Battered Record Execs Set to Face the Music

Source: Reuters

Global recorded music sales look set to fall for the fourth straight year in 2003 thanks to piracy and the economic downturn, and its bosses are desperate for solutions.

Executives gathering for the global music industry conference Midem in southern France this weekend know it’s make or break time.

The bruised industry needs a new formula as fans increasingly spend their disposable income on video games and “burn” their own CD compilations while labels desperately seek a new crop of long-lasting stars.

Major music labels have so far responded by slashing jobs, axing B-list artists and trimming back their bloated businesses. However, the industry appears no closer to a long-term solution than last year and talk of consolidation among the big five music companies is growing louder by the day.

“2003 will be the tipping point. The fundamentals continue to deteriorate and consolidation will have to happen,” said Michael Nathanson, media analyst at U.S.-based investment research firm Sanford Bernstein.

Forecasts see sales sliding another six percent in 2003 — a fall felt most by the big five music giants — Universal, Sony, Warner, EMI and BMG — which account for 70 percent of sales. That comes on top of an estimated nine percent fall in 2002, a five percent dip in 2001 and a 1.4 percent fall in 2000.

PIRATES AHOY!

Critics assert the age-old business model of merely selling physical copies of music to the masses is hopelessly out of date in a digital era of track downloads and song-swapping on Internet services like Kazaa and Morpheus.

Music execs, meanwhile, remain cautious about the Net, held back by technological, economic and legal limitations to putting their entire repertoire online.

The fear persists that the popularity of song-swapping services and the ease of CD-copying will give birth to a sort of doomsday scenario — generations of music fans who refuse to pay. Unsurprisingly, piracy will be a key topic at this year’s Midem.