Six years ago when music downloading exploded, the major record companies were amazed at how much they were despised by consumers, the government, and their artists. It really surprised the music industry executives how little support that they had. Weren’t record companies cool? It turns out not even close.

Here were some of the reasons that they had such a universal lack of sympathy:

CD prices. Yes I understand that indexed for inflation or compared to Europe, etc. they are reasonably priced. But to buy 3 CD’s on sale and pay over $50 is just too much.

Buy an album for one track, eat the rest. How many times have we decided to give a new release a shot based on hearing just one song and then realized that we just paid $18.00 for one song.

CD “anti-piracy” packaging. Once you’ve paid the $18.00 you still need to figure out how to open up the damn packaging. This punish-your-best-customers is a recurring theme of record companies.

Payola. Why do CDs cost so much? is it because the major labels need the money to bribe radio to play lousy music?

Consolidation. Just five big multinational music companies dominate the world music industry.

Salaries. For your typical record consumer it was hard to take the incessant whining from executives who make $500-$2 million a year that probably couldn’t make a quarter of that in any other industry.

This was six years ago. Did the major labels learn their lesson? Not a chance. Let’s look at things happening just this year:

Sony’s Malicious Spyware. Let’s infect with malware the computers of people who are buying our CDs.

Warner Music Group’s new owners bought the company in 2003 for $2.6 billion and since that time they have cut the artist roster, laid off employees and, oh yeah, paid themselves $1.4 billion. They still own the majority of the company.

Fighting iTunes. It took an outsider who had to fight tooth and nail to do digital music sales the right way. It appears that some of them still regret it.

Sony Connect. Factor in every Sony division’s wish list and then don’t bother to ask consumers what they want. Of course you end up with something that no one wants–not too smart.

Payola. It’s still so prevalent that even Elliot Spitzer is getting into the act.

Consolidation. Down to 4 big music companies that dominate the world music industry and rumor has it that it will soon be just 3 behemoths.

Salaries. More in line but still hard to take the whining.

So the music industry remains under-siege and from directions that didn’t even exist a decade ago. Even worse is that this new technologies from downloading to satellite radio provide consumers with more choice than the music industry has traditionally been comfortable providing. The current record company model falls down if consumers are able to buy what they like and avoid what they don’t. Since changing consumers is notoriously difficult, perhaps it’s time that the record company models change.

More important than even that however is that record companies need to woo back its fans. In the 70s and even 80s, record companies were cool. Despite the misguided home-taping boogie man, record companies didn’t treat their consumers like the enemy. Record companies should be doing massive outreach programs and supporting music programs in schools. They should be run again by people who love music as most independent labels are. Everyone understands the right the record companies as to protect their intellectual property and it will be a lot easier for them to do so if they aren’t despised.

When you think of it, the people whose job it is to find and market great music should be some of the most loved professionals in the world. How did they get it so upside-down?

techorati: record industry music industry

Similar sentiment at Cedub’s Media Ecosystem

This entry was posted on Monday, December 5th, 2005 at 10:22 pm by Insider and is filed under How Not To Succeed In Business. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.