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Name: Adam Bernard
Home: Fairfield, Connecticut, United States
About Me: Entertainment journalist with 15+ years of experience. Supporter of indie music. Lover of day baseball, fringe movies, & chicken shawarma. Part time ninja. Nerdy, but awesome.
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Digital Sales Soar, but Satellite Plays Dead
Friday, December 05, 2008

Two major stories that could potentially affect the music world broke last week. First The New York Times reported that Atlantic Records has announced their digital sales surpassed their CD sales for the fourth quarter of 2008 (although they wouldn’t release the actual numbers and simply said digital sales accounted for “about 51%” of their total recorded music sales for the quarter), and a story on Slashdot made the claim that satellite radio is on its last legs, backing it up with a number of statistics, including the fact that the stock has seen a 97% decline since the merger of XM and Sirius. So what do these stories mean and how do they affect artists? Let’s take a look at them as individual cases.

Atlantic announces digital sales surpass CD sales

As a headline this is definitely very sexy. It makes it seem like we’re reached a new age in music distribution. What we don’t know, however, is the reason Atlantic has seen such growth in digital sales. It could be that this doesn’t represent a huge growth at all as it could simply represent a huge drop off in CD sales. The facts aren’t there since they aren’t releasing their actual numbers, but part of me thinks that if a company’s digital sales are that much higher than the norm (Atlantic’s parent company, Warner Music Group, states their digital music sales account for only 27% of their recorded music sales), something fishy is going on. I’ll be impressed with the digital sales numbers only if they aren’t followed up by awful CD sales numbers. This could be the dawning of a new age, or it could be some really great spin on terrible fourth quarter CD sales (and if it's the latter their entire PR department deserves a raise).

What does this mean for artists? Well, I think everyone knows the power of digital sales by now, but the overall numbers at Warner might be a little more indicative as to the actual climate of the business. There’s no doubt you need an online presence, but if most of the big boys are getting 63% of their sales from CDs, clearly the compact disc isn’t dead yet.

Satellite Radio Near Death?

I can’t say I’m surprised by the numbers that are coming out regarding satellite radio. I was always one of the people that never thought a pay for radio business model was going to work. Unlike with television, there are simply too many free radio options, both on the AM and FM dials as well as on the internet, to be paying for the privilege of hearing certain personalities and getting uncensored music without commercial interruption. The first nail in the coffin came when Opie and Anthony were fired from terrestrial radio, went to satellite radio, and then when the whole controversy that got them fired from their terrestrial radio gig blew over they immediately went back to the FM dial. They used satellite as a springboard to go back to where they wanted to be, which was FM radio. This told me satellite was on its way out. Had it been free it wouldn’t have been a problem, but why on earth would people pay money to hear guys who just wanted a chance to get back on free radio? It would be as if tickets to MLB games were free, but you had to pay to see the minor leaguers.

What this means for artists is, unfortunately, there might be one less place where they can be heard. This is especially troubling for independent artists who were able to get on the indie channels of satellite radio, which was, bar none, the best feature of satellite radio. Hopefully it will find a way to survive. It just needs a totally new business plan. Anyone care to draft one?


posted by Adam Bernard @ 7:35 AM  
  • At 10:37 AM, Blogger Letitia said…

    Angel Rosa predicts...By the year, 2015: The future of radio isn't radio. Well, at least not 'radio' as we know it today. The internet will be the medium of the future.

    Web-enabled mobile media players will be in every home, workplace and vehicle. And get this: WiFi will be amplified and thus accessible to everyone nearly everywhere, for FREE.

    Billions of dollars in yearly revenue from advertisors will provide the foundation upon which this medium will be built and thrive.

    Sorry, no flying cars just yet.

    Angel Rosa on the web:

  • At 12:58 PM, Blogger Always Home and Uncool said…

    I've had XM for 6 years. Got it b/c my 1990 Accord's 2nd tape player died and the Clear Channel stranglehold on Dallas radio made my commute unbearable. It was a true blessing.

    Now that I work from home I still listen to it regularly, though the merger worries me the end is near (still can't figure how Sirus, which was in far greater debt, managed to buy XM, which was near breaking even for once). Too bad.

  • At 7:26 PM, Blogger JW Doom said…

    The model for sat radio is like the model for premium TV. Meaning you can hear people say "fuck".

    That being said, with a subscriber format niche formatting can pay off. Since the mass market is going to stay with the free option, you don't have to play Jay Z or Puff Daddy every 15 minutes.

    Have you listened to DMX or MusicChoice? Infinitely better than any terrestrial radio station. You're also less sensitive to pressure from advertisers to do things like, not say "fuck".

    That said, sat radio's long term future is probably dim as wireless internet connectivity becomes more powerful. I dunno if nowhere, Montana will ever get a big pipe, but odds are satellites will just beam down data and some of that will be audiostreams.

  • At 12:03 AM, Blogger Red said…

    And get this: WiFi will be amplified and thus accessible to everyone nearly everywhere, for FREE.

    Here's why: the transition from analog to digital for television is almost complete.

    And Letitia, like you, I thought that by the time 1999 clocked down to 2000, we'd all be living the way of The Jetsons.

  • At 8:11 AM, Blogger Adam Bernard said…

    Thanks for all the contributions. Very enlightening stuff!

    PS - I want my flying car!

  • At 12:00 PM, Blogger Adam Bernard said…

    I just wanted to add that now, three weeks after this post, the New York Times is talking about the death of satellite radio:

    NYT - Satellite Radio Still Reaches for the Payday

    So in one story I managed to both reference the Times and scoop them!

    That's SKILLZ homey!

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