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The Australian newspaper says illegal downloads are the reason music sales fell to their lowest point in 23 years. It is no longer online.

According to the paper 1.8 billion albums sold in 2007. That’s roughly the same number as at the start of the CD sales boom in 1985.

MP3 downloads have an impact – but they are not the whole story. The Economist reported earlier this year EMI can’t even give CDs away to younger listeners.

Illegal downloading harder, riskier

Thanks to music industry-lead legal actions against downloaders, p2p services and ISPs, illegal downloading is now harder than in the late 1990s and the early years of this decade.

That was when Napster and other services were at the peak of their popularity. Surviving p2p networks are now filled with spam. They have music industry-generated dummy files designed to make downloading difficult.

This aside: the music industry was the architect of its own decline.

The last serious flowering of popular music was in the late 1970s and early 1980s – I know, I was there. An explosion of new talent appeared as punk rock and new wave. It morphed into dozens of other fresh new music styles.

New wave music, creative boom

That burst of creativity gave us acts as diverse as The Clash, The Jam, Talking Heads, The Smiths and the Ramones.

Accompanying this was a commercial blossoming. Hundreds of entrepreneurial, at times idealistic, record companies and related businesses arrived on the scene.

Similar waves arrived in the 1950s with original rock and roll. Then again in the 1960s with the Beatles and rock’s second coming. A third wave was from 1967 through to the early 1970s. Each successive wave  had a creative and commercial aspects.

Around the time CD sales took off, the record industry began a process of consolidation. This left four major companies accounting for most global sales. About 70 percent in the USA, more in some other western countries.

Music industry squeezing out innovation

Along the way the new mega-companies trimmed their rosters of acts. They began playing it safe; which meant squashing innovation and creativity. They also started mining their back catalogues more than in the past. I can’t quote numbers, but old music accounts for a sizable share of today’s total sales.

As a result, there are fewer signed artists. There is less room for commercial mavericks to flourish. The remaining acts are more predictable and controllable. That’s great for large corporations reporting to shareholders, not so good for nurturing new talent.

Independent record companies still pick up bright new acts. But sooner or later they the majors get hold of them and the squelching starts all over again.

Which means the music industry would be in serious decline now even without illegal music downloading.

Even so, I’ve decided to make sure my music collection is one hundred percent legal.