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Downsizing Of Music Industry

2007 was a bad year for Big Music; 2008 could be even worse. Physical album sales across the world fell between 10 and 20 percent in most countries (19 in the U.S.), and while digital download sales grew tremendously, they did not begin to make up for the loss of revenue from CDs. Worse, the growth of digital downloads appears to be slowing.

In 2007, Radiohead released a new album online and let consumers choose the price, it was also the year Madonna left Warner Music to strike a deal with concert promoter Live Nation. It also happened that the Eagles released a best-selling album without the help of a major record label. Each deal made labels look irrelevant.

Where do the major record labels turn to now? So-called "comes with music" packages might be the answer. Social network Imeem is a good example. The ad-supported site offers free streaming music and is backed by all four major record labels, which take a cut of ad revenue. In another such deal, phone maker Nokia plans to offer free music in its new line of phones. The music majors will supply the music and then take a cut from each phone sale. The common thread is that music is becoming an add-on service that needs to be given away for free.

Read the whole story at The Economist »

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