Chronicle of a long-foreseen crisis - part 1

Simultaneously with the launching of Apple’s VOD, supported not by the strength of a catalogue (that does not exist physically) but only by its iPod video and AppleTV assets, the publishing world has published prior to the Paris book fair, the 2006 best-selling list, illustrating in many ways the magnitude of a long-foreseen crisis. These two announcements have been made shortly after the publication at the MIDEM, of the record industry results for the past year (- 11%)

 So what is the link between these three public announcements?

First of all, one needs to forget the outlook shared by the players in the record industry, according to which the crisis that they are currently going through is due to the emergence of the Internet, whereas it was really born in the 80’s when the record publishers decided to sacrifice the independent network of record shops on the altar of the holy growth of the turnover rate, and of the profits allowed by the combined effects of TV commercials, the lowering of the VAT, and the development of the record section in supermarkets.

Riding high on that two-figure growth, the record industry has overlooked the emergence of the Internet as a market powerhouse, and has not bothered to think over the consequences it might have on the record market, being too busy at the time cranking out compilation after compilation to fill out the department stores shelves. In the aftermath, the record publishers have developed access copyrights based on the strength of their catalogue. Big flop.

To offer closed systems of access while Internet is all bout open access beyond borders, was a strategic mistake from the beginning, and we are weighing its consequences today.

This lack of vision explains the success of platforms such as Kaaza or Napster whose strength and attraction, as opposed to what was claimed, was less based on the free access (you had to own a computer and a high debit connection to the Net) than on the fact that they offered universal access to all existing catalogues, available through the collection of records owned by the registered members.

While publishers, hurt full force by this new reality, tried to drain the flow of these exchanges by acting up in court, Apple outmaneuvered everybody by imposing its iPod as a standard and iTunes as a virtual store, a heavyweight of a music store today, with 70% of the market of online music. Without a catalogue.