O'Reilly Network: Liebowitz finds that MP3s are hurting the music industry [June 05, 2003]
Not to detract from the article itself - Liebowitz does an excellent job of examining the facts. But the one thing that is missing is the simple economics of disgust. CDs now cost about the same as they did (adjusted for inflation - perhaps actually more than they did) when they were first introduced. The associated production costs have, of coursed declined drastically (who in 1990 would have imagined being able to burn your own CD on your home computer!?). So why am I paying $18.99 for the new "Weird Al" CD (okay, so I found it online for $13.99, but locally it was $16.99-18.99)?
What the recording industry continues to turn a blind eye on is the simple fact that they're charging an arm and a leg for crap that people aren't interested in paying for. Why buy a new CD for $18 that only has one or two songs on it that I want? C'mon, folks! The top-selling CDs for the past several years (over time, excepting out the 1-2 weeks' worth of new release) have been the "Now! That's What I Call Music" collections. Why? Because most people will pay $18 for songs that they know they like!
The recording industry will continue to slowly siphon off its own profits until it realizes that they only have three viable options to regain the market: (1) create a per-song kiosk system that allows me to create customized CDs for ~$1/song; (2) lower overall CD prices to no more than $12/each for a new CD, $10 for a back-catalog disc (I remember the days when ALL CDs at Circuit City were $11.88 or less. Who killed that? The industry, when they threatened to pull their distribution channels!); and/or (3) follow Apple's lead and make a real effort to create an online distribution model.
Unless they do that, they're already dead; they just don't know it yet.
