Music industry has to die to live

(MoneyWatch) The music industry is the source of two stories. One is the first global rise in sales since 1999. The other? The industry will again go after Internet users for alleged copyright infringement.

It's a curious combination that encapsulates the current strengths and problems of the entire industry. Is there a future for professional music? Absolutely. But first, the industry as it has existed will have to die.

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The upturn in sales was only 0.3 percent, which is anemic even in the context of a global economic recovery after the financial disasters that surfaced in 2008. In absolute dollars, the figure was $16.5 billion. Of that amount, $5.6 billion was digital revenues, up 9 percent from 2011, according to International Federation of the Phonographic Industry (IFPI), an industry organization.

The entire picture is better than in 2011, during which sales fell 8.4 percent from the previous year. But still, the total is less than half of the industry's pinnacle more than a decade ago.

A major reason for the drop is that the recording industry once enjoyed revenues buoyed by artificial bundling, much as happens on cable television. Consumers were not allowed to buy only the titles they wanted. People would have to purchase entire albums, even if they were only interested in a song or two.

All that money supported many businesses and individuals -- an enormous infrastructure -- with musicians getting the smallest share, according to blog TheRoot.com. For every $1,000 in music sold, the average musician gets $23.40. Sell $1 million in music in a single year and, if you're that average musician, you'll make just over $23,000.

Most of the money goes to keep the majority of the industry that doesn't create music. As revenue drops, so does the money that can support all these organizations and people. The choice has quickly become whether to support the musicians or the non-musical majority.

Furthermore, the industry is showing signs of antagonizing consumers again. Ten years ago, just as digital music was starting to gain in popularity and file-sharing sites like Napster were new, the recording industry tried to eliminate the potential revenue threat by suing individuals who shared music. The music and video industries are planning a new campaign to stop sharing of entertainment, according to AP:

But unlike the lawsuits from the mid-2000s -- which swept up everyone from young kids to the elderly with sometimes ruinous financial penalties and court costs -- the latest effort is aimed at educating casual Internet pirates and convincing them to stop. There are multiple chances to make amends and no immediate legal consequences under the program if they don't.

The industry will monitor file sharing sites, look for indications of file sharing, and then ask swappers' Internet service providers to send individuals notices that they detected copyright infringement.

It is a risky strategy. Perhaps it will have the educational value the industry says it wants and convince people to stop sharing files. However, with secret file swapping sites, email, Internet messaging, and other more private forms of communication, the result may be only driving the activity further underground and increasing a sense of antagonism.

Every industry eventually reaches a point where business as usual is no longer possible. In the case of the music industry, the shift to digital will not stop. People will pay less for music and the industry, as a whole, will make less. There is no going back. That means companies have to find new ways of doing business that don't require the massive infrastructures that take such a large share of the revenues.

Image: RGBStock user Abyla