antiGUY's
RANTitorial
Nu Math and the R.I.A.A.
3-15-01
antiGUY
I just love it when people twist their
numbers around in order to make a point, its even funnier when the press
ignorantly goes along with the propaganda without taking a careful look
at the numbers themselves. The latest example is the R.I.A.A., which in
its ongoing battle with Napster has claimed in a round about way that their
sales have declined because of fans stealing the music online**.
The R.I.A.A. recently released their annual sales numbers and that claim
doesn't add up unless you use nu math, which makes it possible for 2+2
to equal 37. But before we delve into the numbers lets take a look at the
controversy that is Napster.
While I have reported on the Napster issue
several times, I have never publicly taken a stand for either side. The
truth is, I can understand the stance of both sides, and so I am split
on the verdict of whether Napster is a good thing or not.
Personally I think of Napster as the modern
equivalent of radio, it provides a platform for music to get out to the
public. Radio these days is so market driven that fans only get to hear
the hit songs which accounts for only a small percentage of the music
that is released each year. Napster opens up the floodgates so to speak,
so lesser known bands have the chance to get discovered by listeners. In
that respect Napster is great. Then you have the bands or performers who
dont need this exposure and fans download the MP3s so they wont have
to pay for the CDs, in this respect Napster is bad. By the same token,
fans could just as easily tape the same song off of radio or burn a copy
of someone elses CD to avoid purchasing it for themselves. But I believe
a great majority of people who discover songs they like from Napster do
indeed go out and buy the full CD. This is evidenced by our unscientific
survey on iconoFAN where we asked our readers if they have ever purchased
a CD because they liked a song they heard on MP3. Over 80% said they have.
So in that case, Mp3s have acted just like radio and inspired fans to
buy CDs.
With that in mind, the best solution to
the Napster problem may be similar to what they proposed to the record
industry, which is a royalty model similar to radio. Each time a song gets
played on the radio the publisher of the song gets paid a small royalty.
Since, I believe Napster is the modern equivalent to radio it makes sense
to employ such a royalty model. So every time someone downloads the song
xyz by the band efg they will generate a royalty payment. However, these
payments could get out of hand and end up costing Napster a fortune if
the same payment amounts are used. Plus add in the fact that radio makes
their money from advertising and Napster proposes a subscription model
to generate revenue, the radio royalty type system would have to be majorly
tweaked in order to work, but it can be done. For the artists that
do not want their music traded on Napster, the company could employ the
blocking filters they are now under court order to use, to keep those songs
from being traded.
Now lets look at the R.I.A.A.s claim that
Napster has caused a 38.8% decline in CD sales. That is just not true.
The 38.8% came from the decline in CD singles not full length CDs.
Furthermore, CD singles only account for about 1% of the R.I.A.A.s members
sales. It is arguable that Napster has been a big cause of the decline
in CD singles sales, but then you can also argue that the fans decided
to buy the full length CDs instead of the singles. Look at sales of performers
who would normally be big hits in the singles market like N Sync and Eminem,
looking at the millions of full length CDs they sold, it is conceivable
that fans opted to purchase the full CD instead of the one or two song
single. Looking at Cdnows Eminem catalog they have for sale a full length
CD for $14.99 which contains 18 tracks. They also are selling CD singles
for $5.49 which only contain 5 tracks. So it would make sense that fans
would opt to buy the 18 track CD for a little more money instead of the
5 track single. Looking at the broader picture though, singles are pretty
outdated to begin with, they date back to the days when music was sold
on vinyl and single 45s sold for about 10% the cost of a full length LP.
With CD singles they can cost almost a third of the cost of a full length
CD. Wouldnt it make more sense for the record industry to discontinue
singles and sell the single songs for a buck or two online as downloads?
They would save a bundle on manufacturing, distribution and marketing which
could translate into a windfall in revenue for the sale of digital singles.
As for full-length CD sales in 2000, they
were up 3.1% from 1999. While this is a sharp decline in growth (1999 sales
grew 12.3% from 1998) it is still an increase and the decline in growth
can also be partially attributed to a slowing economy the relatively small
number of hit artists in 2000. Was Napster a part of this decline? It
could have played a part but we will never know for sure.
Continue
footnote: **(While
they did not come right out and say this, the wording of their press release
was done in such a way that it may appear the 38.8% applied to total CD
sales. A few reporters did in fact read the release this way and included
that assumption in their articles) |
