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Predictably, The Australian newspaper says illegal downloads are the reason music sales have fallen to their lowest point in 23 years (story no longer online).

The Australian says 1.8 billion albums sold in 2007, 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 attacking downloaders, p2p services and ISPs it is now harder to illegally download music than in the late 1990s and the early years of this decade when Napster and other services were at the peak of their popularity. Surviving p2p networks are now filled with spam and music industry-generated dummy files designed to make downloading difficult.

I want to concentrate on one important aspect: 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 morphed into dozens of other fresh new music styles.

New wave music, creative boom

That burst of creativity gave birth to acts as diverse as The Clash, The Jam, Talking Heads, The Smiths and the Ramones. Accompanying this was a commercial blossoming as hundreds of entrepreneurial, occasionally idealistic, small record companies and other 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 and then a third wave 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 that eventually left just four major companies accounting for most global sales (about 70 percent in the USA, more in some other western countries).

Squeezing out innovation

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

As a result of these moves there are now  fewer signed artists and less room for commercial mavericks to flourish. The remaining acts are more predictable and controllable – great for large corporations reporting to shareholders, not so good for nurturing the next generation of talent. Independent record companies pick up bright new acts, but sooner or later they the majors acquire them and the squelching starts all over again.

Which means the music industry would be in serious decline now even if illegal music downloading never happened.

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