Breaking Records

After being assigned the topic to investigate a current issue that has affected the industry, I felt I should choose an event that affects me the most. I decided to look into the decreasing amount of record sales and the causes for this decline. Contributors to this decline are the Internet, short attention spans, EP’s and singles and new music consuming behavior.  This decline in sales spirals out of control when record companies can’t afford to spend as much as they used to on an album. Soon, more and more EP’s and singles will start to be released and before you know it the growth of pick-and-choose methods of buying music has spawned. Once Internet usage accelerated, attention spans thinned even more. With the demand of new music on the rise, consumers flock to the internet and are bombarded with music sites spanning from blogs to aggregators, and music services such as Soundcloud and Bandcamp, giving independent artists opportunities they wouldn’t have had without the internet.

The Internet is also to blame for the fact that 95% of music is acquired illegally. The situation only seems to be getting worse. It’s no secret that the music industry is facing turbulent times. There are different reasons for this change but there are also different solutions. As the industry continues to consolidate, there are fewer major labels heading the forefront and the playing field is beginning to level. Some believe that it is the industry itself that is at fault for driving consumers to their music pirating ways, but the internet has given consumers the option to explore music and find exactly what they are looking for that will fit their unique tastes. Downloading music is as simple as a Google search or the click of a mouse on iTunes. Either way, using the Internet has become the primary medium through which we consume music.

Since 1997 physical album sales have steadily decreased. The creation of the Internet plummeted the industry into a downward spiral.  CD singles tumbled from 67 million units sold in 1997 to a low of five million five years later. CD album sales went from 943 million in 2000 to 803 million units in 2003. Now in 2009 we are at 71.6 million units sold. According to the RIAA “music piracy causes $12.5 billion of economic losses every year, 71,060 U.S. jobs lost, a loss of $2.7 billion in workers’ earnings, and a loss of $422 million in tax revenues, $291 million in personal income tax and $131 million in lost corporate income and production taxes.“ This is not a phenomenon; it is unabashed crime taking place.  95% of music acquired is illegal. “Generating value in an environment where 95 per cent of music downloads are illegal and unpaid for is still the biggest challenge for music companies and their commercial partners,” the IFPI said in a release.

It seems as though things are only getting worse. “The days of releasing an album with 17 or 18 cuts are over. It’s difficult to give full quality with such an abundance of music. … I think we can expect to see more extras in the future instead of additional songs.”” said Charles Goldstuck, president and CEO of the RCA Music Group.   Charles aptly points out that with this abundance of music as a side product of the Internet, attention spans have thinned. Efforts to find a solution are growing. Also growing are single, EP and digital download sales. Digital music sales have risen 15% since 2007. Increasing by an estimate 25% to 3.7 billion dollars in trade value.  This was never a strategy that record labels were fond of. Labels were always opposed to releasing singles because they looked the format as being “money losers.” But since labels can’t spend $18 million on an album, it seems the format is “poised for a comeback.” Artists that refused to conform to this format in 2003 include Linkin Park and Red Hot Chili Peppers. Consumers have demanded a pick-and-choose method of buying, which has attributed to the success of iTunes. People would go to record stores if they could walk out with an individual song for a dollar. This holiday season album sales were affected by the weather conditions in the south and east that kept shoppers away from the stores.

Recently it seems that the music business is on its way to a slow collapse, but there are some bumps along the road. With digital sales on the rise and 39 new tracks breaking the $100,000 at the end of the 4th quarter we can still go home smiling. Digital and physical sales are practically dividing the music market in half, sure to surpass physical sales in the next couple of years. Outsiders may see the industry in turmoil, but from a young consumer perspective, the internet only gives us more options to explore and find exactly what we’re looking for, eliminating the unwanted and unnecessary. The modern day music consumer is looking for quality over quantity.


  1. Online search of EP’s and Singles effects on the industry.
  2. Online search of Record Sales and The Internet effects
  3. Nielsen Soundscan
  4. Lexis Nexis
  5. Ulf Oesterle, my Music Industry 305 teacher
  6. Michael Howe, A&R executive at Downtown Records
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