The following MBW blog comes from Paolo d’Alessandro, the founder and CIO of International Solutions, a music promotions and marketing specialist in Europe, the US and Australia. International Solutions works with clients including Razor & Tie, Epic Records, RCA and Dine Alone Records. Paolo (pictured) is a former VP of International at Roadrunner Records and Domestic GM at Universal Music Italy.
There is a simple observation about the worldwide music industry that keeps nagging at me.
The only two markets in the world where the people have clung on to physical music sales – Germany and Japan – are surprise, surprise, two of the three biggest markets on the planet.
The decline of CD is really now starting to feel like a self-fulfilling prophecy.
Retailers say ‘oh, the CD’s dead, let’s take those racks away’. And then the CD dies… because you’ve taken the racks away.
Yes, of course the advent of a new technology will always shake the previous one. And yes, potentially it can obliterate its predecessor – we’ve seen that in the past.
But it just seems rather telling to me that Germany still has around 700 physical music retailers, and its physical music market was completely stable in 2014. In fact, physical remains the bedrock on which its market continues to grow.
I recently walked into a SATURN shop in Cologne and it was staggering; there were loads of people buying CDs. It was full.
“This is all about a balancing act between recognising the current demand while keeping an eye on technological developments”
Let’s be honest: This industry has been known to be near-sighted like no other.
Anybody who’s been around for a while – or has read “The Hit Men” – remembers Walter Yetnikoff and his famous firing of loads of people at CBS back in the day. He thought the CD would never work because the booklet was too small and “people don’t want to squint to look at their album cover”.
So with that in mind, we look at Germany, which has 700 physical music shops, a growing annual recorded music market – of which 75% is physical. And then we look at the UK, whose recorded music market continues to decline.
The UK has HMV – which has been through hell and back then done a return trip – which has around 125 stores. Add a generous amount of indie record shops and you’re looking at 150 retail spots for CD.
Heck, be extra generous and make it 200. It’s not great either way.
All I’m asking is: are we really looking at this market from an objective point of view? If we are, fine. So be it.
But if we’re not, if we’re being near-sighted or scared, then history will have taught us nothing and that, to me, is the ultimate sin.
I worry that we’re simply enabling our ADHD – always moving on to the next shiny thing, falling onto the side of the cutting edge for the sake of it
And then you look at this staggering recent increase in vinyl sales. Has anybody really asked themselves why that’s happening? Instead of just dismissing it as a hipster or Guardian reader’s fad?
Mine and many other people’s Christmas present was an ION turntable I could plug into my Mac. So maybe vinyl’s resurgence is about hardware, about infrastructure.
Can somebody please investigate if there is a correlation between hardware sales and vinyl sales?
Can somebody please check if there is a correlation between the 700 CD stores in Germany and the stability of the CD in that market?
I don’t have the answers. but I do recognise this is all about a balancing act between recognising the current hardware infrastructure and fulfilling that demand while keeping an eye on technological developments and trying to understand where that will take us.
This isn’t about forcing 14-year-olds to use the CD. If two generations from now the CD is as important in the overall market as vinyl is today, then there’s nothing wrong with that.
But I worry the music industry today suffers from ADHD. We’re so quick to focus on the next source of revenue – even if that means contributing to kill the previous one.
We are desperate to jump onto the next bandwagon – even, it seems, before the one we’re stood on has finished its course.
[Pictured: Pink Floyd’s The Endless River was a No.1 in Germany last year, with the vast majority of its sales on CD]Music Business Worldwide