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Bye, bye, Miss American Pie (chart)

By Trajce Cvetkovski - posted Tuesday, 4 April 2006

New release CD singles are all but dead, and CD albums are dying. Yet the sale of chartable albums (the "Top 40" especially) forms the bulk of revenue in the pop music industry. The exclusive club of a few multinational major recording companies (majors) are very worried. They control most (80 per cent) of the revenue in this highly concentrated, well-organised mode of pop cultural production. But since 1998, the majors have posted unprecedented losses in profits from chart sales generally.

Why the sudden disruption to a well-established and extremely advanced form of commercial exploitation? And what does this great rock 'n' roll fire sale mean for the heavy weights of the music industry?

Eight years ago, albums retailed for up to $30.95. The small club of audience-targeting majors (Sony-BMG, EMI, Universal and Warner) were laughing all the way to the bank because, on average, CDs cost as little as one dollar to manufacture. The industry was valued at nearly $100 billion internationally.


The music business has a number of advantages in comparison to other modes of capitalist production. Generally speaking, there are such small interaction costs attached to producing pop music products and yet they have so much surplus value as they are capable of perpetual exploitation (via the copyrights attached to them). Rummage through your record collection and you will probably discover you have the same song recorded on more than one format. For all its sex, drugs and rock 'n' roll, the music business is really quite clever.

In this well-established environment, sycophantic, music-obsessed, "pocket money" punks (teenagers) used to rock up to HMV, Sanity and other major stores to buy up big on the latest, over-priced CDs. This passion for music consumption has meant, historically, that music is the most popular form of en masse, "first-line" culture consumption for young people (products purchased primarily before another competing product, for example video or magazines). The pop music circus has been omnipotent in the minds of young ones. And the majors have masterfully maintained such consistent and spectacular returns throughout the 20th century.

But currently, chart CDs retail for as little as $20.95. On average, the price of Top 40 albums appears to be dropping at a rate of more than one dollar a year. (Who knows, in the year 2018, albums may have a zero sale sum dollar value.) Yet, paradoxically, there is a direct correlation between the downward spiral of prices and a downturn in traditional music consumption. This truly is a peculiar trend because, if anything, album sales should be increasing.

So why is the music industry in Australia, or in the rest of the Western world for that matter, in a "spin"? The majors' representatives would have us believe the answer to that question is based on a combination of unfavourable legislative change and emerging technologies which have caused a diminution in the value of music products.

They are partly right in identifying the obvious challenges; but they appear to have failed to recognise that the significance of other important pop cultural developments, such as a genuine lack of consumer interest (or perhaps boredom) in CDs as primary cultural products. This has largely stemmed from emerging but competing pop products (DVDs, music DVDs, ringtones, computer games, SMS services, and this list of cultural pleasures goes on).

Through an intriguing mix of illegitimate and legitimate technological challenges, and in conjunction with legislative reform and pop cultural developments, the Australian music scene has demonstrated how, internationally, a fistful of industry media moguls has had its closed-shop cage rattled.


So what happened eight years ago, when the current trends became apparent? First, in Australia, there were significant amendments to the Copyright Act 1968 that allowed for the parallel importation of locally licenced products. For example, a retailer was now free to purchase from Sony Indonesia rather than Sony Australia. Due to the significantly different economies of scale between the two regions, the price differences at the wholesale dealer price were stark.

Not surprisingly, strenuous lobbying by the majors' "keepers" followed, alleging the death of the industry due to a flood of inferior and possibly pirated copies. Resistance to change and acrimonious litigation appear to be fundamental tenets espoused by the majors.

Nevertheless, these legislative measures have been instrumental in setting new pricing standards. It might be fair to conclude, therefore, that imported CDs are capable of driving prices down, but ironically, cheap imports are seldom sourced by major retailers. That is, stores continue to order domestically manufactured albums from the majors. Legislative reform in Australia assisted in this process but the majors cannot blame parallel importation per se. Similarly, the legislature should not take the credit for the price drop. So what else happened some eight years ago?

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First published in the Brisbane Line, on the Brisbane Institute website, on March 29, 2006.

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About the Author

Dr Trajce Cvetkovski teaches law, policy and governance at the University of Queensland. He also practises as a Barrister. He is the author of Copyright and Popular Media (2013, Palgrave Macmillan)

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