Book Review

When I was nineteen, I received, among my usual stack of news weeklies, a check from the RIAA, the recording industry, for twenty dollars. The letter stated that the reason for their payment was a class-action lawsuit from consumers who had been overcharged for CD purchases within a ten year period. In 1999, the CD format was still dominant, and, while file-sharing websites like Napster existed, most people either weren't aware of them, or still preferred to buy their music at costs up to $17, at retailers like Sam Goody and Music Land. I gladly cashed the check, and probably went out to buy another CD.

In Appetite for Self Destruction: The Spectacular Crash of the Record Industry in the Digital Age, Author Steve Knopper provides a highly entertaining account of a business model that grew immodestly bloated during the CD sales boom, and failed at nearly every pivotal turn to recognize key changes in the consumer landscape, leaving themselves at the eventual mercy of iTunes, and trying to bolster sales with ringtones and music wallpapers for computers.

Post disco, the industry was slumping. Vinyl sales were flat, as retailers struggled to find ways to raise the prices beyond eight dollars. Michael Jackson's fifty-million (US only!) plus Thriller sales, and the advent of digital music revitalized the industry in ways nobody could have expected. Since the sixties, researchers had tried to perfect digital music, and had worked with audio compression, to achieve a clean sound, bereft of the pops and static associated with vinyl. The labels, mired as they were in flat profits, jumped at the chance to entice their consumers to replace their back-catalogs with the new format, and the early 1980s saw rapid growth in the medium. This was not without its problems. Retailers didn't want to replace their expensive LP racks, so blister packs were made to sit side by side to fit the old space, needlessly wasting millions on packaging, and creating an environmental mess. Jewel cases helped solve the problem, but didn't emerge until the late eighties.

The list of failures during the era is staggering: Record labels kept merging, getting bigger and more disconnected from the consumers, the CD killed the album format, and a practice of including one or two hits on albums stuffed with filler dominated the industry, as did their elimination of the single format, forcing consumers to pony-up for the full-price to hear only a few songs. Through the 'boy-band boom' in 2002, labels paid millions to manufacture bands, often giving groups like N'Sync, which later sued their label for unfair business practices, huge profit margins.

When Napster emerged in the late 90s, the labels reacted in exactly the wrong way, preferring lawsuits and threats over mediation and compromise. They should have found a way to partner with the new medium. Instead, they panicked and litigated, setting a hostile trend that would continue for nearly another decade. Companies couldn't accept that their old business model was falling apart, and tried everything except finding creative solutions to the problem. For every Napster that they eliminated, many other alternatives developed, using 'nodes,' instead of central servers, making them much harder to track. Steve Jobs, recognizing that the record labels were desperate, forged deals for back-catalogs to partner with his iTunes, which now holds an impressive market share in music purchases. New mediums, like torrents, and MySpace, continue to be a low-overhead method of introducing new music, and only with compromise and an eye for the future, will record labels continue to be profitable.

Rarely have I read a book with such intensity. This is a stunning account of hubris, arrogance and of an industry that lost touch with its own consumers so fantastically.