Wednesday, December 3, 2008

Thoughts on Music Industry (Part 2)

This over 100-year-old industry is running into major challenges and bogged down by the good ol' days of profitability. Here are the fundamental shifts that already occurred.


  1. Physics has changed: physical media --> digital media (no, I mean binary things like mp3, streaming, etc.)
  2. Contol/Power has shifted: recorded studios --> artists and fans
  3. Price came down the curve quickly.

The fat profits to recording companies are at best marginalized by the adoption of digital formats and piracy. When all things seem gloom and doomed, there are still positive things about the whole paradigm shifts.
  • 53M iPods sold in 2007
  • 36% y/y growth in P2P file sharing
  • 25% y/y growth in audio streaming
  • 40% y/y increase in worldwide digital music sales
  • 8% y/y increase in concert sales
So... what's the big deal with the bunch of numbers? People LOVE music and they are willing to pay for consumption.

I don't know what the answer is for this industry. Just like in any other industries, innovations must be experimented and questioned. What I can tell from my small world is that something dramatic needs to happen (for better or worse) and the whole innovations will cost numerous deaths and a few trophies for those who have the "golden" key. And most importantly, the industry as a whole needs to change the mindset of looking at the opportunities, because the good ol' days are indeed over.
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