Digital sales may be playing a swan song

[Bob Olhsson]

Here's some food for thought: (http://californianonline.gns.gannett.com/apps/pbcs.dll/article?AID=/20070215/TECH01/701260346/1001/TECH)

http://californianonline.gns.gannett.com/apps/pbcs.dll/article?AID=/20070215/TECH01/701260346/1001/TECH
(http://californianonline.gns.gannett.com/apps/pbcs.dll/article?AID=/20070215/TECH01/701260346/1001/TECH)

[Zoesch]

Huh?

Don't think so... compared to the (still declining) sales of CD's the sales of downloadable music are still small, considering how long the iTunes store has been around calling it a failure is a bit far fetched.

Personally, I never believed downloadable music was going to replace CD's any time soon but it's a good complementary service to find the odd single tune you don't feel like buying a complete album for.

On the plus side, it allows people access to more music than before, on the down side you have to search around, dig for music, find the artists you like and exert a ton of personal responsibility... unlike the past two decades of MTV-fed artists.

[kwiksilver]

This paragraph from the article is pure nonsense:

"It's not just an iTunes problem. In January, the International Federation of the Phonographic Industry - the global bureaucracy guarding music copyrights - said that online music sales in 2006 "nearly doubled." Which sounds amazing. Until you get to the part where the IFPI says that sales had tripled in 2005. So the growth rate had slowed."

?????

Take any given number, triple it and then double it; you have growth.

[eagan]

This paragraph from the article is pure nonsense:

"It's not just an iTunes problem. In January, the International Federation of the Phonographic Industry - the global bureaucracy guarding music copyrights - said that online music sales in 2006 "nearly doubled." Which sounds amazing. Until you get to the part where the IFPI says that sales had tripled in 2005. So the growth rate had slowed."

?????

Take any given number, triple it and then double it; you have growth.


As weird as that might strike you, you have to understand that these days in the corporate business world, this seems to actually be common thinking. In that kind of thought, the rate of growth of the rate of growth slowed, and that comes as bad news to them.

What I mean is something like this:

Let's say the difference of gross revenues for Big Stupid Corporation Inc. between 2005 and 2006 increased by 20%. So then the suits of BSC Inc. are looking for the figures for 2007, and as part of their goals for improvement and growth, they might want to see, say, an improvement of income of 30% between 2006 to 2007. If things increase by 20% again from 2006 and 2007, they won't see that as "improvment", they'll see that as "stagnant", because the rate of growth of the rate of growth didn't get any higher!

If things increased by 20% from 2005 to 2006, and their revenues increased by "only" 10% from 2006 to 2007, they might see that as a decline, not things getting better two years in a row, because they built their whole plan on the idea that last year they increased by 20%, so this next year things must improve by 20%, or their big plans blow up. It might even be that their plans revolved around the idea that "last year had 20% growth, so this year, we MUST HAVE 30% growth as our goal", and if income increases by 25%, this is failure.

And guess what happens then? Watch the news. Masses of people at the lower and middle of BSC Inc. get chopped, the people left get to do all the work they had done plus the work that was done by the people just tossed out the doors, and then, as part of some mook plan of "continuous improvement", the ones left are also told to get on it, because to straighten things out, now for 2007 to 2008 the Big Plan requires that we see an increase of 40%.

As bizarre as all this might seem, this kind of thing is common thinking now.


JLE

[kwiksilver]

As weird as that might strike you, you have to understand that these days in the corporate business world, this seems to actually be common thinking. In that kind of thought, the rate of growth of the rate of growth slowed, and that comes as bad news to them.

Well eagan,

It doesn't strike me as weird. I have been working in large corporations for close to twenty years.
I am well aware of that corporate mentality. I was a downsized victim some years ago due to the company wanting to maintain a 20% growth per month through acquisitions of competition and diversification. Redundancy comes into play and the axe falls.

When acquisitions reach a saturation point or other economic factors come into play, just what you said happens. The axe continues to fall and those remaining workers are now putting in 60 - 70 hour work weeks. I know people doing this now and they are burning out fast.

However, a point I didn’t make in my first post is this:

The reporter is being irresponsible by taking things out of context and making things sound worse than they are.

“(IFPC) said that online music sales in 2006 "nearly doubled." Which sounds amazing. Until you get to the part where the IFPI says that sales had tripled in 2005.”

That information is from two different yearly reports.

Extracted from the IFPI:06 Digital Music Report - 2006 –John Kennedy, CEO

“Two years ago, few could have predicted the extraordinary growth we have seen in the digital music business. Some 420 million single tracks were downloaded in 2005, up more than twenty times on two years ago. And that excludes the entire business of music on mobile phones, a market which is not far behind music downloads in value. Together in 2005, these two new distribution channels took record company revenues from digital sales to an estimated $US 1.1 billion globally, tripling in value compared to 2004. And there will be further significant growth in 2006.

But, impressive as they are, these statistics only hint at the real underlying value of the digital music revolution. Music is today making an enormous contribution to the development of the world’s digital economy. For example, in 2005 consumers bought over 60 million portable digital music players (worth an estimated $US 9 billion), paid over $US 75 billion in broadband subscriptions and purchased $US 50 billion worth of mobile data services. Nokia, the world’s largest mobile handset manufacturer, sold over 40 million music-capable phones alone.

The message is clear: a new wave of digital commerce, from mobile to broadband, is rolling out across the world. It is generating billions of dollars in revenues and creating millions of jobs. And it is being driven, to a large extent, by music – by the people who create music, who produce it and who invest in it.”

Extracted from the IFPI:07 Digital Music Report – 2007 – John Kennedy, CEO

“The digital music business continues to grow. Trade revenues in 2006 doubled to about US$2 billion – around 10 per cent of our sales. By 2010 we expect at least one quarter of all music sales worldwide to be digital.

Some commentators have expressed concern about the pace of annual growth. Yet we never claimed it would double every year and the rate of growth that we are seeing today would be considered wonderful for many businesses. ”

Kevin Maney’s column in TheCalifornian.com is just one commentators opinion about someone else's opinion on the state of the online digital music business.

We all know the old saying about opinions…………………………..

kwiksilver

[eagan]

I was a downsized victim some years ago due to the company wanting to maintain a 20% growth per month through acquisitions of competition and diversification. Redundancy comes into play and the axe falls.

When acquisitions reach a saturation point or other economic factors come into play, just what you said happens. The axe continues to fall and those remaining workers are now putting in 60 - 70 hour work weeks. I know people doing this now and they are burning out fast.

Ah. OK, you obviously don't need me telling you about all that then.

20% growth per month? Good god. People are just nuts.


But, anyway, I see what you're getting at. I does kind of look like a USA Today columnist filling a day's column. Maybe a little like if it was 1950 and somebody wrote a newspaper column saying "television is a failure.... look how few people have them!".


JLE