Horrible liberals they may be, but they get it right, or at least interesting, this time

Another music industry in the Internet era article, courtesy of The Economist (and brought to my attention by The Rambler.

The number of music files freely available online has fallen from about 1.1 billion in April 2003 to 800m this June, according to IFPI, a record-industry body.
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there is already evidence that data derived from the preferences shown on illegal file-sharing networks are being used to help launch acts
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A poll by Rolling Stone magazine found that fans, at least, believe that relatively few “great” albums have been produced recently (see chart 2).

Of course, chart 2 simply reveals the age/tastes of the RSters: nearly all "500 great albums" were recorded between 1965 and 1975, and hardly any before 1960, and with a sharp decline leading into the '80s.

The boss of one major label estimates that, while catalogue accounts for half of revenues, it brings in three-quarters of his profits. If the industry stops building catalogue by relying too much on one-hit wonders, it is storing up a big problem for the future.
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In the past 12 months, according to a manager who oversees the career of one of the world's foremost divas, his star earned roughly $20m from sponsorship, $15m from touring, $15m from films, $3m from merchandise and $9m from CD sales. Her contract means that her record label will share only in the $9m.
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For example, Warner Music Group is thought to be readying itself for an initial public offering in 2005 and, as part of cutting costs in Belgium, it dropped artists this year. Among them was Novastar, whose manager says the group's latest album has so far sold 56,000 copies in Belgium and Holland.
(I include the last paragraph because, you guessed it, of the out-of-the-blue mention of Belgium. Novastar is Belgian and not Dutch, by the way.)

It is still unclear what a successful business model for selling music online will look like. People are buying many more single tracks than albums so far. If that persists, it should encourage albums of more consistent quality, since record companies stand to make more money when people spend $12 on a single artist than if they allocate $2 to each of six bands.
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Apple forced the industry to accept a fixed fee per download of 99 cents, but the majors will push for variable, and probably higher, prices.
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The best distribution of all will come when, as many expect, the iPod or some other music device becomes one with the mobile phone. Music fans can already hold their phones up to the sound from a radio, identify a song and later buy the CD. At $3.5 billion in annual sales, the mobile ringtone market has grown to one-tenth the size of the recorded music business.
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In September, according to comScore Media Metrix, 10m American internet users visited four paid online-music services. The same month another 20m visited file-sharing networks. The majors watch what is being downloaded on these networks, although they do not like to talk about it for fear of undermining their legal campaign.