The Future with the President of the RIAA

August 18, 2007

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Cary Sherman gave an interview to the Homer Theater with, besides the usual conservative thinking of stealing etc., a good and openminded statement about the future of the music industry:

“The industry is changing, no doubt about that. In 2005, digital formats (ringtones, subscription services, and downloads) were 8.8 percent of overall industry revenues; in 2006, they were 16.1 percent. Clearly, that is our future. But I don’t think it will be a future with just downloads. If you think about it, digital downloads are a pretty traditional model—you are buying a song or album, just in a different form.

Mobile will be huge. We are at just the tip of the iceberg with mobile—videos, streaming music and subscription services, Internet radio, you name it—will be available on mobile. The licensing of music will be increasingly important (for TV shows, movies, etc). Performance royalties from digital radio services like satellite and Internet radio will grow and be a bigger piece of the pie. Music companies will branch out and no longer just be record companies, but all-purpose entertainment firms. Lastly, legal subscription services—those now on the scene like Rhapsody and Napster—but other models as well (perhaps by an ISP?) in the future will play a bigger part. It’s a different model than what people are used to, so it will take some time, but the subscription service model—all you can eat a month for basically the price of a CD—makes real economic sense and will likely grow as consumers become more comfortable with this new way of acquiring music.

The future is bright. We are in a tough transition now, but the good news is that the appetite for music is greater than ever. All those iPods have made music even more a part of everyone’s daily life than before. But while the consumption of music is increasing, people are paying for less and less of it. We just need to steer more attention toward legal models and continue to innovate and offer exciting additional ways to consume music.”

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