Recently I was asked by John Snyder, coordinator of Music Industry Studies at Loyola University New Orleans, to collaborate on the development of a presentation and speech on the evolution of the music industry and copyright to be delivered to students at Loyola’s College of Law. Throughout the course of our discussions and development of the presentation, we synthesized a number of the emerging trends in the industry into what we found to be an interesting new perspective on the metrics of the industry. I have decided to share the ideas we developed in a 4 part series of articles (largely because a hard drive crash has caused me to lose the video of our presentation), the first of which is found here:

New Metrics in the Music Industry – Artificial Inflation (Part 1 of 4)

The Music Industry is often used a case study for the impact that the internet and the digital age are having on a wide variety of industries.

The first to be hit by the immediate and infinite distribution machine and perhaps the most notoriously resistant and unable to adapt to the new demands of the market; hardly a day passes without an article being published on record low album sales and the dire state of the industry as a whole.

The tone of most of these articles and the general attitude of industry players seem to indicate an ongoing search for a deus ex machina: a new platform that will instantly and painlessly eliminate the open information sharing taking place over the internet and restore order and control to artists (read: labels).

The reality of the situation, however, is that for the Music Industry there will be no messianic technological innovation or business model tweak that will restore the original paradigm.

It is highly unlikely that a single event or product will restore stability to the industry but rather that a larger amalgamation of minor improvements will be wrangled into the ability to create successful sustainable careers for those artists who are smart enough and quick enough to make use of them. The industry paradigm has shifted and the manner in which we gauge an artist’s success must follow suit in order for us to make any sense out of things.

In a world where record stores are dying and sales figures plummet from year to year it certainly seems archaic to refer to charts indicating the total number of albums sold over the course of a year to gauge the popularity or success of an artist.

As total album sales have decreased over the past few years, there has actually been an increase in the total number of singles sold via iTunes and other distributors. This preference for singles as music becomes untethered to the modern concept of the album has some sources arguing that the price of music has actually been artificially inflated for the past few decades

The reasoning being that prior to the CD, the music industry consisted primarily of the sales of singles. A listener heard songs on the radio and went to the store to buy only those songs that they actually wanted. With the advent of the CD, listeners went to the store to buy the songs they heard on the radio and ended up with 10 more songs thrown in and an 80% markup to boot.

If there is validity to this position then current sales figures would actually represent a more accurate indication of the total size of the recorded music market undiluted by the restrictive format of the album. If true, this would certainly mean that the reports of the downward spiral of album sales could be taken less as harbingers of impending doom and more as the byproducts of the faulty economics of an industry that is notoriously bad with basic business principles.

This when coupled with the topics that will be covered in the following weeks: the economics of digital music; the impact of social media on the music industry; the concept of free; and community building in the music industry will provide the basis for what is largely becoming the new way to interpret data in the music industry.

- Patrick R

patrick@rabbitholeconsulting.com

For more on the concept of artificial inflation in music, check out these links:

http://blogcritics.org/music/article/market-forces-and-the-music-biz/

http://www.hypebot.com/hypebot/2010/11/how-single-sales-redefine-album-success.html

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