Yes, I know, I know, but let’s not worry about all the “is/isn’t the record industry a good comparison for books” stuff. None of it matters if a comparison is interesting, and whichever side of that interminable, pointless debate you fall it certainly is interesting.
The headlines from the latest music industry news suggest 40% growth in streaming services, which now generate £696m worldwide, while download growth has slowed to 8.5% year on year. In total physical sales comprise 61% of the total revenues of record companies, although this figure masks the almost total collapse of the CD singles market and reflects residual strength in CD album sales. Other reports I have read suggest revenues from digital are more like 50%, having only recently crossed that milestone, but we can now assume they are at least 40% of record company earnings, a figure far below the digi-hyperbole usually surrounding discussions of the industry.
By far the most important figure though is the continued decline in overall revenues. Earlier this year I had heard the long bleed in revenue was beginning to stanch, with a plateau developing in earnings – certainly preferable to the annual falls we had become used to. However the latest numbers show this isn’t the case. Firstly, as expected, physical sales are dropping everywhere, 12% globally and 16% in the UK. Worse, the growth in digital still isn’t enough to offset this, with overall revenues dipping 2.6% globally and a whopping 16% in the UK.
What can we make of this?
The key lesson is that less is less. Once sales start sliding they will continue to slide, and no amount of innovation, new services, new pricing models, devices and delivery systems can ever inject sufficient cash to replace lost physical sales. A combination of lower prices, less remunerative models, retailer consolidation and piracy – working together - have an inexorable and irreversible downward effect on earnings. Furthermore, I would suggest this is a feature of what happens to cultural products in general when they enter digital environments rather than being a specific feature of the music industry. When the value starts seeping it out, it seems that it is not so much a matter of putting it back as simply trying to slow the flow. What value remains tends to accrue as much to the platform as the content owner, although consolidation in the record industry has handed an inordinate amount of power to the majors, notably Universal, to dictate terms.
If you have an answer to this problematic let me know*. So far the book industry is only at the beginning of the curve. Top line growth is just starting to flatten or dip for many publishers. In addition the industry as a whole appears buoyed by some recent mega smashes, with The Hunger Games and E.L. James springing to mind. In contrast the record industry is having a fairly tepid time in 2012 because the line-up of new releases is so weak, especially in contrast to the Adeles et al of last year. However the warning signs are there. Absent the super-bestsellers and there aren’t too many growth stories, although at least there has never been the noxious combination we saw emerging in the early 2000s for the music industry.
The second lesson is that subscription access models and services are the future. Digital downloads are an anomaly, an interregnum, a hangover from the analogue world clumsily imposed on the digital. Someday, probably not too far off, the idea of paying for a single download of media content will seem bizarre and anachronistic. While that assertion isn’t totally supported by the data, they do suggest a tendency towards that conclusion. We should expect on-demand book subscription services from Amazon Prime to 24 Symbols and Safari Books Online to grow, just as Spotify, Rdio and Pandora have done. From a user perspective it makes more sense, although quite how to price, build and market these services is still a challenge.
We’ve all heard it before of course. Nonetheless, it’s good to get a solid sense of how digital continues to play out in fellow content industries. If we find ourselves on a regressive income path like the music industry, as I suspect may about to be the case, then for once that most over-used appellation in publishing – “crisis” – might not be an exaggeration.
*PS – if I had to suggest a solution to the ‘negative growth conundrum’ it would be a combination of renewed focus on internationalisation, further diversification of product in digital, investment in brand(s), movement towards services and new physical only productions. And luck.
Recent blog posts
- Changing the DNA of the reader
- Starting to Accept the Neighbours – @Tom_Chalmers
- Innovation is in the blood
- My Independent Bookshop: a new chapter in book recommendation
- The end of the beginning
- A vision of a hybrid bookstore
- Riding the Rift
- We need to talk about start-ups
- Advocates of the book - stand up
- The e-book journey into China
- What exactly are those interesting questions?
2 weeks 6 days ago
- Dead books walking
8 weeks 7 hours ago
- Why Segregate?
10 weeks 5 days ago
- Big idea: build a new ecosystem - An alternative idea
12 weeks 4 days ago
- finding editors
13 weeks 6 days ago
- Predatory Publishers
19 weeks 54 min ago
- Hybird Authors
22 weeks 17 min ago
23 weeks 1 hour ago
- Still not a plateau
23 weeks 2 hours ago
- Fascinating article
24 weeks 4 days ago
Tweets from @thefuturebook
TheFutureBook RT @CathyReadsBooks: Great subject for next @thebookseller essay comp. Changing the DNA of the reader | FutureBook t.co/5SL4JACuCi v…
TheFutureBook RT @michaelbhaskar: Next in the @thebookseller Essay series announced: t.co/B2E2B4ispy On reading. Entries to @philipdsjones by 23rd…
TheFutureBook MT @tomroper to @RichardMollet CILIP is not 'UK off-shoot' of EBLIDA. 'There is nothing wrong with wanting to provide patrons with e-books'