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Music labels still expect to see sales drop by $5 billion

With traditional music sales of CDs plummeting, music labels are looking for alternate revenue streams. While record labels see higher profit margins from physical media sales like CDs, the huge volume of sales that digital downloads can deliver may offset the lower profit margins.

According to a new study from research firm eMarketer, traditional music sales will continue to decline, but online and mobile music sales will grow rapidly. As faster mobile networks are introduced around the country, digital music downloads will become faster and easier for users to purchase.

The report predicts that by 2011, mobile music sales will be a $7.3 billion business. In 2007, mobile music sales amounted to $1.7 billion and by the end of the year sales are predicted to total about $3 billion. In 2009 the number is expected to hit $4.8 billion and by 2010 the mobile music industry will be worth $6.2 billion.

Despite the huge growth to be seen in the mobile music market, Information Week reports that the music industry expects to see a decline in music sales of about $5 billion. The report includes master recording ring tones, full-track audio downloads, ringback tones, music video downloads and streaming services in the predicted market worth.

There are many mobile services looking to cash in on the massive growth expected for mobile music downloads. Apple’s iTunes music download service is currently the top digital music retailer and Apple has said it plans to enter the mobile music market with ring tones and more.



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Crazy World
By tubalcain on 7/8/2008 10:03:12 AM , Rating: 2
Here is a breakdown of a $15.99 CD

$0.17 Musicians' unions
$0.80 Packaging/manufacturing
$0.82 Publishing royalties
$0.80 Retail profit
$0.90 Distribution
$1.60 Artists' royalties
$1.70 Label profit
$2.40 Marketing/promotion
$2.91 Label overhead
$3.89 Retail overhead


You see that the stuff in bold is the big bulk that goes towards the RIAA labels, the artists under that regime are lucky if they see $1.60 off each CD sold, most see .75 on the dollar if that. One can argue that most of it goes to the labels and that again varies by contract. They have to do big tours & a big video or 2 that will eat up their budgets. Independent artists are more likely to see about $6-$7 of each album the rest of the $$ comes from shows and merchandising. Their promotion and advertising comes from word of mouth, leaks on torrent sites by the artist themselves, Youtube, Myspace, etc. Distribution through CDBaby and digital means. Even Itunes, Rhapsody and Emusic do a 70/30 split with the artist, Snocap does 60/40 all benefiting the artist. These independent guys/gals are the ones doing good music and makes me happy when they succeed even if its on small levels. Quite simply, the RIAA is scared of losing their cash cow which is the traditional pimp/ho model.




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