TOM HARDING

The last year has seen UK sales of vinyl records slump in the face of major competition from CDs (and illegal CD burning), legal download websites and Internet piracy. Many of the more established record labels have not had the foresight to evolve their business model to take account of this preferring to cling to the vain hope that vinyl sales will pick up. This simply isn’t going to happen. As a result many record labels are left scratching their heads wondering what to do next and in some quite high profile cases this has eventually lead to bankruptcy (Telstar, Hooj Choons etc). It’s not all doom and gloom however, as some forward thinking labels have managed to adapt to fit the changing market. In addition a number of new music portals have sprung up designed specially to meet the demands of this market. While there will always be DJs and record collectors who want to buy vinyl the real money in the future will be made through downloadable music, currently in the form of MP3, MP4 and ACC files. Steve Jobs, founder and CEO of Apple Computers, recently celebrated the 100 millionth music download from Apple’s iTunes website. If you bear in mind that each track costs around €2 to download, even if you take into consideration the royalties paid to the labels and artists, Apple are still making a fortune. OK, iTunes isn’t a specific record label; rather it acts as a portal selling tracks from numerous labels but if you apply this to a record label there is an even greater opportunity to make money. If a record label releases its tracks as downloadable MP3s available direct from its website then it cuts out the costs of pressing vinyl and then paying a distributor to get the vinyl into shops. Sure you can’t charge as much for an MP3 download as a vinyl release but remember that the €2 that you pay is charged per track (whereas vinyl could have up to four tracks per release) and is almost entirely profit. There have been a number of purely online labels that have started recently using this idea and for the most part they seem to be doing fine. It now remains for the record buying public to adapt their habits and start using online labels, shops and portals as their primary source of purchased music. The only real threat to this new breed of music seller is piracy and the illegal download market and it will be an interesting yet crucial test to see if technology or the market can further adapt to prevent this from causing total market meltdown in the future. Until next time… Tom