So tired, tired of waiting tired of waiting for you: record labels long for digital to rescue dwindling sales

New music players, a growing number of broadband connections and a proliferation of online stores helped digital music sales double last year but the surge was still not enough to reverse a declining music market.

Record companies' digital sales jumped to $2bn (£1bn) in 2006 from $1.1bn a year earlier and continued to take market share, according to the latest update from the global industry group IFPI yesterday.

Downloads to mobile phones, computers and music players now make up a tenth of global music sales but as sales of physical formats such as CDs continue to fall, digital has not come to the rescue.

Reports the Guardian and CD sales are due to halve within the next few years

Darwin would be chuckling to himself, it is brutal out there, just look at EMI and the ousting of Alan Levy

The company admitted yesterday that annual sales were down 10%, compared with investor expectations of them being in line with a year ago. Analysts reckon EMI's poor festive showing will knock a £50m hole in profits for the year, leaving them at about £110m.

As a result of the downturn in its core music business, which accounts for more than 80% of EMI's revenues, the company has ousted French-born Mr Levy and his deputy, David Munns.

Now the fortunes of EMI, at least in the short term, appear to rest on the shoulders of Norah Jones. The third album from the daughter of Ravi Shankar is out this month and EMI hopes for success. I mean how bonkers is that as a business model?

Apparently Japan, where mobile phone downloads are widespread, has reached a turning point. Digital was also within a whisker of offsetting falling CD sales in Britain and the United States.

Doug Morris head at Universal said

We are going to make money from MySpace; we are going make money from YouTube; we are going to make money from Zune. We will make a tremendous amount of money from telephones

By which he means mobiles rather than bakelite stuck to the wall telephones - I hope.

The moment of inspiration - Mobile, moment, money and me

EMI's global head of digital, Barney Wragg, says "We have the opportunity to satisfy the impulse purchase. We are acutely aware that we are competing for every pound, every euro and every dollar in the consumer's pocket."

If only they had been talking to Tomi a few years ago. Sigh

Creating a greater narrative, deeper context, more value

Alex Zubillaga, who runs digital strategy at Warner Music Group, said the company doubled online album sales in 2006 by adding lyric sheets, video and photos. Further incentives included priority concert tickets for those who pre-ordered the Red Hot Chili Peppers "bundle".

Is it not amazing that boards only spend 3% of their time thinking about the future. If the music industry had put more effort into investigating what was happening in technology, culture, and communications they could well have avoided a great deal of the pain.

And of course now comes the blood letting and the cost cutting.

Decline of EMI Music

Comments

[Jeremy Silver]

Thanks for the link Alan, yes the music industry is now at a very significant cross-roads in its development. It is faced with the reality of withering on the vine (industries rarely vanish overnight) or of transforming itself. The problem appears to be that, despite the optimistic comments you quote from the digital folk at Warner and EMI and Universal, none of the major labels knows how to restructure itself around a new business model. They have lost all the defining characteristics of what previously made them majors - ie control of access to customers for artists, control of distribution, control of marketing. The fact is that people can choose these days whether or not to pay for music - and through P2P mostly they don't pay. So the model is broken big time and desparately need to change. A few of us industry veterans (blimey I think that's what we're now called) have a few pretty good ideas about what the new model looks like. But it will scare them half to death - it's just a question of whether they have the courage to grasp the opportunity or whether they prefer to try to feather their individual executive beds as the industry gradually dies around them.

[Alan moore]

Dear Jeremy,

Thanks for posting, Yes I agree the majors are at a significant cross-roads.

Basically I think, people can create different, deals, global distribution, different contracts from day one.

Will they do enough to survive?

Hmmmm hard to say.

I tried so hard to talk to so many record companies, and gave up. It was frankly quite depressing.

And after all that EMI pins its hopes on the sales of Norah Jones new musical offering.

In many ways you see a myopia, and almost negligence, in these companies not being prepared to investigate or countenance a different business model. Where you give up control to gain control. As Darwin says adapt or die. As we say, engage or die.

Ps. where are based?

And thanks for posting - Alan :-)