By Mitch Bainwol, Chairman and
CEO of the RIAA
As printed in the San Jose
Mercury News during this month's International Consumer Electronics
Show
This week in Las Vegas, thousands have
gathered to pay homage to the pantheon of gadgets and software that is the
Consumer Electronics Show. Hundreds of companies will pitch their newest
devices, designed to wow. The breadth of innovation will astound us all.
Throughout it all, there will be one frequently recurring theme: The
content that is the foundation for so much of this innovation and
experimentation is music.
Last year was a challenging one for the music
industry, no doubt. But to those who may wonder about the relevance or the
role of music companies in the digital era, the array of platforms for
music at CES are a reflection of the enormous potential that gives us
reason for optimism.
Think about this: Two of the most popular
television shows, "American Idol" and "Dancing With the
Stars," are about music, and music is an essential, distinctive part
of many hit shows, such as "Grey's Anatomy." The most popular
video game this season is "Guitar Hero 3." And the most popular
consumer electronics device in recent history is the ubiquitous iPod. The
common thread is that all are platforms for music. One of the reasons: the
enduring quality and appeal of music.
This is confirmed by
our market research. A 2007 survey by Public Opinion Strategies asked
consumers, "How important is listening to music in your life?"
More than half said "listening to music" was extremely or very
important, while the share of those who said the same about "watching
television" stood at 27 percent and "going to the
cinema" was even less at 10 percent.
The music fans of 30
years ago could enjoy their favorite artists only through a handful of
ways - albums, tapes and over-the-air radio. Today's music fans enjoy
access to an unprecedented and breathtaking array of digital distribution
platforms and enhanced physical products, all licensed by the music
industry: satellite radio, a variety of Internet radio models, song and
music video downloads and subscription services, HD Digital Radio, legal
peer-to-peer networks and ad-supported social networking sites, cable
television music channels and a variety of existing and emerging mobile
phone models, to name just a few. All provide not only incredible
opportunities for fans, but also important new revenue streams for the
music industry.
These digital distribution platforms present
untold new opportunities for artists to better connect with their fans.
And in an online world where nearly 3 million new bands clamor for
attention on sites like MySpace, the need for a record label to help find,
nurture, promote, market and recommend artists to specific audiences is
greater than ever. There has been exponential growth in the digital music
marketplace, both in revenues and in users.
Collectively, digital
revenues have grown from nearly zero in 2003 to more than $2 billion. Last
year, there were nearly 13 million households using a paid digital music
download service - nearly three times more than in 2004, according to
market research firm NPD. And the consumption of music has never been
higher. In fact, NPD reports that for Internet-connected consumers,
various forms of acquiring music increased 8 percent between 2005 and
2006.
All this confirms that the quality, interest and popularity of
music as a central way that Americans express, identify and entertain
themselves endures. Does our industry have its share of challenges?
Certainly. Music consumption may be up, but the share of that consumption
that is illegal continues to be alarmingly high and compromises the
industry's ability to invest in the new bands of tomorrow. We need to
continue to address the theft of music in its various forms, and to enlist
partners such as Internet Service Providers, universities and technology
firms to help in this mutual fight. We need to fully monetize the
investment that record labels make in these new digital distribution
models. We need policy parity in the rights and standards that govern an
increasingly competitive and convergent marketplace.
We are soberly
realistic about the challenges today and ahead. The transition from a
physical products marketplace to one populated by dozens of different
models is filled with twists and turns and, no doubt, many unpredictable
story lines. The encouraging news - through it all and now more than ever
before - is that music remains a central form of human communication and
an essential foundation for technological innovation.
