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The Changing Music Market

by @ 11:12 am on June 25, 2006. Filed under Music, Technology, iPod, iTunes

The Washington Post has an article about the way that the market for music has changed now that more of it is being purchased online:

For years, old recordings have piled up in the archives at Verve Records, including beloved jazz tracks that had no market big enough to justify pressing new discs. But thanks to the Internet, music lovers are rediscovering iconic titles like Ella Fitzgerald’s “Sunshine of Your Love” and Quincy Jones’s “Body Heat” — rekindling enough popular demand to prompt Verve to reissue them through a project called Verve Vault.

“The demand for music has never been as big as it is today. We get all kinds of questions from customers worldwide, looking for a track name or an album, or asking, ‘Why haven’t you put that out yet?’ ” said Jon Vanhala, vice president of new media and strategic marketing at Verve. So far, about 2,700 albums have been brought back through the Vault, with more than 5,000 scheduled to follow

In the past, record companies took albums out of circulation on a regular basis, releasing then again only in spatterings or, in most cases, not at all. The reasons, of course, were largely economic. It cost money to put out a vinyl record or compact disc and, if you couldn’t be assured people would buy it, you’d lose money. With the advent of online music the equation has changed completely. The cost of releasing a digital version of a recording is virtually zero, so if you can get even a small group of people to pay 99 cents a song for it, you’re probably coming out ahead.

All of this had led to a change in the way that people discover new music and the industry has been forced to adapt.

Because the Internet has changed how people discover and share music, the rules of marketing it and the hierarchy of who determines what’s hot have also changed. As radio-music listenership declines, the industry finds itself spending more time courting a broader field of tastemakers who, through Web sites, are popularizing songs that never get radio play. The primary tool in this transition is the playlist — a sequence of tracks posted on blogs or shared on music purchase sites such as iTunes.

(…)

In the online world, friends’ recommendations or an endorsement from bloggers such as Wang and Burke, as well as podcasts such as “The Nashville Nobody Knows” and “Accident Hash,” can yield significant marketplace results.

A duo called Gnarls Barkley, for example, found a huge following online. The band’s songs, including “Crazy,” were well established online before getting radio play. Its songs have been listened to on the band’s MySpace social-networking site more than 6 million times. Transatlantic online exchanges made the British band Arctic Monkeys famous in the United States before any album came out here.

“Word of mouth benefits [independent labels] in particular, and we’re only starting to see the benefits,” said Kevin Arnold, founder and chief executive of the Independent Online Distribution Alliance, which disseminates music from 2,500 labels to digital music services.

No longer is musical taste in the hands of A&R executives at record companies. With virtually an entire music catalog available at your fingertips, you don’t have to listen to what they say you should be listening to, and that can only be a good thing.

Even radio stations are being forced to adapt:

To adjust to that shift, radio stations are experimenting with “send us your playlist,” or by-request music shows, said Mike McGuire, an analyst with the research firm Gartner Inc. “It greatly complicates how you promote acts and content,” which is why forward-thinking labels like Warner Music Group’s all-digital label Cordless Recordings are spending more time and promotional money on finding bloggers, he said.

All of this makes life easier for the consumer, and opens up musical worlds that we might not have otherwise been exposed to:

In the past, a music aficionado had to invest time and money sifting through racks in the hunt for, say, a little-known ska band. Now, entire CD racks and vinyl-record collections can fit into several gigabytes of computer memory — and people who never invested their resources in acquiring music can simply rip off a playlist, or type in a search to find that same, small-time ska band. It’s yet another blow to brick-and-mortar record stores, which with the rise of digital music have already lost CD sales.

Of course, there are some who don’t like this brave new music world:

Richard Carlisle toes a harder line. The self-described vinyl-record purist has sold records for 30 years and owns Orpheus Records in Arlington. He’s never put an iPod to his ears and spends no time on the Internet surfing for new music. “I have a vested interest in people not using an iPod,” he said. “I guess you could call it a sour-grapes phenomenon.”

But online trends still affect his business; a customer recently came in asking for an album from an indie-rock band he’d never heard of — Neutral Milk Hotel — which had become popular online. Since then, he’s sold roughly 30 of those albums.

The market is changing, and even the purists will be forced to change with it.

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