Record Labels To Blame For Industry Decline

    April 12, 2007

Physical music sales continued a trend of downward progression and digital revenues are not making up the difference. Within the next two years, total revenues from music sales are projected to dip down to $23 billion, which is half of what the industry brought home a decade earlier.

Tower Records recently closed its doors for good, signaling the end of an era for the brick and mortar music store. Digital music downloads continue to become the method of choice for audio aficionados, while CD sales are plummeting faster than you can say Don Imus.

Even as online sales increase, however, industry revenue continues in a pattern of overall decrease that has the major labels hanging on for their very lives. According to Enders Analysis, a British research firm, record companies have only themselves to blame for the precarious position in which they now squarely rest. 

Eric Bangeman from Ars Technica reports on the firm’s findings:

Is piracy to blame? Is DRM the solution? Enders Analysis says no, instead laying the blame for the industry’s sliding sales at the feet of the record labels. "As we analyze the industry’s core challenges… we consistently find that the industry has lost the ability to influence and control its future," reads the report’s executive summary. "Worse, the industry has often appeared caught short, and its reactions accordingly wrong-footed."

Now we’re getting into some interesting conceptual territory. The RIAA, which represents all the major labels, has focused so intently on controlling revenue streams that it has lost focus on the bigger picture of the evolving industry. As a result, the RIAA has grasped the money stream so tightly that the very future of the music industry itself has slipped through its very fingers.

Gordon Gekko would tell you that greed is good. In this case, however, it has irrevocably removed the major record labels from any sense of relevancy within the music industry.