June 10, 2009

DVDs+MP3s+GTA4s > CDs

A study by Charles Arthur (UK’s The Guardian) concerning the drop in music sales over the past 10 years correlates the CD drop with the rise of DVD and video games sales. The study measures CD sales in comparison to DVD rentals and sales, and video game revenue. Results show an extraordinary growth in the gaming industry with a steady shrinking of CD sales and a smaller growth in DVD sales. What could this mean?

Arthur points to consumers’ “finite” amount of money. We do not have enough money for all of these things. Simple economic logic shows that in a specific market, in this case entertainment, one industry's success means another's decline barring any abnormal increases in population income. It's supply and demand – people are substituting the multimedia entertainment of the video game for the single medium of music. Remember what happened to silent film when talkies first came out?

Simply put, we do not have enough disposable cash for all of this stuff. Then again, most people do not have the patience, or tools, to download video games for free. This statement is becoming less and less true for movies, but still, quality continues to be valued by the majority of consumers who would rather not watch a super-compressed version on their laptop of Transformers

So, while the onus is consistently placed on pirating, gaming and DVD sales are silently infringing on the entertainment market share. Alternately, gaming companies may have taken advantage of the music industry’s troubles by increasing costs and expanding their audiences (look at Wii). Coinciding with Xbox 360's release in November of 2005 was perhaps where CD sales started falling the most. Playstation 3 and Wii only made things worse in the ensuing years.

-Jake S

Are downloads really killing the music industry? Or is it something else?

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