The Australian Recording Industry Association (ARIA), after taking a look at sales for the first half of 2008, has run crying poor to the Herald Sun. While they have not yet released these figures to the public, they presumably continue the trend evident in published figures for 2006 and 2007.
Australian Music Sales
Nothing here is particularly surprising, but nor should it be particularly alarming. Sales of physical media fell by more than $60 million from 2006 to 2007, driven largely by the fall in CD album sales. In percentage terms, CD singles fell further, but this was more than offset by increased sales of digital tracks. So it appears that Australians are embracing iTunes and other digital music sellers. This is despite the fact that the music industry here seems more focused on combating piracy than promoting digital outlets. Sales of digital music grew by more than 40% and at that rate, if the 2006-07 trends continue, digital sales will exceed physical sales in under five years!
SonyBMG chief, Michael Smellie recently conceded that the Australian music industry has “missed the boat” in the digital age. The result is that Australian music-lovers are missing out on the benefits of innovations in music sales and, I would argue, the industry is forgoing revenue opportunities as well. By way of example, Apple’s challenges with music licensing in Australia were such that the Australian iTunes Store opened a full two and a half years after the US store. Music subscription services such as Pandora and Rhapsody are yet to sort through this licensing mire and are forced to block Australian visitors to their sites. I suspect that the likes of APRA and PPCA are not helping very much with this process, when they really should be embracing initiatives like these. The best way to fight music piracy is to provide decent legitimate options for people who are prepared to spend money on their music.
Rhapsody is a particularly good indicator of where digital music is heading. For a monthly subscription fee of around A$15, users are given on-demand access to an enormous library of music. Combined with a network music player (such as a Squeezebox or Sonos), a service like this can dramatically change the way people listen to music. A band or track comes up in conversation? Fire it up on the stereo, whether you’ve ever owned it on CD or not! There are benefits for the industry too. Subscriptions tend to be sticky: just think about your mobile phone bill. It is estimated that 25% of Australia’s 8 million households subscribe to pay TV. There is no reason that subscription music services should not aim to achieve the same penetration rate, if not higher, particularly since there is no directly comparable free to air competitor. At $15 per month, the resulting revenue would come close to monthly sales of CD albums in 2007. The sooner ARIA and APRA understand this, the better for everyone.
Of course, some of us (particularly of the older generations) will not be able to let go of our fetish for the physical artefact and so the demise of the compact disc will be a long, drawn-out affair. In fact, surprising though it may seem in a declining market, a new CD shop opened in my neck of the woods just last Saturday. Repressed Records joined So, Hum, Fish Records, Stikki Records, Egg Records* and (my favourite) Bravery Repetition & Noise on King St, Newtown alone. So, while shops catering to the latest pop releases will struggle to compete with digital alternatives, the CD will continue to sell in those shops that can command the loyalty of specific niches of music-lovers.
In one form or another, the music business has plenty of life left in it, despite the tales of gloom being peddled by the like of ARIA.