Copyright 2004 Guardian Newspapers Limited  
The Guardian (London) - Final Edition
June 7, 2004
SECTION: Guardian Media Pages, Pg. 54

LENGTH: 791 words

HEADLINE: Media: New Media: Salvation for the record industry

BYLINE: Saul Klein

BODY:
Most of us have memories of taking home an LP from a record store, unwrapping it, admiring the cover art, closing the bedroom door, turning on the record player and sitting back, without the tyranny of a remote control, to study the lyrics and sleeve notes while listening to the tunes in the order they were played.

Somehow CDs could never be the same. All of a sudden track numbers became more memorable than song titles, you could skip all around and the visual canvas of the cover was so compact that the bond between you and the band seemed shrunk to Lilliputian dimensions or displaced to another medium such as MTV.

No wonder when the internet came along we all started to flee in disgust and sought refuge back in the music heaven to which we had always retreated. The file-sharing networks that Napster spawned were a godsend. Not only was there now music everywhere but a community of listeners to share it with.

It's not clear whether the decline of the music industry coincided with the birth of file-sharing networks or was precipitated by it. Year on year, the industry has suffered global losses of 20% since 2000 and its official bodies, such as the IFPI, have attributed much of these losses to digital and physical piracy.

Forrester's European study in January 2003 concluded that "more than 40% of frequent downloaders buy less music now than they did before they began downloading. This is not enough to be compensated by 2% of people who say that they bought more after having downloaded".

Sounds pretty conclusive and with an estimated 1bn files available for download in April 2003, you can see why the music industry was having kittens and suing any teenager with a peer-to-peer connection they could lay their hands on. But many of these studies did not actually look at the data; instead they asked people who were downloading if it affected their purchasing behaviour, and surprise surprise many said it did.

But a more recent study done in partnership by Harvard Business School and UNC Chapel Hill, which correlated actual download information and compared it to sales data, suggests that the true impact of file-sharing on album sales may have been over-estimated and in many cases found that file-sharing actually leads to increased sales. In fact other forms of entertainment seem to have had more impact on the music industry than Kazaa and Morpheus. The long march of video games and DVDs, plus a reduction in music variety stemming from both label and radio consolidation, have led to systematic decline.

But the music industry may be turning the corner, and once again it may be its willingness to embrace and innovate using the new digital formats presented by the internet and DVDs that will drive the renaissance. Both are relatively new and untested by the labels but the early signs are that the combination of the online distribution's breadth of selection, convenience and value-for-money and DVD's ability to involve us in the intimate world of the artist - behind the scenes, behind the lyrics and live on stage - is pointing us back to a world where we could love music and feel excited enough to share our passion.

Digital downloading has stripped music down to its bare essentials - all sound and no fury, it is the logical conclusion of the customisation promoted by the CD format. But the format and distribution possibilities afforded by DVDs could be the first major creative bonanza for artists since the birth of MTV, in terms of developing new dimensions of intimacy with their fans.

In 2003, retail sales of music fell worldwide by 7.6% but there have been some encouraging trends for the music business as it looks to explore and add value to new formats. The sales of DVD music video grew 67%. Top-selling artists included new and old favourites such as Coldplay, U2, Led Zeppelin and Michael Jackson. In Europe alone, more than 50 legal music downloading services have been launched, and in the US, Apple managed to push iTunes pass the 50m download mark in March 2004.

In fact perhaps the best news for a music industry increasingly intent on exploiting under-developed markets is the news that, according to NPD, the real growth opportunity is among the over-30 crowd, who represent 56% of all sales, and by 2005 could account for as much as 60%. Maybe I'm showing my age, but it certainly makes sense to me that, instead of pushing compact content at the 15-24 year olds, the music industry may be better served creating the albums of the future for a community that enjoys visual feasts and footnotes alongside our new digital downloads.

Saul Klein is the co-founder and CEO of Videoisland.com, and can be reached at www.saul.klein.name



LOAD-DATE: June 8, 2004