The graph shown is the trend of U.S. music sales and licensing for the past decade. The graph is from a CNN article entitled Music's lost decade: Sales cut in half. (For comparison, in the same period radio revenues fell about 20%.)
The article quotes Joshua Friedlander, vice president of research at RIAA:
The industry is adapting to consumer's demands of how they listen to music, when and where, and we've had some growing pains in terms of monetizing those changes.
Some growing pains? Seems like a 57% decline in revenue over ten years (with only one single year of growth) is maybe a little more serious than just growing pains. Revenue will have to more than double just to get back to 1999 levels. That's a lot of ring tones.
The trend of the graph is notable because the decline appears to be accelerating. It suggests that rather than adapting, the record labels are headed in the wrong direction.
Aggressively going after downloaders and keeping prices of CDs and downloads high clearly hasn’t worked. Growing friction between radio and the recording industry hasn’t helped either.
One would think that losing half your revenue and an accelerating negative trend would make the labels rethink their strategy. But no. They see the Macmillan Books win over Amazon as an opportunity.
Warner Music Group’s CEO Edgar Bronfman Jr declared:
I think what this signals is that content is going to have more pricing flexibility over time rather than less, because frankly, the only thing that drives iPhones, iPads, Kindles, Zunes and other kinds of devices is content. I think the power of content in that little fracas with Amazon was clearly evident.
In other words, Bronfman hopes to force websites like iTunes to charge more for downloads. That should fix everything.