Free Pony Theory ~ CD sale trend (bla bla)

Joined: 23 Sep 2006 Posts: 1088

http://www.almightyretail.com/music_retail/cd_sales_chart.php

Rolling Stone - October 12, 2004

But as Wal-Mart and other national discount operations such as Target and Best Buy have grown -- approximately half of all major-label music is sold through these three -- an estimated 1,200 record stores have closed in the past two years, according to market-research firm Almighty Institute of Music Retail.

This breakdown of the cost of a typical major-label release by the independent market-research firm Almighty Institute of Music Retail shows where the money goes for a new album with a list price of $15.99.

$0.17 Musicians' unions
$0.80 Packaging/manufacturing
$0.82 Publishing royalties
$0.80 Retail profit
$0.90 Distribution
$1.60 Artists' royalties
$1.70 Label profit
$2.40 Marketing/promotion
$2.91 Label overhead
$3.89 Retail overhead

Joined: 23 Sep 2006 Posts: 1088

http://www.rollingstone.com/news/story/6558540/walmart_wants_10_cds

For the music industry, having such a dominant retailer is like
being stuck in a bad marriage. Whereas traditional music retailers
took advertising money from the labels to push new releases in
Sunday newspaper circulars, Wal-Mart barely advertises locally. It
relies on national campaigns, where it promotes its own low-price
policy. "Wal-Mart has no long-term care for an individual artist or
marketing plan, unlike the specialty stores, which were a real
business partner," says one former distribution executive. "At
Wal-Mart, we're a commodity and have to fight for shelf space like
Colgate fights for shelf space."

<p>In the same way that Wal-Mart made it difficult for local
mom-and-pop retailers to compete with its low prices, it has hurt
smaller music stores. "When you're buying CDs for twelve dollars
and selling them for ten like Wal-Mart, it makes the rest of us
look like we're gouging the customer, when we're not," says Don Van
Cleave, head of the Coalition for Independent Music Stores, a
retail consortium. "It's supertough to compete with that price
point." Even online, Wal-Mart sells songs for eighty-eight cents,
compared with ninety-nine cents at the market leader, Apple iTunes
Music Store.

Joined: 23 Sep 2006 Posts: 1088

To show the promise of digital sales for individual albums, Warner Music executives provided cost-analysis data from a successful hip-hop record released in the last 12 months. The information was disclosed on condition that the performer not be identified in The New York Times.

According to the data, sales of the CD accounted for roughly 74 percent of domestic revenue the company took in from the project, or roughly $17 million. But sales of an array of digital products added almost $6 million — about two-thirds of that came from ring tones of hit singles. The figure also included roughly $330,000 from mobile phone games related to the performer and $94,000 in sales of cellphone “wallpaper,” or screen backgrounds.

Yet the industry as a whole still remains uncertain — and in the meantime must try to promote digital sales at the same time it seeks to preserve the CD and brick-and-mortar retail shops.

Mr. Nardone, for one, said the industry must consider lowering CD prices to allow retailers to compete with Apple’s industry-leading iTunes service, where full-length digital albums typically sell for $9.99. That is less than his wholesale cost for CD’s. Sales at his chain are running about 9 percent behind last year, he said.

http://www.nytimes.com/2006/12/11...&partner=digg&exprod=digg

Joined: 23 Sep 2006 Posts: 1088

Recording compared to other entertainment

http://bigpicture.typepad.com/comments/2004/02/time_not_on_yor.html

Joined: 23 Sep 2006 Posts: 1088

Entertainment retailer Trans World filed its 10-Q yesterday, which show its 2007 Q1 earnings. (Download PDF.) Those figures were released last month, and the new filing offers some information that was in the Q1 earnings conference call.

On page 18 we see that music represented 44% of sales in 2007 Q1, as opposed to 52% in 2006 Q1. Music sales dropped 16.7% and sales of the CD format dropped 20.8%. (In the conference call, the COO said comp music sales were down 21%.) Comparable store sales (total) were down a whopping 10.1%. Any way you slice it, Trans World's music story is a bad one.

The company operates over 800 stores under the brands f.y.e., Coconuts and Wherehouse Music.

http://www.coolfer.com/blog/archives/2007/06/trans_world_rel.php

Joined: 23 Sep 2006 Posts: 1088

For the music industry, it was a rare bit of good news: Linkin Park's new album sold 623,000 copies in its first week this May -- the strongest debut of the year. But it wasn't nearly enough. That same month, the band's record company, Warner Music Group, announced that it would lay off 400 people, and its stock price lingered at fifty-eight percent of its peak from last June.

Overall CD sales have plummeted sixteen percent for the year so far -- and that's after seven years of near-constant erosion. In the face of widespread piracy, consumers' growing preference for low-profit-margin digital singles over albums, and other woes, the record business has plunged into a historic decline.

http://www.rollingstone.com/news/...81/the_record_industrys_decline/1

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Joined: 23 Sep 2006 Posts: 1088

