Wrong. At least according to Sean Boyd of Fanatic Promotion, in this video. Basically, the number of songs sold (in both physical and digital media) has increased quite a bit over the last decade or so – but because the per-unit cost of those songs has gone down, and the industry hasn’t caught up with that price drop, it can’t meet its costs. (As an aside: I don’t watch Fox Business…and so I’m wondering: are all their correspondents this low-wattage? None of them seem to get it at all, and the lame joke at the end about “recession-proof” seems oblivious to the fact that Boyd has been talking about a ten-year period, not the last few months.)
I remember thinking, several years ago and before the digital boom, that it was odd that prices of CDs had never really fallen. Considering that from a rare, expensive new technology selling only to geeky audiophiles, CDs had evolved by that point to the dominant music medium – which of course meant that manufacturing costs per unit had dropped, and the risk of producing a new experimental medium was clearly no longer an issue. My theory at the time also was that CDs had come along at a propitious time for the music industry: suggested list price for LPs immediately before CDs came along was $9.99 – just shy of the psychologically significant ten-dollar line – but introduce a new, shiny medium, advertised as having better sound and lasting longer than LPs (both true – shut up, vinyl fetishists), and that ten-dollar barrier is shattered like your grandma’s shellac 78 dropped from a great height. But prices dropped only slightly, in dollar terms, from their initial introduction (I think they started at just shy of twenty bucks, dropped to around fourteen or so, and rose slightly, to where Boyd can talk about a $17.98 retail price: one reason I’m sketchy on this is that I am not a moron, and so I never paid mall-store retail prices for CDs, which were always three to four dollars higher than you’d pay at an actual record store).
CD prices should have been cut dramatically as digital downloads became viable…even more so as CD burning became possible. The industry should have immediately realized which way the wind was blowing, and both gotten into digital media much more quickly than it did (I cannot believe iTunes didn’t exist until 2001…and of course iTunes was not introduced by the music industry at all) and worked to create value-added packages with CDs that included any number of non-digitizable add-ons – anything from discounted concert tickets to price-off to people who upgraded their old LPs to the sorts of amusing swag that was sent out with promotional packages. But they did not: they just assumed that people would continue to buy CDs.
Another fault is the way the industry was built on blockbuster titles (I seem to recall that Alanis Morissette’s Jagged Little Pill accounted for something like 1 out of every 7 dollars its label made the year it was big), and it was precisely the most mainstream, popular titles that were most bootlegged (duh). I also wonder why it is that labels still haven’t figured out that since creating and maintaining physical media is one of the hugest costs associated with back catalog (particularly since tax laws were changed sometime in the early ’90s on such items), making back catalogs available in digitally-exclusive editions would have been attractive to the people who still buy music (older people, who actually have money to buy music with). I mean yeah: someone would have to digitize the recordings in the first place – but after that, very few additional costs directly associated with those recordings, assuming the company maintains a download site to begin with. The advent of digital music should have meant the near-elimination of the concept of “out-of-print” – since “print” was now just a file on a server somewhere. Why didn’t that happen? My guess: the industry clung to its “sell a bazillion copies of three titles” approach instead of “sell three copies of a bazillion titles.” With physical media, those two are nowhere near equivalent; with digital media, they’re much closer.