The Fall and Rise of the Global Music Industry (and the RTO cop)

Over the past couple of decades, as I moved from being a Gen X to a Gen W to possibly a Gen V person (on a comparative basis with the youth today), I kept on being confronted with younger sisters-in-law and office team members that the only way to listen to music is through free downloads from various websites. I used to feel hopelessly outdated during such conversations given my strong stand of not downloading free (pirated) music and thereby protecting the rights of the copy-rights holders to earn rightfully from their talent (be it singing, composing music or in identifying talent itself). But I was hopelessly outnumbered and hence, changed my stance from voicing my view to smilingly keeping quiet in such discussions.

The revenues from sales of CDs and audio cassettes for the Global Music Industry had plummeted from USD 27bn at the end of the 20th century to about USD 22bn in 2004 and further to a dismal USD 10bn today ! Putting these macro and micro facts together, one could easily explain this 63% fall in sales over 12 years by the increasing and all-pervading free downloads. At this rate, the music industry would almost vanish by 2030 AD !! Why would companies pay to produce songs and advertise them if they wouldn’t make profits ?

However, you may have noticed above that I used the seemingly arbitrary 2004 data point of USD 22bn – I did that (not arbitrarily :) ) because the Year 2004 marked the birth of a new type of revenue for the Music Industry and that was from PAID digital sales. With great personal joy ( and validating my attention to my moral science lessons at school), I have seen Revenues from Digital sales increase from 2004 to a whopping USD 5bn in 2012 !!! So, the total Music Industry sales has changed from USD 27bn at end of the 20th century to USD 15bn today (10bn from CDs, DVDs etc and 5bn from paid digital sales). In fact, there is another USD 1bn of revenue coming from online streaming websites paying royalty each time a song is played on their sites, taking Music Revenues to USD 16bn today.

Why have people started paying for digital downloads now ? Simply because it has been made simpler through hundreds of download stores, Apples’ iTunes being a leading one. And also cheaper than physical media. Also, one can download song-by-song by paying for it – different rates for different songs. As smart-phones become more prevalent, it’s getting easier and smarter to download such music on the move…AND LEGALLY ! Looks like there are millions of people who want to own music legally, only the price for doing so was quite high in the past and amazingly, music was not available freely to be downloaded legally !!

2012 is the first year this millennium when music sales have increased over the past year, though only by a slight margin. Physical sales continue to fall, but I see digital sales and royalties keeping on increasing in coming years as more people across the world access Internet over phones and tablets. And the next Gen X does not even know that one can download music illegally, or more hopefully, knows that it is wrong to do so !! (similar to most of us bribing the RTO cop with Rs 100 because the fine is Rs 1000. If the fine itself becomes Rs 100, then I guess, 90% of us will pay off the fine…I think).

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