The digitization of the music industry vs. the book world: the ultimate overview (part I)

This series of blogposts originated on Twitter, when a few people from both the book world and the music industry came to the conclusion that there has been written a lot about the developments in both worlds, but never before in one big comparison.    

The developments in the book world are regularly compared to those in the music industry. The outposts warn time and again that publishers now, shouldn’t make the same mistakes as the record bosses did then, substantiated with data, studies and their own experiences. Unfortunately, these comparisons and warnings are not always heard by their colleagues. So, this requires action. Therefore, a joint series of blog posts was written by Timo Boezeman and Niels Aalberts, with important additions and nuances by Erwin Blom, Eric Rigters and Jelte Nieuwenhuis. All work(ed) in book world and/or music industry. The goal: the ultimate overview of the digitization that is taking place in both worlds. Not to convince others: that is something you will have to decide for yourself. Not to come with the solution, there is simply not one solution. Not to explain what the music industry has done wrong in the past (and perhaps the book world will do wrong in the future), that is something Ori Brafman and Rod A. Beckstrom with The Starfish and the Spider and Steve Knopper with Appetite for Self-Destruction have written excellent books about. No, our aim is to lay these two worlds ‘on top of each other’ to demonstrate the similarities and differences. Something anyone can use in his advantage.

From physical to digital
To properly compare these two worlds, it is important to know where they come from and what has happened until now. Today the music industry, tomorrow the book world, Wednesday the similarities and Thursday the differences.

Music: from paper to mp3
The traditional music industry as we know it these days, arose halfway last century and blossomed with Elvis in the late 50’s, the British beat-boom in the 60’s (Beatles and the Stones), disco and (progressive) rock in the 70’s, world stars Madonna, Prince, Michael Jackson and stadium concerts in the 80’s, and house, Nirvana, Oasis and boy & girl bands in the 90’s. Time and again a technological development played a key role in a new golden age, and in the avoidance or ending of a dip. The transition from (selling) sheet music to recordings on vinyl (early 20th century), first 78, then 33 and 45 rpm, the Walkman and cassette tapes (although this was instantly seen as a threat) and, to an extreme, in the transition from analogue to digital, from vinyl to CD: with just minimal effort, the music industry earned their money twice, because of the massive replacement purchases made by consumers. Steve Knopper describes this process in Appetite for Self-Destruction. What is striking: every technological progression, and thus every golden age, was always the result of an invention or innovation from outside the music industry.

Knopper also shows in his book how record companies missed the boat entirely with the latest technological developments in the music industry, the transition from CD to MP3. A mass exchange of digital files over the Internet was the result. This is illustrated in a rather hilarious statement on Blender.com with ‘The 20 biggest record company screw-ups of all time’. At the top of that list: the prosecution of the file-exchange network Napster, late last century. Although files were exchanged illegally on a large scale, and copyrights and other rights were violated, Napster was the worldwide clubhouse for the hard core music lovers. If the corporate music industry had started a conversation with Napster at that time and immediately offered a reasonable and affordable alternative to the file sharers (for what there actually took place - all the music ever made, always and from everywhere available, easily, quickly, directly and usually safe - a lot of redundancies and the halving of an entire industry maybe could have been averted. By shooting with hail in the world's most popular music pub and destroying landlord Shawn Fanning, the biggest music lovers of the world each crawled under a different digital stone (read: fled to another file-exchange service). The most important and previously most loyal customers of the music industry were now untraceable and therefore unavailable to their marketing machine, which was working fine until then. A wise lesson for every publisher now.

Music: growth of the digital format
The MP3 originated in 1992, but only became a threat to the established music industry with Napster, Kazaa, The Pirate Bay and other platforms where they could be exchanged quickly and easily. That same music industry likes you to believe that Fanning and his henchmen are fully and solely responsible for the halving of an entire industry. But that is not true. Steve Knopper devotes an entire chapter to the development of Napster and shows that it is different. This development started around 1997 and reached a peak in its use shortly after the turn of the century. From these graphs (graph 1, graph 2) , the decline in revenue of the Dutch music industry started almost 10 years earlier; the magic of the CD started to fade away in the first half of the 90’s, when most of the vinyl was replaced by a silver disc. The decline in sales was accelerated enormous by Napster though.

Other markets show the same trend over that period. The preliminary final result: the halving of the Dutch and global music industry. The rapidly declining CD sales are barely compensated by digital sales for a long time. The Netherlands is thereby relatively further behind than other territories. BREIN (the Dutch FACT/MPAA/RIAA) and the established industry shout: the Dutch like to steal, and ‘you cannot compete with free’. The truth is: fast Internet is everywhere, we are impatient with what the music industry is doing not quick and good enough, and is therefore unable to deliver legally and affordable (remember ‘all the music ever made, available everywhere, easily, quickly, directly and usually safe’). Now that this is rapidly improving, digital music sales in different markets rises significantly. The figures and forecasts of streaming platforms like Spotify are becoming more and more positive. The music lover gets more and more legal access to what was only possible illegal for years. Hopefully, the film and book industry also see that convenience, offering sufficient quality and a reasonable price are the key. This doesn’t mean that the revenues from legal digital sales and streaming have made up for the losses in the music industry.

Tomorrow in part II of this series: what preceded in the world of books.

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