Music industry way off track with song and dance about falling sales
March 29, 2004
Figures show that we're buying albums in record numbers, despite the internet 'freeloaders', writes Steve Cannane.
The Australian record industry has just had its best year ever. But it doesn't want you to know about it. This month ARIA announced its sales figures for last year. In its press release, it talked about Delta, it talked about falling CD singles sales, it talked about the rise in DVD sales, but at no stage did it tell us it was the industry's best year ever. Why bury the good news?
Record industry types aren't usually shy about success. But this time their success is a little embarrassing. For the past few years the industry has argued that file-sharing and CD burning is having a negative impact on sales. But, unfortunately, their own sales figures don't back up their arguments.
ARIA's press release was slugged with a bizarre headline: "Music DVD continues its rise whilst CD singles slide further". A mixed year, you might think. Not so. It took a canny finance reporter, SBS's Peter Martin, to decode the spin. He had access to ARIA sales figures going back to the early 1980s. He worked out what ARIA knew but decided not to share: when sales cracked 50 million albums for the year it was the first time this had happened. And combined sales of all formats for last year climbed to more than 65 million for the first time.
But that's just one year, I hear the record companies say. OK, let's go back to 1998. The year before an 18-year-old college dropout named Shawn Fanning wrote a file-sharing program called Napster, the software that kick-started the downloading boom. In that year Australian record companies sold 39.6 million CD albums. Five years later the figure had gone up to 50.5 million. That makes it hard to argue that downloading and CD copying has been killing sales.
But what about the sales of singles, I hear the record companies cry. Singles sales did fall last year by a significant amount. While album sales increased by 7.85 per cent, singles sales went down by 16.5 per cent. But what would you rather? We know which format makes the most money. ARIA wants to stress the drop in singles sales because it suits its argument.
But it's not telling the whole truth. It neglects to mention the record companies are not releasing as many singles as they used to. Sales of singles do not make much money. Singles are these days pretty much released for promotional purposes - to get radio play and drum up interest in an album. In the US, singles have virtually disappeared from sale.
But what about our research, I hear the record companies scream. ARIA paid a research company to survey music consumers. The survey results suggest there's been a 12 per cent decrease in CD purchases by people who are into file-sharing. The greatest percentage is with the under-17s - people who don't have much money. But the research suggests those with the money, the 45 and overs, are buying more CDs after file-sharing. Now that's a statistic we never hear quoted.
According to Stephen Peach, CEO of ARIA, "The free ride simply can't continue indefinitely at the expense of the owners and creators of music."
If we ignore the rhetoric of record companies caring about artists for a moment, let's think about this. Maybe it's the record industry that's getting a free ride from file-sharing - a massive marketing system that allows music lovers to get exposed to all kinds of music without the record industry having to pay a cent.
I'll tell you what the record companies are paying for now, and it's not scholarships for the struggling artists they say they're trying to protect. It's lawsuits. ARIA is taking on Kazaa and suing university students. American record companies have sued nearly 2000 file-sharers in the past six months. Even the FBI has become involved. It says music piracy has become its third priority behind terrorism and counter-intelligence. A number of US Congress members who rely on the entertainment industry for campaign funds lobbied the FBI to spend more money hunting file-sharers and CD burners. So now CDs in the US carry FBI stickers warning of fines of $250,000 or five years in prison.
There's been no similar push by Australia's Federal Police. But keep your eyes on the figures - next year could be another record year for album sales and for prosecutions.
