Electronic Music and Music Business Commentary by Fate Sensation

The State of the Music Biz Nation

By Fate Sensation

Issue #02 (April/May 2006)

5-26-06

On this Memorial Day weekend, Fate Sensation wishes all of you much health, wealth and happiness. He also thanks all Americans who have sacrificed to protect the freedoms which allow Fate Sensation to speak his mind without fear of repercussion from an oppressive government. Fate Sensation encourages you to support Chinese democracy (the people not the new Guns ‘N' Roses CD). Here are his favorite news items from the past two months:

US Music Sales Decline Again in 2005

The Recording Industry Association of America (RIAA) reported 2005 U.S. retail sound recordings sales of $12.27 billion, a decrease of 0.6 percent from its 2004 estimate of $12.34 billion. U.S. sales peaked in 1999 at $14.68 billion. In 2005, CD sales declined 8% from the previous year but revenue from internet sales increased 172% almost making up the difference. Nevertheless, the industry registered its fifth decline in the past six years.

Fate Sensation's Top Nine Reasons Why Sales Continue to Drop

9. It's the economy stupid! While the government continues to pretend the economy is thriving and there is no inflation, Fate Sensation can't help but notice every time he fills his gas tank it costs way more. The extra $20 it takes to top off means one less CD Fate Sensation is able to buy.

8. CDs cost too much. Fate Sensation doesn't like to spend $18.95 for a new CD. He thinks CDs should cost $9.99. The major record labels should stop colluding and compete more on price.

7. CDs with only one or two good songs. Thanks to iTunes, Fate Sensation can now buy just the song he likes instead of having to buy an overpriced CD full of stinkers. The problem for record labels is this only generates 99 ¢ instead of $18.95 in revenue. Fate Sensation, who has bought many disappointing CDs says, “too bad!”

6. Too much product, too little time. Last year, the major labels released approximately 11,000 new CDs and independent labels released approximately 49,000 CDs. While this is great news for audio engineers (more work than ever), Fate Sensation bemoans the fact he can't possibly listen to them all. While his favorite CD of all time was probably released last year, unfortunately, he didn't hear it.

5. Today's popular music sucks. As evidence, Fate Sensation encourages you to listen to the Black-Eyed Peas' “My Humps,” D4L's “Laffy Taffy” and The Pussycat Dolls' “Beep” over and over again for several hours. 'Nuff said.

Fate Sensation apologizes for violating his rule, “Don't hate, congratulate!” He has officially reached old-age and thus no longer understands the musical tastes of young people. Interestingly, many of the young people who attend Fate Sensation's music business classes also claim today's music sucks. Are they just trying to get a better grade or is Fate Sensation maybe right?

4. Payola. Music on popular radio is not chosen because of its quality but because of the size of its record label's wallet. While it is illegal for a record company to pay a radio station for airplay, the practice seems to be alive and well. Estimates are that it can cost several hundred-thousand dollars to get a song on the radio.

Elliot Spitzer, the State Attorney General of New York has been investigating the relationship between record labels and radio stations and recently extracted financial settlements from two of the four major record labels (Sony BMG paid $10 million and the Warner Music Group paid $5 million) along with a promise that they will never ever do it again. Of course, such promises were made with fingers crossed. As soon as Mr. Spitzer leaves his post to run for president…

3. Peer-to-peer file sharing. Despite the RIAA's 2005 legal victory against peer-to-peer software companies (In MGM v. Grokster, the U.S. Supreme Court ruled peer-to-peer software companies could be held liable for copyright infringement committed by the users of their software), illegal file sharing continues unabated. This is also despite the fact the RIAA has sued over 18,000 individuals in the U.S. for illegal file sharing. Fate Sensation suggests the RIAA consider the old saying, “if you can't beat ‘em, join ‘em.” Isn't it a good thing these people are music fans and isn't there a way to benefit from them other than by suing them?

2. CD Bootlegging. It turns out more people acquire music without paying for it (or paying very little for it) through the ripping and duplicating of CDs. While the 1992 Home Recording Act allows you to legally make one back-up copy of a CD, many people burn multiple copies for their dozens of very best friends.

1. Competition from DVDs and Video Games. Fate Sensation thinks the biggest problem faced by the sound recording industry is they are getting their butts whipped by the movie and video game industries. Fate Sensation is way more likely to spend his entertainment budget on DVDs and video games. The music industry needs to learn how to compete more effectively. See #5, #7and #8 above.

Taylor Hicks is New American Idol Winner

Before you get too excited for Mr. Hicks, read this clause from the contract he signed to appear as a finalist on the show:

“ I [Taylor Hicks] hereby grant to Producer [19 Entertainment - the American Idol production company] the unconditional right throughout the universe in perpetuity to use, simulate or portray (and to authorize others to do so)...my name, likeness (whether photographic or otherwise), voice, singing voice, personality, personal identification or personal experiences, my life story, biographical data, incidents, situations and events which heretofore occurred or hereafter occur…”

For those of you who don't understand lawyer speak, this means poor Taylor is now OWNED by American Idol in every way, everywhere and forever. This is the 21st century version of selling your soul to the devil!

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