The plight of the music industry has played out like a 1970s disaster film, the kind where the principal characters declare that nothing on earth could threaten their state-of-the-art luxury liner or superstructure.
Crash! Cut to people gasping for air or scrambling for a seat on the lifeboat. That's where the record labels are now; scrounging for technologies and business models that can keep them afloat.
To their credit, the four largest music labels have experimented with a range of ideas. They have finally opened up to the idea of selling MP3s--compressed audio files of songs that can be downloaded from an online source and then stored and played back on a digital music player. They also are dabbling in ad-supported music and have talked about launching a jointly owned subscription service.
Meanwhile, piracy continues to flourish. CD sales continue to tumble. Some top artists, including Radiohead and Nine Inch Nails, began distributing their own music last year, Paul McCartney quit EMI, and Madonna jumped to a concert promotion firm, Live Nation, and an alternative business model.
Half of all music sold in the U.S. is expected to be digital in 2011 and sales of downloaded music will surpass CD sales in 2012, according to a recent Forrester Research report titled "The End of the Music Industry as We Know It." Digital music sales will grow at a compound annual growth rate of 23 percent over the next five years, reaching $4.8 billion in revenue by 2012, Forrester says. However, digital music sales will fail to make up for an ongoing decline in CD sales, which, by 2012, will be reduced to $3.8 billion, according to the report.
So the music industry has its work cut out for it. This is how we see the next year shaping up in the digital music scene.