to comment Share on other sites More sharing options...
B. Clugston Posted May 31, 2007 Report Share Posted May 31, 2007 Another factor is that so many CDs aren’t worth owning from a packaging perspective. A younger colleague of mine bought a Dave Matthews Band CD a year or so back and upon finding the packaging to be skimpy, wondered why he didn’t download. So much pop and rock CD booklets are filled with nothing more than vapid lyrics and artists thanking their creator. Tool is an example of group with got-to-have-it packaging (provided you like them). Quote Link to comment Share on other sites More sharing options...
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