Good News! CD Music Sales Down 20% from 2006

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Am I breaking the law with my embed above of this copyright-violating music video on YouTube? Or am I providing a valuable marketing service to Silversun Pickups and their current tour? The answer is: both.

The Wall Street Journal notes that CD music sales are down 20% from the same week a year ago. The seven year decline in CD sales doesn’t look to be turning around anytime soon.

And while legal music download sales are increasing by 50% or so a year, overall industry revenue is still down 25% from a year ago by some estimates.

The faster music labels realize their massively profitable days are over, the better it will be for them, as well as the bands they represent and us, their customers. Digital music sales are not going to make up for lost revenue. Suing their customer base is not going to make up for lost revenue. In fact, absolutely nothing is going to make up that lost revenue. The industry, revenue-wise, is going to continue to shrink.

The problem is that their main product, recorded music, has a zero marginal cost to produce. It’s so cheap to make that consumers can actually make it themselves. And they do. A billion songs a month are downloaded, mostly illegally, from P2P networks.

As the marginal price of recorded music continues to fall towards zero, its natural price, bands will need to make money elsewhere. Live concerts will become more and more popular, and will be the largest source of revenue for many artists. Recorded music will be used to promote those live events. Popular artists will still make a very, very good living. Others will have to decide if love of their art is enough to keep going.

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