The death spiral

July 30, 2009 at 12:55 pm 1 comment

| Gabriel |

Two years ago EMI fired all its middle management. That was pretty ominous to cultural sociologists because research by Paul Lopes and Tim Dowd has established that record label middle management was the only thing that let the industry stay creative despite formal consolidation. Since then other labels, book publishers, and film studios have all similarly cut loose their semi-autonomous divisions aimed at niche tastes, instead centralizing management and focusing products on mass appeal, general interest products.

This cost-cutting was apparently insufficient as EMI is no longer doing business with mom and pop record stores. They actually told these stores to send someone to Best Buy to get cds, bring them back to the store, and mark them up. The reason was that the transaction costs are just too high to process their orders and they feel it’s cheaper to ship cds to WalMart by the palette-load than to rinky-dink independent stores one at a time. (This makes me wonder how cdbaby stays in business, as low volume orders are their entire business model).

Taking these two issues in combination means you can kiss the long tail goodbye, or more precisely, the big cultural firms are telling the long tail not to let the door hit its ass on the way out. Yes, we have an enormous access to the depths of the catalog through iTunes and Amazon, but the big cultural firms are increasingly uninterested in producing that kind of material in the first place. We seem to be returning to an older cultural ecology, where the big firms focused on the cultural mainstream and left niche tastes to the little firms, rather than the roughly 1975-2007 cultural system of the major firms coopting niche tastes within semi-autonomous internal fiefdoms.

———-update (8/3/09)———–

Also see this NYT op-ed on the decline of the music industry. The gist of it is that digital has not been kind to recorded music sales but the infographic is very good at illustrating this.

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1 Comment

  • 1. Noah  |  July 30, 2009 at 8:15 pm

    Gabriel: Since the costs of production and distribution are a lot lower now than in the days of Tin Pan Alley, do you think we’re going to head all the way back to a Tin Pan Alley type of oligopoly or are we more likely to see a weaker form of concentration? I’m guessing this will show just how important the economies of scale in promotion are to various culture industries. Does any of your research on radio lead to a prediction for the music industry here?

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