MADE

The graph below is really bad news for the record industry. It’s even more striking when you think about those billions of lost dollars as actual numbers of physical CDs that aren’t being bought and will never be replaced. The last decade was music’s lost decade. According to Forrester, just 44% of U.S Internet users think music is worth paying for.

The fundamental problem with records is that they consist of bundled content. And each of those individual pieces of content has stand-alone value. What that means is that each individual song on an album you release has its own sentimental value independent of the other songs on the record. I could buy one of your songs on iTunes without needing the rest because it’s enough to give me my emotional high for the day.

It’s not like a piece of software where the individual features hold little value independent of the whole. So you can obviously see where this is going. Any technology that lets people own pieces of a bundle without paying for the whole bundle—bit torrent—becomes a record slayer; a quasi-industry slayer.

Nobody could blame the record industry for not seeing any of this during the CD boom of the 80s. But the 90s?

What happens when your entire business model is predicated on selling overpriced bundled products that people don’t want bundled and then technology comes along that unwinds the strand? The graph above is what happens.

The dark moral of this story is stay away from the record business.