The Devastating Collapse of the Music Industry in One Chart

By: Rocco Pendola

NEW YORK (TheStreet) — Get a load of this visual, courtesy of the Record Industry Association of America (RIAA), via Digital Music News:

That’s a breakdown of total music industry revenues. And it’s nothing short of what my headline says … a “collapse” that is “devastating.” No click bait hyperbole here, brother. Just plain fact.

And it’s plain fact I’ve been riffing on ever since I started writing on the broad subject, as it particularly relates to Pandora(P) and Internet radio, at TheStreet. We’re seeing it play out as Congress listens to arguments from the various sides with respect to how much traditional radio and streaming media outlets should pay to license music.

The music industry continues to go after anybody it thinks it can make a case against. It argues Pandora and Internet radio doesn’t pay enough. It claims — suddenly — that it’s unfair that broadcast radio has never paid a performance royalty. Executives from the various cogs of the music industrial complex would sell their mothers out, to a person, if it keeps them from having to face up to their own ineptitude. To the fact that they — not Pandora, not traditional radio — created the mess they’re in.

I get into some detail in February’s Apple Hosed the Music Industry. But, yes, in the shell of a nut, the record labels and other key industry factions sat back and let Apple(AAPL) do the hosing. They allowed Steve Jobs to crush the $15 CD sale in favor of $0.99 a la carte downloads. Even as it was clear they were losing money on that deal, they sat somehow fat and happy with that arrangement. As downloads showed signs of fading, they allowed streaming radio pioneers, particularly Pandora, to take the driver’s seat.

There was never any action taken by the music industry to right its own ship. To look at its outdated landscape and take reflective/proactive action to alter it. Music industry brass remained static and went on a campaign — that’s in full steam today — to blame everybody but themselves for their problems.

The music industrial complex didn’t build it own platforms to distribute the music it owns and/or controls. It didn’t take its own streaming media platforms (the ones it didn’t build) and partner meaningfully with others to harness the power of music preference and other music-related data to create and perpetuate new, robust and forward-looking lines of revenue. Outside of a few visionary individuals acts, the music industry didn’t move to monetize touring and merchandise in the dynamic ways necessary to make up for rapidly declining physical sales and downloads and the lower payout rates from streaming radio. It sat back and committed itself to the blame game.

That’s what losers do. And, as the chart at the outset of this article shows beyond a shadow of a doubt, the folks who run the music industry — not the musicians, the executives — are clearcut, over and done losers.







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