Even the inhabitants of Outer Mongolia must be aware of the impending demise of music as we know it; not as far as the type of music available is concerned but rather how we consume it.
Once one has loaded one’s CD collection onto one’s iPod, one will never revert back to playing individual CDs ever again. It is only the technophobes – the older generation – who resist the move to an easier more convenient way of consuming one’s music.
No longer am I forced to listen to the same 5 CDs lying in my car. Instead I can now listen to any of the songs of the 250 CDs on my iPod. I have read the last rites to my CDs and placed them in cold storage in an outside room. This is merely a halfway house, to placate my conscious before I dump all 250 CDs into the rubbish.
You may well ask me why I did not just turf them out like some unneeded item, which they are. I will finally dispose of them shortly without receiving trauma counselling just as I managed to cast away my old beloved LPs, the old unloved cumbersome VRCs and even my thousands of running medals which were merely cluttering up the house.
It is an end of an era. The once beloved CD collection will soon be permanently discarded for a newer, slimmer and sleeker mistress, MP3 storage. Apart from a frission of regret when the deed is done, it will rapidly pass and life will return to normal. I will not even retain a copy just to show my future grandchildren what a clunky space consuming monstosities CDs were.
I was starkly reminded today that this process is inexorable and has wider implications than my ex-CD collection. While walking through Cresta yesterday, I attempted to make my mandatory stops at Exclusive Books and at Look and Listen. There staring at me was a boarded up shop façade which Look and Listen formally occupied. After the demise of Phase 2 CDs and the Top 10 CDs stores at Cresta within the past year, that leaves Musica as the only music retailer remaining at Cresta.
How serious is this crash?
CD sales, which make up the bulk of physical recorded music sold in South Africa, shrank from 15.9 million units in 2012 to 12.2 million in 2013. In 2009, CD sales in South Africa stood at 17.1 million.
Globally, overall music sales decreased by 4% from 2012 to 2013, while in South Africa overall music sales are down by almost 12%.
The graph below illustrates the dramatic decrease in music sales trade revenues in South Africa.
Music sales in South Africa by format (source IFPI)
If this is not a precipitous decline, I don’t know what isn’t. This will translate into a flurry of store closures as leases expire or alternative tenants obtained.
Various strategies to delay the decline have been noted: severe price cutting especially on Blu-ray items, most CDs on offer being at the lower end of the price scale, offering accessories et cetera. None of these measures will ameliorate the situation but rather make it just less bleak while the store closure process is in full swing.
My crystal ball is projecting that up to 80% of all Music stores will be shuttered by 2020
Earnings of artists and record companies
Being a middle-man in the process, technology will result in the disintermediation of the record companies if they are not providing a valuable service to their customer. Most will not survive in their current form with artists being empowered to bypass these channels.
Where my chief concern lies is with the artists. With the ability to easily download music off the web, why would today’s youths want to pay for an item that they previously obtained free? With the genie out of the bottle, it will not be recaptured & reinserted.
The die has been cast. Piracy is alive and in rude health. The value of the artists’ intellectual property has been written down to a fraction of its previous worth.
The purchase of digital music on sites such as iTunes has not nearly taken up the slack created by the demise of physical sales.
No business model that I am aware of will replace those earnings on a one for one basis. Annuity income from record sales is now a relic of the past. To earn money, bands will have to perform. Live acts are not subject to digital download – at least not in the foreseeable future.
These are torrid times for the music industry as technology has made the previous business model outdated.
Like all such changes, there will be winners and losers but I am not despondent. A viable business model will eventuate out of the morass of an archaic structure where the record companies as opposed to the artists held the upper hand.
Finally the role of intermediaries in these processes is being called into question including the necessity of having expensive physical stores for something which is in essence an electronic “good.”
Ultimately this will be a revolution affecting the roots and the branches of a once opaque industry.