• by Mike Bloxham , Op-Ed Contributor, January 26, 2006

Those of us decrepit enough to have grown up with vinyl records and cassette recorders should have recognized that the 2005 sales figures for the music industry represent something akin to full circle for the music business. Back in the day, when I was still struggling with the trials of containing teenage hormones and living with older siblings and parents who just didn't get it, the music industry thrived. How? By selling large numbers of singles at a reasonable price to an audience that waited each week to hear which band or heartthrob would top the charts. It was all carefully and effectively orchestrated through collaboration with radio and TV. Those were the days when singles led and album sales followed.

Gradually, all of that changed. Singles became more expensive, making albums look more affordable, and the balance started to shift. In the end, sales of singles took such a hit that the music business was in something of a bind long before the advent of digital downloads. The first salvation for the industry came in the form of the CD, when millions of us took to buying the same music on the new format, thereby generating millions in back catalog revenue for the major labels.

Of course, we also bought plenty of new material, but it wasn't long before consumers began grumbling about the price of CDs, and in various countries there were inquiries into allegations of price-fixing. Those inquiries were never fully settled, and the notion stuck in many consumers' minds that they were being over-charged. High-profile court battles between artists and record companies over revenue sharing merely helped set the stage for the illegal downloading culture.

Ironically, this culture is now responsible for getting the industry back to where it was all those years ago: selling a growing number of singles at a reasonable price to a market of avid consumers.

The supreme irony of this cycle is, of course, that the music labels were dragged along by the events. When Napster led the way to the all-you-can-eat buffet of illegal downloads, it put in motion a shift in consumer behavior that was partly enabled by a record industry largely out of touch with its consumer base. While good at churning out the product, the industry remained largely incapable of adapting to the prevalence of digital media in the lives of young people who are ambivalent toward paying marked-up prices for the music they want. When everyone you know starts downloading and burning their own CD compilations for free and no one takes any meaningful steps to stop them, wouldn't you? Don't you? Let's face it, from the consumer's perspective, it's the same as recording vinyl onto audiocassette, which is something many of us spent countless hours doing as kids. It was every bit as illegal, just not as threatening.

After Napster, music fans looked to Apple's iTunes Music Store. Apple introduced the right price point and marketing to make it work. The evidence for this success comes in the form of the pre-Christmas 2005 sales figures, which show downloads up 148 percent year-over-year to 332.7 million tracks sold online, while offline album sales are down by almost 50 million (around 7 percent, to 602.2 million). All the growth is in the sale of single tracks. We're back where we started.

That the basic model for the digital distribution of music has proven itself is something the music industry is no doubt grateful for. That it took industry outsiders to identify how to get back in step with consumers should be a source of embarrassment to the major labels that appeared too attached to existing business models and margins to seriously contemplate change.

Consumers, meanwhile, are demonstrating the same basic motivation and behavior that they did when I was a teenager back in the 1970s. They are seeking the music they want and increasingly paying what they deem a fair price to have it in a format they like. They may not be going to the record store anymore -- but that's about all that's changed.

Mike Bloxham is director of testing and assessment at Ball State University's Center for Media Design and oversees the Middletown Media Studies. (mbloxham@bsu.edu)