The Death of the Record Industry

Rolling Stone has an article up about Who Killed the Record Industry. Answer: the companies themselves.

So who killed the record industry as we knew it? “The record companies have created this situation themselves,” says Simon Wright, CEO of Virgin Entertainment Group, which operates Virgin Megastores. While there are factors outside of the labels’ control — from the rise of the Internet to the popularity of video games and DVDs — many in the industry see the last seven years as a series of botched opportunities. And among the biggest, they say, was the labels’ failure to address online piracy at the beginning by making peace with the first file-sharing service, Napster. “They left billions and billions of dollars on the table by suing Napster — that was the moment that the labels killed themselves,” says Jeff Kwatinetz, CEO of management company the Firm. “The record business had an unbelievable opportunity there. They were all using the same service. It was as if everybody was listening to the same radio station. Then Napster shut down, and all those 30 or 40 million people went to other [file-sharing services].”

I would also add a few other factors:
1) Getting rid of singles, and forcing people to buy an album for one song. Another reason people started grabbing MP3s.
2) Never dropping the price on CDs, but instead jacking it up to about $18. A crime.
3) Shameless CEO salaries.
4) Being Lowest Common Denominator about everything.
Also, why don’t record companies sell CDs for cheap at concerts? That’s a major audience who are ready to impulse buy. I’m sure there’s some stizoopid legal reason for this, but I’ve always seen this as a missed opportunity.

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