The Death of the Physical: A Mass Market Strategy?

A lot of buzz is circulating about the physical music market being dead.  Such statements concern me.  I am not concerned about the declining physical retail sale of music, but I do find concern with the praise shown, as if the death of the physical is some sort of goal or accomplishment.  It is a well-known notion that the digital world is creating a new mass market for music, but what does that have to do with the presence or absence of the physical?

According to the RIAA 2008 Year-End Shipment Statistics, physical retail sales made up roughly 2/3 of  all music sales, a 9% decrease from 2007.  Digital music sales increased to 32% of total market value, bringing in $2.7 billion in total shipments.  Likewise, and contrary to the “death of the physical” exclamations, vinyl sales increased to $57 million, more than doubling its 2007 figures.

Although the rise in vinyl sales throw a  curve ball to “death of the physical” enthusiasts, the rising digital consumption statistics has become misrepresented.  These enthusiast seem to profess how music companies should focus on the digital instead of wasting time, energy and money on physical music retail sales.  Such notion raises much concern.   It is discerning to me that anyone would propose to render such a major outlet obsolete while the music industry, as a whole, suffers from a decline in total music sales.

Digital music sales are increasing in its percentage of the whole music sales pie – a pie that is shrinking by the moment.  The overall album sales pie, made up of both the physical and the digital, has decreased 14%, between 2007 and 2008.  This trend will only continue as listeners find other, free sources to obtain music.

The physical market not only provides income, but the physical market provides a unique and personal connection between artists and avid music connoisseurs.  Die-hard music fans collect vinyl and CDs, not to mention other music swag that record labels sell.  Die-hard fans are the people who are willing to spend more in the long run on merchandise, new products and concert tickets, distinctly separating themselves from the great number of people looking to get free digital music without any intent to support artists.

The death of the physical mindset abuses avid, die-hard music fans, possibly making them disinterested in supporting the very artists they now cherish.  This breaks the fan-artist bond, a bond needed in order for the music industry to profit.  Not only will this mindset upset the functionality of the existing music business model, but this negative mindset strives towards a dysfunctional mass market strategy.  The music industry is already facing challenges, why create a surefire method for failure?

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7 thoughts on “The Death of the Physical: A Mass Market Strategy?

  1. Pingback: The Pros and cons of online music distribution « Rainbow Rice

  2. Interesting article – I don’t agree with some of the points you bring out though. First of all, I don’t think that the physical music market is dead. As you mentioned, things like vinyl sales and although declining CD sales, these are collectibles, these are things that can be cherished in the new world of digital music. You talked briefly about the increase in vinyl sales – I think this is a perfect example of how the “physical market” isn’t extinct. I have a lot of friends who still go out and buy CDs and vinyls for tons of reasons – to continue supporting their favourite artists, to collect old (or new) records, to sample from for hip hop beats, etc.

    I take most “offense” so-to-speak, with your points about die-hard album consumers being the biggest connoisseurs or the most likely to buy other merchandise, go to concerts, etc. I’ll admit that I don’t currently own any physical CDs and that I download all of my music – just because I get it online does not mean I’m less likely to support the artists in other ways. For example, although I digitally have all of Jay-Z’s CDs.. I’ve also seen him twice in concert and bought t-shirts in the last few months.

    I believe that digital music isn’t a bad thing.. it’s a new, easier, more effective way for us to get and listen to music. It doesn’t have to constitute the “death of physical music” though and it certainly does not mean that digital music-holders are not supporters of music or the music industry, just because we aren’t buying the actual vinyl or CD.

    There’s always new technology that changes the way we look at, use and view the music industry.. the invention of the record player, radios, television, the internet, etc. Not necessarily a bad thing.

    Good article though, I definitely enjoyed reading it!

    • I’m glad you enjoyed it!

      I, by no means, explicitly or implicitly stated that the physical music market is dead. I actually stated the contrary, taking up issue with those who rejoice in the dwindling physical market and those who proclaim that the physical market is dead. I included the 2008 shipment statistics to illustrate the very fact that the physical market is still in existence and remains vital to the music industry. On that point, my post and your comment are in agreement.

      As for your preference to buy digital albums, I’m not sure why you are taking offense to that. I’m looking at industry statistics and trends – referring to the market as a whole, rather than looking any individual consumer’s preference or buying habits. I’m sure you and many other people have attended live performances of artists whose music you own digitally, I know I have. However, that is not reflective of industry trends.

      Regarding your comment about digital music not being a “bad thing,” I completely agree. Actually, I don’t regard digital music as not being a “bad thing” at all. I regard digital music as a great thing! That’s essentially why I dedicate this blog and my business/legal career to digital media in the music industry.

      Cheers.

  3. I think I may have misread parts of your article and interpreted them in a different light. In regards to the physical market’s decline, I think I may have misunderstood your position of its state – that’s why I commented that I didn’t believe it was dying. So yes, we are in agreement with that!

    And I believe I misunderstood your last point, assuming that you were suggesting that die-hard fans are the only ones that will buy the physical products, the merchandise and go to the shows.. and that it is digital music that is causing the decline in this phsyical market.

    That being said, I am in agreement with your position and really enjoyed the article!

    My mistake on the misunderstanding!

    • No worries and no apologies needed. I enjoyed your comment. I’m always intrigued to see other people’s points of view. Feel free to call me out anytime…there are many times where I’m mistaken 🙂

  4. Great article, this is definitely one of the most pertinent and divisive issues involved in the future of the music industry. I don’t have any stats on this, but I would venture to say that the physical market accounts for not only a huge chunk of major/upper indie record label sales, but it is the life blood of independent artists.

    This is not to say that digital downloads aren’t relevant to indie artists, it’s by far the most efficient way to reach people outside of someone’s “market” or region, but physical sales of CD’s, vinyl and merchandise far outweigh the sales (not to mention the profits) from digital downloads. All artists are losing percentages somewhere (particularly those signed to major labels), but most of the middlemen between the artist and online music formats like itunes, rhapsody and amazon usually take anywhere from 20-40% of online sales: song by song, album by album. Honestly it’s a pretty good percentage, but it is very strange to me that apple or rhapsody or amazon won’t deal with independent artists directly. But that’s a whole other can of worms.

    Because of the lack of personal connection you mentioned involved in artists and physical sales, some artists and labels are being very creative with how they approach digital downloads (ie. Radiohead just doing what Radiohead does, Weezer offering something of a digital video series leading up to the release of their new album, John Mayer documenting the recording process of his new album via video blogs, etc.) in order to create a more personal connection with fans in lieu of something physical. Do actions like this completely account for the lack of connection in digital downloading? Maybe, maybe not, but I do think that we’re going to continue to see artists doing really innovative things in an attempt to make the digital format more personal and inviting.

    Honestly, I don’t think either format is going anywhere anytime soon, but I’m very interested to see where things are headed five or ten years from now. Thanks for the insight on this issue, it’s great to see people having an informed discussion about it.

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