Sinking Record Sales /Managing the Digital Age

An article in the most recent Rolling Stone sings the same tune we've been hearing for much of this decade - "the record business has plunged into a historic decline," and there's really no disputing this fact. (Read the complete article here). Everyone - indies and majors alike - are feeling the ramifications of this decline, and the task at hand is simply to deal with it. But how did we get here? One expert - and I'm inclined to agree with this at least partially - sees the industry's failure to manage the digital landscape as a major factor.

"They left billions and billions of dollars on the table by suing Napster -- that was the moment that the labels killed themselves," says Jeff Kwatinetz, CEO of management company the Firm. "The record business had an unbelievable opportunity there. They were all using the same service. It was as if everybody was listening to the same radio station. Then Napster shut down, and all those 30 or 40 million people went to other [file-sharing services]." Thankfully, major labels didn't make the same mistake last year, choosing to negotiate deals with YouTube, as opposed to fighting them.

The digital shift poses several challenges to our industry, but an interesting phenomenon has arisen at the same time. While less people seem to be buying CD's, "people are listening to at least as much music as ever. Consumers have bought more than 100 million iPods since their November 2001 introduction, and the touring business is thriving, earning a record $437 million last year." So, while the digital arena allows for fans to access everything for free, it also allows them the opportunity to find sounds they never would have been unable to a decade ago. Subsequently, our collective appetites for new music seem to have grown considerably, as had the quantity we feel capable of taking in. The challenge the industry is grappling with - as am I - is how to translate that into an actual product that can be bought and sold.

It's no secret that New and Used Records is investing its energy and resources into digital supplements. Our label blog and video podcasts are our strongest marketing tools. It is my hope that through these outlets, we will be able to build a stronger connection with our fans. Those who feel connected may be more likely to purchase a CD or attend a show as a sign of support. Being a small label, we cannot really afford an expensive promotional campaign. Thus, we rely on these fans to link to our site, embed our videos and so on, becoming our digital "street team" if you will.

I also see a great deal of potential in the world of digital downloads. Granted the profits to be gained our far greater than those of a physical product, but the costs are also significantly lower. Furthermore, the medium allows for the return of such lost art forms as the single and the EP. You can anticipate a number of digital only releases from our label in the near future, as a platform for remixes, covers, and alternate takes has opened up once more. Our friends Birdman Records launched a ditial only label (Birdman-a-phone) in 2005 to supplement releases with live recordings and b-sides. Listeners have no desire anymore to see their favorite bands disappear for three years in between albums (unless that band is Radiohead) and the digital platform allows for labels and artists to keep listeners constantly satisfied and interested.

I enter this industry knowing full well the challenges it presents, but I can't help but be more excited and worried. I like the see the digital age less as a hurdle, and more like an interesting challenge. Meanwhile, the industry certainly has a great deal of changes in store.