An update on the changing face of the music industry

Two weeks ago, I wrote about Dave Matthews Band and the rapidly changing music industry. In that post, I mentioned that total sales of music had contracted 25% since the industry peak in 1999, showing no sign of picking back up.

This week, we have more confirming evidence that the old record-label model of selling music via albums is slowly becoming obsolete.

In the latest sign of waning consumer demand for recorded music, the Billboard 200 album-sales chart just registered a dubious distinction: The No. 1 position was held by an album that sold fewer CDs and downloads than any predecessor since at least 1991, when accurate weekly tallies first became available.

The 44,000 units sold by the band Cake's sixth album, "Showroom of Compassion," marked the second week in a row that the No. 1 album notched a new low-water mark. Last week's chart was dominated by Taylor Swift's "Speak Now," which sold just 52,000 copies according to Nielsen SoundScan.

Album sales simply aren't what they used to be, and that's a reflection of technology enabling and revealing customer preferences. Regardless of how record labels prefer (or preferred) to sell their music, consumers prefer to purchase their music piecemeal--cherry-picking their favorite tracks and creating their own playlists and mixes on their iPods and other mp3 players. Call it the "mix-tapeization" of the music industry.

For decades, consumers had no choice but to purchase albums. It was the only way they could own or listen to the music they loved, so they shrugged their shoulders and handed over their money. Technology has enabled more choices, and the consumers' preference has been made loud and clear. It's not that there aren't still successful albums and consumers willing to buy them; it's just that there are many fewer of them than the old model seemed to suggest.

Freeing the consumer from the tyranny of the album model should be a net positive for the industry--it allows for artists to see more clearly what consumers like and don't like, and what they are or are not willing to pay for. This kind of customer feedback is vital for any successful business, and it's exactly the type of feedback that the music industry wasn't getting for so long.

Certainly, record companies are the player who will be hurt the most by the decline in album sales. But musicians are arguably better off--they never made much money from album sales to begin with, and now they can waste less time producing tracks 4 through 15 of a mediocre album, and more time focusing on producing more of the premium content that their listeners actually want. That, and more time touring, which as Dave Matthews has taught us, is where the real money lies.

[Wall Street Journal]