Are Videogames Killing the Music Industry?

[Via Gizmodo]

To the right you can see a graph plotting the total money spent by consumers on music since 1973 divided into different media.

There is a clear trend here of one new media type taking sales away from it’s predescessor.

Until you get to the drop off in CD sales.

Now the RIAA would like you to believe that this drop is purely the result of internet piracy.

It isn’t.

I’m not about to say Internet Piracy isn’t a problem (it is) but I’m also not about to side with the RIAA as their tactics have been fairly reprehensible.

However Piracy alone cannot explain the huge drop in spending on music.

What follows is my opinion based on anecdotal evidence. It’s not facts and I’m not claiming that they are. I have no real evidence to support my claims but I hope that somebody at elast investigates it because I think it’s an interesting topic…

The Internet Killed Music

Piracy hasn’t killed the music industry. If anything Online Retailing and the rise to power of Amazon has had a much larger effect on the bottom line of the music industry than any amount of downloaded music.

Back in 1999 if I wanted to buy an album on CD I would be paying between £12-15 for it in a brick and mortar store.

Today ten years later I can buy a New CD for under £10 sometimes even less than that.

Most things in the last ten years have gotten more expensive (like Candy. That stuff cost 30p ten years ago and now costs closer to 70 of our pence. Rip. Off. ) but CD’s have gotten much cheaper.

2 Reasons exist for this:

CD’s cost less to duplicate. I can get 1000 CD’s pressed with boxes, Cover Art etc for under £1 each with shipping. The numbers the Music Industry is dealing with means that they are paying pennies to actually manufacture the product.

Compared to ten years ago the profit on the physical product is much higher (while arguably the cost of recording the music has kept pace with inflation).

This reduced cost of manufacture is what allows big stores like Amazon to sell a CD for 2/3 it’s RRP and still turn a good profit.

At the same time as manufacturing costs dropped the intense competition from online retailers has forced the retail price to drop. In order to stay competitive and stop a sale going to Amazon high-street music stores have to charge online prices.

So point 1: Music Costs less to buy now than ten years ago. Thus the value of a single sale is much lower than it was ten years ago. All we know from the above graph is we’re spending less money. That doesn’t mean we’re buying less music just that we’re spending less money on it.

CD’s Aren’t The Only Fruit

Around 1999 (the peak of CD sales) something happened. DVD became a viable format for Films and Videogaming consoles had become mainstream entertainment.

Both of these cost more than a CD full of music.

What happened then is that people found their disposable income was split between CD’s, DVD’s and Videogames.

Films and Videogames both cost much more to produce than an hour of music with budgets firmly rooted even then in many millions of dollars. To make back your investment on a Film or Videogame meant you had to charge more for the end product.

It was easier to spend more money on music ten years ago for most people as the alternatives either didn’t exist or weren’t as compelling.

Remember that the amazing numbers you see for how much money we’re spending on Videogames has to come from somewhere. In order to spend more on videogames we had to spend less on other luxury items like Music and Books. The new format taking over from the CD in that chart isn’t mp3 or digital downloads but the videogame.



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9 Comments

  1. Posted August 6, 2009 at 3:44 pm | Permalink

    At first, I thought you were not really right, but actually if you think about it in recent years people really have been buying a LOT of TV and movies on DVD.

    I’d like to see this plotted alongside movies/games, as well.

    You know, there is another way to look at it, which is just culturally how are we entertaining ourselves? It used to be split between Television, Theatregoing, Music and Traveling Puppet Shows.

    But now, I wonder if we don’t all just spend so much time on the interweb that it’s killing the music/television/etc. industry. Like, it’s not that we’re pirating music, it’s just that we’ve stopped being interested in it! (sorta)

  2. Nodachi
    Posted August 12, 2009 at 7:59 am | Permalink

    Good read, reasonable.
    You once said in another post that Videogames are competing against other Activitis, such as Sports etc.
    But i guess you could say that CD’s have the same Problem, they are competing against Films and Videogames aswell.

  3. Posted October 26, 2009 at 1:37 pm | Permalink

    It’s an interesting idea, though if I think about why I have stopped buying CDs, and I used to buy them constatnly, it does have alot to do with the internet and computers. It is not attractive anymore to own tons and tons of cds, people prefer to have neater stored info on hard drives etc. It makes it easier to travel, clutters places less, and is overall cheaper.

  4. Posted November 18, 2009 at 11:03 am | Permalink

    I completely agree with Psysal. The biggest problem is that people do NOT have tha same interest in music as they did before. Anyways, thank you for sharing the article, it makes reflect on how society and tastes have changen in the last 30 years.

  5. Posted December 21, 2010 at 8:07 pm | Permalink

    […] Rob Hale chews over the recent music-industry-failing infographics and wonders whether videogames actually did kill the music industry. […]

  6. Posted December 21, 2010 at 8:14 pm | Permalink

    It’s an interesting idea, though if I think about why I have stopped buying CDs, and I used to buy them constatnly, it does have alot to do with the internet and computers. It is not attractive anymore to own tons and tons of cds, people prefer to have neater stored info on hard drives etc. It makes it easier to travel, clutters places less, and is overall cheaper.

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