I thought I’d share some further analysis on a previous post I made on whether the return of vinyl is myth or setting a long term trend for the future.
My original entry was sparked by a digital music news post that provoked some obviously biased comments based on a graph that didn’t provide any real perspective or analysis. The graph simply provided a fact that everyone already knew; vinyl sales have decreased dramatically since the adoption of the CD. And whilst the proceeding comments poked fun at the so called vinyl revolution there was no real analysis as to why this may or may not be so. One of the main problems with this graph was that it only provides for data for the commercial releases of vinyl and ignores the fact that there is a massive market for second hand vinyl. Whilst my searching of the internet has been unsuccessfully in finding even an approximate figure of how big this second hand market could be, the proof of how much this market has grown is in the simple economics of supply and demand. The first records I bought where copies of John Lennon – Shaved Fish and Neil Young – Rust Never Sleeps in 1996 from Dixons Recycled in Dandenong. The two records together cost me $8.00. Today I did a quick search of the internet and found an asking price of a 2nd hand copy of Shaved Fish being AU$54.25 (Screen shot in case the link expires). Whilst I agree that this is horribly over priced it does go a little to illustrating the value and demand that people are putting on these pressings of great albums, non of which are counted as sales by the music industry.
Fortunately Digital Music News have later redeemed themselves posting another graph that shows more realistic analysis pointing to a projected 25% increase in vinyl sales for 2011. This is redeeming because it shows the a much more relevant time frame. This increase will be in some ways be at the expense of the 2nd hand vinyl market as re-issues are becoming more readily available and whilst it won’t decrease the value of an original pressing of Sir Joe Quarterman’s classic funk album, it will decrease the value overpriced and relatively easily found 2nd hand copies such as the afore mentioned Shave Fish. This increase will also be a consequence of record companies pressing more new releases onto vinyl. Labels have realised that consumers are willing to pay for a quality physical product that contains music that they love. Whilst I disagree with most of the utopian projections that have resulted from the Radiohead distribution model, the one thing that it has shown is that consumers are willing to value add their product with the purchase of vinyl, in particular when a free high quality digital download is thrown in to seal the deal.
One of the most interesting comments in the later Digital Music News post was provided by @Food For Thought. One point he/she made suggests that a restriction that will limit the grown of vinyl will be the output of manufacturing plants as it will not be possible for new plants to open up. This is a valid point however I do not believe that this is anywhere near the case yet. Total Sonic Media have a list of 39 pressing plants worldwide and none which I know of are knocking back work because of to much demand. There is also the fact that the production on vinyl is in itself an economies of scale activity. A large portion of the cost manufacturing a record is a consequence of the acetates, and the more records a plant is manufacturing and more value they get from the required chemicals. As a consequence of this pressing plant are more then willing to except an increase in work load because it will result in an increase in profits.
However a concerning point made by @Food For Thought was the environmental issues associated with pressing vinyl records and this will only become a bigger as consumers purchase more vinyl. @Food For Thought goes onto suggest that this will probably be overcome by companies like China producing the required materials for the manufacturing of vinyl. This is would be a worrying solution and one that hopefully will not eventuate if vinyl continues to grow. Innovation on the other hand is possible. The process and the products involved in making vinyl have not changed over the past 30years simply because there has not been a need to. If vinyl sales continue to increase I’m certain we will see the process change as a consequence of the past 30years of technology.
A much more in depth analysis on the place of vinyl in the current music retail environment is put forth by Lucas Mearian. Mearian makes note of the reversing trend of CD sales and looks at the recent historical increase in sales of vinyl. He also quotes David Bakula, Senior Vice President of Analytics at Nielsen Entertainment when he says that “[t]he trend (of increasing vinyl sales) does seem sustainable” and that the “industry is really doing a lot of cool things not only to make the format come alive but to make it more exciting for consumers.” So could it be the music industry is actually taking notice of this rapid decline of CD sales and thinking that the best option for a value added product from digital could be black wax? Being able to buy an album for cheap in a digital format seems like the way to go; lets face it virtually every new release of a popular album is available for free to anyone with a little bit of computer knowledge thanks to Bit Torrent. But for the consumer who is willing to pay vinyl seems like the perfect option. It’s a real product; there are images that can provide a real connection an artist, liner notes that are in a font size that people can actually read and record collections look great when stored in a house. Even today having a collection of records is something that says I really love my music.
It is really too early to tell if the return of vinyl is a fact or fad, however the fact that vinyl has refused to disappear over the past 20 years and is now starting to be treated seriously once again is one indication that it might be here to stay. Whilst we are unlikely to see the release of the next Justin Bieber or Britney Spears album on wax, we are likely to see releases targeted at more mature audiences (who also have larger disposable incomes then teenagers) more and more often on vinyl. Whilst five years ago vinyl was just an after thought to a successful new release, now more often vinyl releases are available at the same dates as the CD and digital versions. The fact these releases are more often coming with a free download card or CD indicates that record labels are interested in encouraging consumers to choose this option. We are walking into an era where if the CD dies and nothing takes its place, the best case scenario will be an oligopoly between a handful on digital retailers and this scenario is not good for the consumers, the artists or the labels. The return of vinyl may just be thing that saves us from this scenario.