Record Stores vs The Internet

Fri 13th Jan, 2012 in Features

We all know that the FL Forums love a good “impassioned discussion”, so each Friday over the next five weeks we will be fuelling that chatter with five controversial music debates. Thanks to Hyundai’s new Veloster will be giving away prizes each week for the best debaters.

Last week we kicked off our debate series with a huge discussion about whether the ‘Festival Bubble’ has burst, and boy did you have a lot to say about that!

This week we are stirring the pot, to find out if you think record stores are a dying breed, and whether this new fangled world wide web is the future (or death) of music. The best debater will win a $350 voucher to either an independent record store or itunes, it’s your choice!

Record Stores vs The Internet

Music retail sales figures for 2011 from the US pointed to an increase for the first time since 2004 and everyone said HOORAY!. Combined sales surpassed 1.6 billion units and more people bought vinyl in 2011 than they did in 2010. Streaming services received a big push into the market and the cloud was embraced by music-lovers. But what of the poor compact disc? It seems the average music buyer is more likely to use them as a drink coaster than a preferred purchase format. So the good news is that we’re spending more on music than we have for a while… or are we?

Trying to decode sales figures is something of a Rosetta stone proposition, but let’s try. Music isn’t fun! It’s about statistics!

In Australia true sales figures are extremely hard to come by. So for the sake of illustrative points, let’s go to US figures, which are more readily available. The bottom line: 10 years ago, people spent three times much on recorded music as they do now. In the year 2000, Nielsen Soundscan clocked US (CD) album sales for that year at 943 million units. And while sales figures for 2011 were up for the first time since 2004, the total number of physical sales was just 223.5 million. Digital album sales hit 103.1 million sales, and all combined music sales – every format altogether – topped 1.6 billion sales. 1.6 billion sounds like an incredible figure, but work into that the fact that Nielsen averages ten track downloads as being equivalent to a single album sale. God, this is confusing!

Vinyl sales are up in the US: from 2.8 to 3.5 million sales (which are pretty negligible figures in the bigger picture.) In the UK vinyl sales were also up – 55% in 2011, however, that is proportionately down on the last ten years, when vinyl sales there accounted for 7.2% of the market on 2000. So people were buying more vinyl in the last year, sure. But it is not suddenly becoming a predominately popular format. It’s always been the preferred format of DJs and audiophiles – though it’s hotly debated whether or not vinyl is actually the superior sound.CD Listeners purchasing vinyl has likely more to do with nostalgia.

Ringtone sales and subscription models have also declined in the last two years. So the bald facts are that people buy less music, but people also listen to a lot more music than they used to – primarily through streaming services on the internet, whether legal or otherwise.

Streaming, far from being a potential saviour in the market, hurts artists in two ways: it cuts into real sales/downloads, and the revenue share they see from streaming sites is pitifully small. Though David Hyman, CEO of MOG, a Spotify-like service, says that the blame for that lies squarely with record labels who are keeping the lion’s share of profits for themselves. This is its own sort of chicken/egg argument: labels found themselves the target of consumer ire when it became clear to everyone how much revenue they kept and so stealing music took on a kind of Robin Hood aspect for anyone who wanted to justify it to themselves (“It keeps money from greedy labels, not artists!”). Now again as the internet has eaten so deeply into their profits, labels resort to those same tactics as a way to try and stay afloat.

ARGH! What does this all mean? This whole mess is pretty well illustrated on this Soundscan chart:

Certainly for one thing, people hate CDs. They just aren’t convenient – you can have the exact same fidelity in a file downloaded from the web as you can from ripping your CD collection/throwing it on the stereo, and downloads just do the fiddly ripping part for you while adding an extremely powerful search database into the bargain. It’s not a huge mystery as to why they are on the way out as the dominant format, though it is sad that a whole artform, the liner note, is largely going the way of the dinosaur with them. Not to mention album cover art – but for as long as there is vinyl, there will be people who want that whole experience of a record, though as we looked at earlier, they are a small part of the market.

The upshot of all this is: people are maybe, slowly coming to pay for their music as a default position, rather than stealing it—how people consume is by measures of ease and convenience; the second someone (Google?) opens the web’s first truly global music store, where everything ever released can be found and paid for in whichever file format you like as easily as it can be torrented now, then piracy might become a thing of the past. Sales figures today are still nowhere near the numbers that the industry experienced in the pre-digital era, so piracy is still an issue.

Lars Ulrich, who more than ten years ago took on Napster and overnight became rock’s most hated human, was in hindsight totally right. He calls record labels “banks for people who are too crazy get loans from anywhere else,” and if the money at the bank dries up, then there will be no more albums to torrent. Gene Simmons is also a punching bag for taking on pirates and loves to say things like “If you let the fox into the hen house, there won’t be any more eggs,” in order to get his point across, which is a very basic fiscal one: it costs money to make music. Likewise U2’s manager Paul McGuinness was the target of terse editorials when he suggested that ISPs should share some of their revenue with labels to account for the fact they make a lot of money from illegal downloads. To counter this, ISPs take a pretty lame standpoint: which is that they say that you can’t blame the postal service for people sending illegal items through the mail – ISPs are only a messenger.

This is part of a bigger problem on the internet: it has bred a culture of entitlement where it’s easy to think that what users want is more important than anything else – being able to have what you want, immediately and for free, like some unending all you can eat buffet – is pretty hard to give up, but we’re learning.

Now it’s over to you – what do you think: are record stores a thing of the past? Perhaps independant stores are all that will remain? Do you buy music and if so where? This week’s best debater will win a $350 voucher to either an independent record store or itunes, it’s your choice!