Apple passes Amazon to become the #3 US music retailer

Apple has passed Amazon to become the third biggest music retailer in the US. This isn't the biggest of surprises, since Steve himself predicted that the iTunes Store would overtake Amazon at the Showtime event back in September, but the leap to #3 is a little unexpected, since Apple also outpaced Target last quarter. iTunes is now rocking a 10% market share, just behind Wal-Mart at 16% and Best Buy at 14%, and while we don't expect to see it pass those two giants anytime soon,

http://www.engadget.com/2007/06/2...o-become-the-3-us-music-retailer/

Joined: 23 Sep 2006 Posts: 1088

"What's to blame for the declining CD sales? Is it that manufacturers are putting out more and more 'safe' (read: crap) music while independent musicians are releasing online? Is it because iTunes is now the third largest music retailer in the country? Or is it just that CDs are becoming obsolete?" Quoting: "Forbes.com [ran] an article showing that CD sales are expected to be down 20% in 2008 (slightly higher than the 15% drop initially predicted). Why such a drop? What's truly happening is a gradual shift away from physical media to downloadable formats. What this indicates, so far, is that US sales of digital music will be growing at an estimated rate of 28% in 2008, however physical sales will drop even further, resulting in a net overall decline.""

http://slashdot.org/article.pl?sid=07/06/26/011235

Joined: 23 Sep 2006 Posts: 1088

Flash-Memory Cards and USB Drives enjoyed another stellar year in 2006. Almost every month brought new announcements of still-higher storage capacities and still-lower prices. The first USB flash-memory drive with 16GB of storage capacity has just recently been introduced, and it carries a list price of just $299! That is $18.75/gigabyte, which was at the low end of ex-factory prices just two years ago! By the end of 2006, some 150 million USB flash-memory drives will have been sold since their introduction in 2001, and the end is nowhere in sight. Flash-memory is becoming so ubiquitous in the consumer field that it threatens to eliminate not only most current applications for magnetic tape there, but many now depending on optical media as well. More and more digital camcorders, for example, employ only flash memory, and this is a trend that is sure to grow. By 2010, we are told, 50GB flash-memory cards and USB drives will be as readily available as 2GB units were in 2006, and at street prices little different from today�s 2GB units!

Next year will see the first so-called "hybrid" hard-disk drives introduced, drives that include a flash-memory storage chip, which helps to speed up overall operations, including the initial boot-up. Some users of high-capacity USB drives have already figured out how to use them to boot up their PCs and portables, and are said to be very pleased with the results. This too is a trend that will grow in the immediate future. By the end of 2007, we may see the first laptop computers introduced that contain only flash memory for storing the operating system and applications, as well as the user�s files.

We note here with much sadness the passing of Mr. Al Shugart, one of the pioneer developers first of the 130mm floppy disk drive, and then, beginning in 1979, of the first 130mm hard-disk drives. Those first hard-disk drives had a capacity of just 5MB (megabytes, not gigabytes), but this was more than five times the capacity of the floppy disk at that time. The hard-disk drive has come a long way since then, and the company that Mr. Shugart founded to produce them, Seagate Technology (originally known as Shugart Technology), has always been at the forefront of the industry. Today, Seagate is a $12 billion company.

Mr. Shugart (he would have objected to the "Mr.", being a "please call me Al" sort of guy!) spent most of his early working years as an engineer at IBM, but left there to form Shugart Associates and later Seagate Technology. He was truly a character, known far and wide for his eccentric interests and behavior, but universally respected as a highly innovative man professionally. He contributed much to the early development of small-format hard-disk drives, but never really liked managing a rapidly growing company. "Al" was also a dedicated gourmet who at one time had a restaurant of his own, and enjoyed life to the hilt. As an industry pioneer, Al Shugart has left an indelible mark on the data-storage industry. He was 76 years old.

MP-3 players dominated the portable audio business in 2006, as they did in 2005 as well. It is interesting and quite useful to see how rapidly these new digital formats have pushed out older analog and digital types in the portable audio business. Consider for example the graph below, the data for which comes from Sony Corporation. It is specific for the domestic Japanese market, but is believed to be representative of what has happened most everywhere in the portable audio field over the past two or three years. Sony, as the originator of the portable audio player (the Walkman audio cassette format), and the company that developed the MiniDisc, the first portable digital audio optical disc recorder, obviously has a large continuing interest in this field. The graph covers ten years of actual data, along with an estimate for 2006, and shows how incredibly fast, in the Japanese domestic market at least, properly designed players, such as Apple�s iPOD units, have replaced audio cassette, CD, and MiniDisc players.

http://mmislueck.com/WhatsNews.htm

Joined: 23 Sep 2006 Posts: 1088

Supply Chain Vision: MP3 Players, a vision realized - and then some

Apple continues to dominate the market for MP3 players. During 2005, the company strengthened its position by introducing the flash-based iPod nano. Apple also scored by adding video capability to its flagship iPod while simultaneously cutting deals to include video content on its iTunes online music store. To date, consumers have downloaded more than 12 million videos from iTunes.

The company more recently introduced a 1Gbyte version of the iPod nano and cut prices for the iPod shuffle; these moves expand Apple's footprint in the market.

One key challenge that Apple faces is iTunes' contract renewal with record labels, some of which are expressing an interest in variable pricing, i.e., making consumers pay larger fees to buy the more popular songs. Apple is resisting this move, and user studies certainly suggest that consumers likely would respond to any price increases by reverting to more piracy.

A lesser challenge is the availability of new music download services from Verizon and Sprint. However, it seems unlikely that consumers will embrace paying a two-to-three times premium-exclusive on any additional air-time charges-compared to iTunes, just for so-called convenience and instant gratification.

Many hardware companies also are trying with limited success to challenge Apple's leadership. However, these competitors face several challenges ranging from flash-memory supply, to content availability, to the so-called "coolness factor."

http://www.emsnow.com/newsarchives/archivedetails.cfm?ID=12292