A very interesting topic. I think everyone has some idea that the music market is eroding, but I believe many think it's a matter of "out with the old, in with the new," in which CD sales decrease, but download sales increase by a similar amount, and that's not true. The past ten-plus years have been a gradual dropping away of music sales in general. First people said, "well, it's CDR copying," then people said "it must be Napster," then "people are spending less post-911," then it was the increase in the legal mp3 market, then it was bittorrent, then the economy.
As the late Gilda Radner said, "It's always something."
The bottom line is that things are changing in a way that is uncomfortable and difficult for everyone who was at all accustomed to the old, traditional ways of the music business. By that model, recording artists made music, possibly with the help of engineers and producers, which was picked up by a record label and made into records, tapes or CDs, and mostly sold through wholesale distributors in retail record shops. There are still groups and individuals making music, but just about all other aspects of that old model have changed.
Record retail is almost completely gone. Imagine if, in the mid-nineties, someone had told you "In less than 20 years, Tower Records will be gone, Camelot Music will be gone, Sam Goody will be gone, Musicland will be gone, Virgin Megastores gone, probably 9 out of your 10 favorite local or indie record stores that exist now... all will be completely gone." You would have thought that person was insane. Now, just about the only people selling CDs in quantity in retail stores nationwide are Wal-Mart, Target, Costco, and Best Buy... not exactly record stores.
Record distribution is likewise completely transformed, with most of the traditional players vanished. It used to be that mid-sized distributors would help small independent labels find their way into record stores. You used to be able to find CDs by labels like Hypnos and Soleilmoon and Dorobo and Multimood in Tower Records, at least. Now I would be very surprised if more than a couple of weird little independent local stores stocked CDs by labels of this kind.
Most labels that existed back then have vanished. New labels that have come up since follow a completely different model. At first, the idea of a "download only" label seemed absurd, not a "real" label at all, just a way of playing at the record label game without really making an investment. Now, it's become viable. What's more, there are many "net labels" which deal entirely in free product, and many independent artists without means of connecting with a label simply stick their album releases up on the web for free download. The perceived value of the product offered by the more traditional record label decreases as the lower barrier to entry allows more players, many of whom offer their material free of charge.
Not only is there a lot more listening material for the music-lover to choose from, so much of it is free that a great number of people simply don't have the time or inclination to buy as much music (CD or download) as they did before. A person who used to buy 100 CDs per year might now, a decade later, actually consume MORE music than they once did... but they might only buy a dozen CDs and two dozen downloads per year, while they downloaded a number 200-300 net freebie releases during the same time. Wow, such a great abundance of new stuff to listen to.
I honestly can't blame the listener for making such choices, nor can I blame the artist who would rather reach more people for free than try to grab a couple thousand dollars a year from their work. The world is changing.
I'll say more later about what this has meant for Hypnos, and what it's likely to mean in the future. We've been slow to get fully behind the download trend, not because we don't understand it or don't think it's likely to end up being important to us in the future. We'll get there, but we've had to adjust what we do with CD releases in the mean time.
Like I said, an interesting subject.