Vinyl and Streaming Win The Music Battle – Does This Have Relevance For Other Industries?

As a huge music fan, what is happening in the music industry is truly fascinating, and I don‘t think many of us would have predicted it ten or even five years ago. At that time, we would have seen the battle for the consumer dollar, pound or euro as being fought between the CD and downloads, led by the all-powerful iTunes. Downloads offered easy access, convenient, and instant availability. The CD could be played in the car, in the house, could be ripped onto other devices, and gave you something tangible to put on the shelf.

Yet now, those two formats look to be in a decline that could be terminal. The sales of downloads are declining fast, even faster than those of CDs, which are not exactly doing well themselves. As Music Business Worldwide reported: “In the first half of 2015, CD album sales in the UK fell 5.7% from 22.68m to 21.38m. In the same period, sales of digital albums dropped 6.6% to 13.86m”.

And all the signs are that the trend is continuing, maybe even accelerating into 2016. But on the positive side, streaming and associated subscription services are booming. It is likely that streaming revenue in markets such as the UK and US is just about overtaking digital sales as we speak.

Now that is not too surprising, when you think about it. Streaming offers everything a digital download offers, but with more cost-effectiveness and a huge choice for the consumer. With the right equipment, you can stream to every room in the house, your mobile devices, even your car. With every song you can imagine available, why would you pay a month’s streaming subscription for just one album digital download? So I think we can say with some confidence that the digital download is effectively dead.

But then we have the big shock of the past few years – the resurgence of vinyl. Go to a fairly mainstream “record shop” (and there aren’t many left) like Fop in London’s Convent Garden, and there is now at least as much space on the ground floor given over to vinyl albums as to CDs. OK, upstairs the CD selection still wins out, but the change in focus has been pretty rapid and remarkable.

Why is that? Well, the vinyl buyer is more of a collector as well as a music fan. We can argue endlessly about sound quality, but the indisputable advantage of LPs is that they look and feel so much nicer than CDs. The covers, the lyric sheets inside, the whole feel of the vinyl – in terms of appeal to the senses, there is no competition. So will vinyl kill off the CD for those of us who want something physical and tangible as a representation of our love of music?

I’m not as sure as I am about downloads. I am buying fewer CDs now I use Spotify; but I will still buy those I really like, just in case we have a digital apocalypse one day or the aliens disrupt streaming … I know, it sounds daft. But for music that means something to me, I like having something to hold and to look at, and vinyl is not as convenient as the CD. But I might buy some vinyl again, and I wouldn’t be surprised if we saw vinyl and CDs each with perhaps a 10% share of the market in a few years, and streaming with pretty much the rest.

So, can we extrapolate into other areas of life, business and maybe procurement? The victory for streaming says that convenience, choice and value for money will always win out. Then there is a market outside that for products (or services maybe) that offer benefits which are more emotional rather than rational. So, for instance, whilst Uber and AirBnB’s success fits with the streaming argument, luxury chauffeur driven limos and the very best hotels will still retain a certain market share.

The IT industry is certainly another parallel. “Cloud” is winning and will win, with security (the equivalent of my “aliens” argument about having physical music) the only reason not to move fully to on-demand services. What about cars and personal transportation? Driverless cars will be another fascinating market to watch. Will cars that humans still actually drive become the vinyl albums of the 2020s?

And what about procurement services? Do I need my own full-time procurement team, expensive and demanding, the equivalent maybe of a large pile of slightly moth-eared albums in the corner of the dining room? Or would a convenient, on-demand, reasonably priced “streaming” service suit the organisation better?

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First Voice

  1. Sam Unkim:

    Given copyright and Supply-chain costs would be negligible. Why not include the CD, in with the LP? – as a double pack.

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