Computer Support Blog

The music industry, which has spent the decade since they effectively sued Napster out of business, has watched their market shrink for years.  The business leaders within the music industry blamed digital downloads of music, specifically pirated downloads, for the steady decline in revenues.  But 2011 showed some interesting trends in the music industry which suggests that the executives may have simply been grossly impatient with their emerging market.

In 2011, for the first time ever, digital music sales grossed more money for the music industry than physical media (compact discs) did.  While the music industry claimed that digital music would outstrip physical media sales back when Napster was in operation, the decade between its demise and the reaching of this milestone suggests that the music industry did not know how to effectively exploit the new medium and sales path.  After all, if pirating music had been the sole problem with the music industry making money off digital downloads, as soon as Napster was shuttered and iTunes started selling digital downloads, the music industry would have met their goal of selling more digital downloads than physical discs.

Pirating certainly was a problem for the music industry, which is why France and several other countries have made more strict pirating laws to combat Internet piracy.  But France’s law does not account for the fact that 50.3% of music sales in the United States were digital music sales.  For that, one has to credit price or quality.  It is entirely possible that the few dollars difference in price between a digital download and the physical counterpart has finally made a difference in the cash-strapped United States.  But equally important, the sales of digital music downloads were especially tied to Internet music phenomenon in 2011.  Emerging artists like Rebecca Black benefitted greatly from their songs going viral on the Internet.  While Rebecca Black’s song “Friday” was downloaded tens of millions of people viewed the video and the digital download sold over one hundred thousand units.  Even though the vast majority of viewers for the video on YouTube “disliked” the video (based on clicking the “dislike” button), the song still made a lot of money.  This suggests that Internet users will pay for a single, even if just to mock it, if it is inexpensive enough.

The other piece of data music execs seem to be failing to correlate is a quality factor.  While price might encourage the purchase of novelty acts and singles, digital download sales may well have peaked because listeners found something they actually wanted to listen to.  The best-selling album of 2011 was Adele’s album 21.  Critics seem to universally agree that the success of 21 has been successful based upon the power of Adele’s voice, the strength of her lyrics and the originality of her sound.

While pirates have certainly inhibited music sales, perhaps the real problem with the music industry has been that it has been a long time since they fostered works worth buying.

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