Appetite for Self-Destruction: The Rise and Fall of the Record Industry in the Digital Age

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If you had even a minuscule amount of sympathy for the declining fortunes of the big record companies like Sony BMG, Warner, Universal, and EMI, it will be gone by the time you finish reading Steve Knopper’s Appetite for Self-Destruction: The Spectacular Crash of the Record Industry in the Digital Age. Knopper traces the history of the last 30 years of the music business; beginning with Disco Demolition Night marking the end of the disco era, and continuing through Michael Jackson’s blockbuster album Thriller, to MTV, to the switch from LPs to CDs, to the battles over Napster and Kazaa, to the dominance of iTunes, and ending with bands such as Radiohead and Nine Inch Nails experimenting with selling music directly to fans.

Much of the recent history has been written about before. What sets Knopper’s book apart is his extensive research. Through countless interviews with people inside and outside the music industry, he’s able to provide an immense amount of depth and detail. This makes Knopper’s book essential reading if you want to understand exactly how the juggernaut record labels got to their ever-diminishing current state.

With every change in the industry, from disco to the introduction of the CD, record labels had previously been able to adjust (with some cost) and continue to make lots of money. Labels profited handsomely for the better part of a decade and a half, selling CDs for $15 to $18. In the process of shifting from LPs to CDs, record companies had killed the single. Music lovers had to buy an entire album in order to get the two or three songs they wanted.

When CD sales started to decline and the war over Napster began, record companies were not about to change their way of doing business. This obstinacy remained even as new media people had already found ways to use the Internet to promote bands and sell music.

Syd Schwartz was one such new media executive at independent label Wind-Up Records. He built

a successful Internet marketing campaign for the rock band Creed in 1997—the band released a free online single via several retailer and radio websites…Word spread, radio picked up on the Internet buzz, and the band would go on to sell 24 million albums. But when Schwartz moved up in the world, taking a similar job at EMI, he quickly realized corporate policy prevented him from doing anything remotely close to the Creed campaign. “I remember, one of my first days of work, being sat down by a senior executive who shall remain nameless and being told that MP3s are the tool of the pirate.”

It would be this stubborn refusal to attempt to harness the Internet and the MP3 format for too long that would lead record labels to cede control over the digital domain. When they finally signed on with Apple’s iTunes store in 2002, they still feared piracy above all else. But by forcing Apple to use digital rights management (DRM) for the music files sold at the iTunes store, the record companies would inadvertently lock iTunes users into iPod music players.

[T]hanks to Fairplay, somebody who bought a Microsoft Zune or a Creative Labs Zen couldn’t buy or store music on iTunes and transfer it to the foreign player. European regulators complained that [Steve] Jobs was using this scheme to corner the digital music market unfairly. Jobs responded by blaming the labels. He posted an 1,800-word manifesto on apple.com, arguing for a music world free of DRM.

Apple’s share of the digital music market has been estimated to be at 85 percnet in late 2008 (Apple defeats music rate hike, Devin Leonard, CNN Money, October 2, 2008). Meanwhile, CD sales continue to fall at double-digit rates (Report: 17 million people stopped buying CDs in 2008, David Chartier, ars technica, 18 March 2009).

Knopper doesn’t take pleasure in the labels’ fall. Instead he vividly depicts a greedy and hubris-filled industry that was repeatedly warned of the shifting landscape but only began to adjust far too late. If there’s a lesson in all this it’s that traditional media have not adapted to the ongoing revolution in content-delivery brought by the Internet.

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