It's the price tag, stupid

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By Scott Galupo

ON THE EDGE column:

It's becoming an annual ritual for this column: scribbling while Big Music burns. According to Nielsen SoundScan, the final, grim tally for 2008 album sales indicated a 14 percent drop from the previous year. Measured against the peak sales year of 2000, album sales have declined a staggering 45 percent.

Digital album downloads continued to skyrocket in 2008 - up 32 percent - but online purchases still don't come close to shoring up the death spiral of the physical album.

There's a kind of presentism, however, that infects many of the analyses of the industry's seemingly precipitous decline during the past eight years.

Often overlooked is that we've been here before.

Peter Bogdanovich's wonderful documentary "Tom Petty and the Heartbreakers: Runnin' Down a Dream" recounts Mr. Petty's confrontation with his then-label MCA Records over the pricing of his 1981 album "Hard Promises." The going rate for an LP in those days was $8.98. MCA wanted to raise it to $9.98. Mr. Petty balked, arguing, "If we don't take a stand, one of these days, records are going to be $20."

Why was MCA bent on raising the price of an album?

Because record sales were in a slump that had begun in 1979.

Stan Liebowitz of the University of Texas at Dallas School of Management noted in a 2002 paper that in a seeming mirror image of today's predicament, album sales were jump-started in the '80s by new media formats: first the cassette and then, more significantly, the compact disc, both of which dramatically increased the portability of recorded music.

Despite, or perhaps because of, this successful technological bailout, Mr. Petty's prophecy was borne out in succeeding years: The price of an album crept ever upward until we arrived at the end-of-the-century absurdity of $20 CDs in mall-rat holes like Sam Goody.