RIAA MISSES IT…AGAIN

This week, RIAA VP of Research Joshua Friedlander wrote a blog entry entitled “Nobody Stole The Pie”. He equated the downfall of the music business to the children’s story of the same name. The story is one where a townsfolk slowly eat away at a celebrated pie before a festival. When it’s all gone by the time of the festival, the residents claim it was “not I” who stole the pie. The parallel is that filetraders have eaten away at the music business pie, and are now claiming it’s not their fault that the music business is in trouble.

Nice story. Nice easy parallel to make for some headlines. If only the analogy were correct. But unfortunately, in order to make his case, Joshua doesn’t quite look at it from the proper angle, in my opinion. He is correct that the pie has whittled away and is working its way down. But while the piemakers (ie record labels) have bemoaned the loss of pie sales, they haven’t fully embraced the true issue.

People now like to eat cookies.

To follow along the parallels here, track sales are like cookies. Smaller, cheaper, more plentiful. Both have the same basic ingredients (flour, sugar, unique sweet filling). But one is easily sold as a big unit, while the other is sold as smaller units, but can also be sold in a multitude of bundled quantities.

Also, cookies have a different cost strucure. They have a smaller profit margin. They require more variety. You also bake them for a shorter period. You can test a flavor out on a customer for cheaper. Maybe to save costs you make them in a smaller kitchen.

In the RIAA’s own blog, they take the pessimist view that the sale of Top 10 product went from 55 million albums in 1999 to 21 million albums plus 36 million downloads in 2009. I take the optimist view that says this is an additional 2 million paid transactions that have occurred. That’s not huge growth, but given the economy it is a pretty bold statement.

The issue is whether the industry is making the successful transition from pies to cookies. At the end of the day, they need to make both. But stop bemoaning the fact that people’s tastes have largely switched from pies to cookies.

They also need to make cookies in different batches. Sell them in different bundles, different brand names. Super high end cookies are possible to sell at a premium. 10 years ago, cupcakes were considered a relatively cheap commodity. Now, in many cities, there are shops that ONLY sell high end cupcakes at Starbucks prices. It can be done.

Readers of Futurehit.DNA already know what they need to do. First off, make as many “cookies” as you can (Chapter 7). Make sure the first bite is the most enticing and don’t rely on people eating the whole cookie for satisfaction (Chapter 1). Make it sweet so you want to share cookies with your friends (Chapter 14). Make your cookie just a little bit longer so it has better value (Chapter 2).

Don’t believe in the doom and gloom of the industry. Track sales continue to increase. The quality of music has increased such that top sellers are selling more in 2010 than 2009. And as more evidence shows today’s kids are consuming in the cloud and don’t even care about stealing, streaming royalties is looming to become the biggest source of revenue a decade from now. Which means you’ll likely be making pies, cookies, and sprinkles.

The reality is that you will succeed if your music is quality. Lack of talent definitely leads to less sales in 2010. Then, you need to follow Futurehit.DNA’s philosophies of how to make sure the public more readily receives your music. When more people follow this, the industry’s revenues will follow.

Keep making delicious cookies.

One Response to “RIAA MISSES IT…AGAIN”

  1. Michael O'Connor March 13, 2010 at 11:20 am # Reply

    The cookie analogy is good but it’s also important to realize that in the music business the cooking process (arranging, producing the song) can screw up a great cookie. As a music publisher who had 4 top 40 Billboard hits…..I found it took about 4 version attempts of cooking those hits with various changes to the ingredients (demo singer, keys, musicians, mixes, quality of arranger) before the cookie tasted like a hit. On my site check out the song “Cellophane” sent to me 20 years ago by producer Phil Ramone (Billy Joel). I finally found the right singer to re-bake that cookie. A blogger Kalebnation loved it and sent a link to his 30,000 cookie lovers.

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