PR 101

I read an article Sunday about how the depressed the music industry is this summer. It said that in order to make up for income lost because of decreasing CD sales, many top bands had upped concert ticket prices to above $200 for the best seats. Given the current state of the economy, no one with an ounce of sanity is spending that kind of money to see a concert. So concert ticket sales are down and a number of acts have canceled summer tours.

This is, to me, is the beginning of the end game for the music business as it is presently constituted. As anyone with marketing experience can tell you, this is an industry that is doing itself in. The music industry didn’t do the same thing American car manufacturers didn’t do – respond to a changing market place.

“Billboard magazine recently predicted that summer 2010 could be the toughest touring market artists and promoters have had to face since the mid-’90s, citing a spate of nixed shows and canceled tours,” The Washington Post reported July 2.

Performers including the Eagles, John Mayer, Christina Aguilera and Simon & Garfunkel have either canceled dates or “postponed” entire tours because of weak ticket sales.

Why is this happening? Well, let’s get into the way back machine and look what happened when CDs were first introduced. That’s when the problems began.

In 1982, Sony and Phillips Electronics introduced the first CD recording – “The Visitors” by Abba. One would have thought that choice of a first release would have strangled the fledgling format in its cradle. Incidentally, the first CDs had a capacity of 74 minutes. That’s the length of Beethoven’s Ninth Symphony. I guess that makes up for the Abba release.

This is where the recording industry made its major mistake. Vinyl albums contained between eight and 10 songs. Whether out of hubris, stupidity, greed or something else, the recording industry put the same eight to 10 songs on those first CDs. Those CDs sold for $21.50, according to a 2007 report prepared by Recording Industry Association of America.

That worked until CD burners were first sold to the public in the middle 1990s. People discovered a blank CD actually held between 15 and 20 songs. That was a “hey, what a minute” moment. True, CD prices had dropped to just under $13, according to the RIAA. It was too late. A lot of people felt they were getting ripped off and got angry.

Free file sharing sites such as Napster rose up in response to that anger. The feeling seemed to be if the record companies were going to rip us off, we are going to fight back. Without rehashing the history, this eventually led to the creation of ITunes, where a complete album can be purchased for $9 or $10. The recording industry essentially ceded control of its product to Apple and other such sites.

Plus, feeding that anger, I feel, was rock stars went from being one of us to one of them. The Rolling Stones bought estates in the south of France. Eric Clapton flies around in a private jet. Why should a college kid making $60 or $70 a week delivering pizza or a laid-off worker feel any sympathy for some over-privileged musician?

Apparently not wanting to give up the valet and butler, those fat and happy musicians raised concert ticket prices to make up for the lost CD income. That is so damned odd to me. Did they think somebody not willing to pay more than $10 for a CD is willing to pay over $200 a ticket? I mean, Mick Jagger went to the London School of Economics. Did he skip the lecture on “elasticity of demand?”

What that term means according to the Business Dictionary is “responsiveness of the demand  for a good or service to the increase or decrease in its price. Normally, sales increase with drop in prices and decrease with rise in prices.” Or the less you charge, the more likely people are to buy your product. Well duh!

As I said at the start, I think what we are seeing is the beginning of the end of the music business in its current form. Unlike the American auto industry, they are not pulling up before they crash. I don’t think they know how. Rather than find a solution, they would rather waste their time going after teenagers downloading music. Sad really.