From Boy Band to Broadband

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In 1999, life was good for the music industry. America was "Livin' la Vida Loca" with Ricky Martin and music sales were at an all time high. Boy bands ruled the roost, with the Backstreet Boys, 'N Sync and 98 Degrees selling a combined 15 million albums. Teenage girls all over the country were donning schoolgirl outfits and dancing along to ". . . .Baby One More Time." Then came the dark days.

Since 1999, the U.S. music industry's sales have been dropping fast, to the tune of 20 percent annually, according to a recent JupiterResearch market forecast report titled "Music, 2004 to 2009." "There are a number of factors that led to this: competition with spending on other entertainment like DVDs and video games, and then indeed there probably was some effect from people ripping and burning music and file sharing," explains David Card, senior analyst for JupiterResearch. "Also, up until then, the music industry had been growing pretty rapidly because people were upgrading their music to CDs. They were buying stuff they had bought before and by 1999, it had probably run its course."

The report highlights the growth of digital music sales, both in the form of downloads and digital subscriptions. JupiterResearch expects the latter to eventually earn more money for the music industry than digital downloads, though Card was quick to point out that neither service will replace the CD.

For about $10 a month, Napster offers a subscription service that allows users to listen to as much music as they want, and even download it to their computer, though it can not be burned. Digital music sales, including both downloads and subscriptions are expected to hit $270 million in 2004 and $1.7 billion by 2009. While these are pretty serious gains, digital music sales are only expected to account for 12 percent of consumer music spending by 2009 and JupiterResearch does not expect any initiative to bring music sales back to the glory days of 1999.

One of the biggest problems the industry is facing is the consistent loss of one of its most important audiences. For the last 15 years, consumers aged 24 and below accounted for 35 percent of sales. In 2004, that number is down to 21 percent. "I think for that generation, music may mean less to them, because of video games and other entertainment. But for the boomer generation, rock music was what they had to spend their money on," Card says.

1990 was 5 years before MP3 was invented, and 9 years before Napster was created and the file sharing boom began. So what could have started that decline?

"Rock was a big deal. During the 60's, when it was a very rebellious movement, it was a big cultural movement; it was a lifestyle issue. That was different than it is now," Card theorizes. Youth today appear to not have the same connection to music that their parents did, for whatever reason that may be. On top of that, younger generations, having grown up with digital media, have different opinions on the importance of the physical product. For teenagers who spend hours in front of their computer instant messaging, what's the point of a real CD when you can just play songs on the computer? These are serious issues that the industry will have to address if it wants to turn around its misfortunes. Years from now we may hear the music industry singing lyrics from the Backstreet Boys 9.3 million selling album Millennium: "Sometimes I wish I could / Turn back time / Impossible as it may seem." For the music industry, and most likely the Backstreet Boys, returning to the success of 1999 will likely be all but impossible.

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