Music Industry Struggles With Devaluation As Digital Downloads, Streaming Lose Favor
Remember how self-righteous we all got when Metallica drummer Lars Ulrich declared war on file-sharing site Napster in the 1990’s? How dare this multi-millionaire demand more money for his music! Isn’t he rich enough?! Just who does this greedy rock star think he is?!
Turns out, he was the smartest guy in the room.
Maybe his timing seemed a bit nefarious since his band was flush with success from its multi-platinum best-seller, The Black Album. But the reality is that Mr. Ulrich saw a terrible disruption – the devaluation of music – heading his way.
Whether file-sharing, streaming or digital downloading, at the end of the day, all of this convenience that Napster kick-started has turned the music industry on its head in the worst kind of way. Monetizing the digital music landscape via subscription-based services like Spotify isn’t the win-win we thought it would be either. People still steal music. Artists still get screwed.
And now that rumors are circulating that Apple iTunes – whose profits have been declining since 2013 – plans to phase out downloads in the next few years, the music industry (major labels) must pay close attention to the demand signals of what is working.
Let’s get physical
My sage advice to music labels? Don’t underestimate the resurgence of vinyl records – or any type of physical media for that matter. These are real products that music fans love collecting in-store and/or online and will pay top dollar for.
Thankfully, burgeoning music communities like Bandcamp, which grew by 35% last year, have figured out a way to make physical and digital co-exist in perfect harmony. In a recent blog post called “Bandcamp, Downloads, Streaming, and the Inescapably Bright Future” Bandcamp said fans pay artists $4.3 million dollars every month using the site, and they buy about 25,000 records a day, which works out to about one every 4 seconds.
Here’s more from the Bandcamp post:
Subscription-based music streaming, on the other hand, has yet to prove itself to be a viable model, even after hundreds of millions of investment dollars raised and spent. For our part, we are committed to offering an alternative that we know works. As long as there are fans who care about the welfare of their favorite artists and want to help them keep making music, we will continue to provide that direct connection. And as long as there are fans who want to own, not rent, their music, that is a service we will continue to champion.
Is the Bandcamp model music to your ears? Sound off in the comments