RIAA: “We’re Halfway Through a Rough Age”

RIAA: “We’re Halfway Through a Rough Age”

Says that it expects to reclaim all revenues lost since 1999 peak sometime in the next decade, and that the majority of revenue in the new business model will likely come from music subscription services tied either to portable media players or ISP accounts.

RIAA chairman and CEO Mitch Bainwol seems to be quite the optimist these days, telling the Tennessean that he thinks the record industry is “probably” at its “low point” in the transition from a physical to a digital music landscape, and that he expects it to reclaim all revenues lost since 1999 (birth of Napster) sometime in the next decade.

“Nobody has a perfect crystal ball, but I think the way to conceptualize this is a 20-year ‘V’ curve. Going back to 1999, the industry was roughly $15 billion,” he says. “That $15 billion is now roughly $8 billion, made up of physical units, digital units and other forms of revenue connected to the ubiquity of music. We’re going to see now in the next 10 years that curve go back up.”

How? By profits derived from an increasingly diverse set of what he refers to as “digital buckets,” i.e. ad-supported subscription, mobile, digital downloads, etc.. Yet, sadly he seems to think the upward curve will involve increased physical album sales as well. I guess nobody’s told him how clunky portable CD players have become.

As for what the music industry will look like and where most of its revenue will come from in the business model of the future, Bainwol thinks that subscription services “will become very significant down the road.”

“The ability to access all the music in the world that is not much more than a few Starbucks coffees is just a phenomenal economic deal,” he says. “It’s my view that (among) a new generation of consumers, that model is going to do extraordinarily well.”

Whether it does well or not will depend on if the music industry offers consumers the selection they want, when and how they want it, and all at a reasonable price. It has a horrible track record of listening to consumers so it would be a safe bet to surmise more of the same in the future.

Also, unless the service is really cheap, people aren’t going to be too keen on the idea of renting music (ask Rhapsody).

Unless it begins listening to consumers in earnest now there’s no reason to think that this is even its “low point” in a 20yr “V” curve, or even part of a curve at all. This is, after all, the same outfit that for 6 long years thought the best way to fix its business model was to sue more than 35,000 of its customers and threaten millions more.

We all know how successful that was.

Stay tuned.

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