Hollywood Take Note: Music Sales Drop 20%

The WSJ reports that CD sales for the first three months this year are 20% down from last year. Though digital music purchases are up about 50% Y/Y, overall music industry revenues are said to be down about 25% Y/Y. It appears the RIAA’s lawsuit bully tactics are having a reverse effect on sales. From the Journal:

The sharp slide in sales of CDs, which still account for more than 85% of music sold, has far eclipsed the growth in sales of digital downloads, which were supposed to have been the industry’s salvation… In recent weeks, the music industry has posted some of the weakest sales it has ever recorded. This year has already seen the two lowest-selling No. 1 albums since… 1991.

Whether the music industry likes it or not, things are only going to get worse. The good news is that people still like music—maybe more than ever. What’s really changing here is that those who had control over distribution are losing control. More and more, the middlemen can be cut out and small bands (much like small businesses on the Web) can reach a worldwide audience without incurring much in the way of costs.

The movie industry has just started feeling the sting of a digital world. As it becomes clearer and clearer that Hollywood’s monopoly over movie distribution lessens, Hollywood will be tempted to take control of the inevitable movement towards new distribution models. Hollywood would be smart to learn from RIAA’s mistakes and take a more participatory role in giving people movies the way they want them, at fair prices. $20 New Release DVDs and $10 movie theater tickets may sell for now, but I don’t see that lasting long.

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