One of those nasty stories that has a way of focusing your thinking ran in today’s business section in the NYT. Atlantic Records, a subsidiary of Warner Music Group, reported that revenue from digital-downloads outstripped revenue from physical CDs this year. Unit sales of downloads surpassed CDs for the first time in 2007, as the graphic accompanying the story points out.
It’s a nasty bit of evidence not because so many people are now able to listen to music, but are getting it by file-sharing, which is just a reality; it’s nasty because this is actually digital revenue being greater, and throughout the industry, digital sales are a tiny slice of the pie.
Payments from subscription sites, for example, are pro-rated across a user’s entire streamed uses, so instead of getting, say, $17.00 for an album sale, it’s streamed and the label (and artist) get whatever percentage of the monthly subscription rate they earned. You pay $15 a month, listen to 200 tracks, that’s $0.075 per track. Say 10 of those were from one album; therefore, the label gets back $0.75 for it. (Before the fees to the providers are deducted.)
I digress. The articles states that Warner doesn’t break out sales on a label-by-label basis, so I don’t know what Atlantic’s share of WMG’s $854 million in revenue for the last fiscal year was. I also can’t predict the future, but if digital sales continue to edge their way up as a percentage of overall sales, there’ll be significant cutbacks made in the amount of new recorded music that’s issued.
Which is unfortunate, because say what you will about excessive overheard, or mismanagement, or whatever, the fact remains that labels can get things done that artists can’t. Releasing your stuff on your own lacks the marketplace heft of a label. (Yes, labels have their down sides, too.) But even on the indie side, labels like Thrill Jockey and Kill Rock Stars, or, if you prefer, New Amsterdam, give their artists cachet through their presence in a trusted stable of musicians.
How this is going to play out remains to be seen, but I do know that the big players will not sit around and let the “digital pennies” mentioned in the article be their business plan. The numbers have to add up, and everyone (even – especially – on my side of the record-industry fence) are making sure they add up high enough. A $10 billion industry has many devoted consumers who have expressed a clear interest in the ongoing viability of the products created by that industry. Which is the wonky PowerPoint-presentation way of saying, of course, that people want music.