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Harris T.

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Proximity Research Report

** Fighting Illegal Downloading with Vinyl Albums ** How Vinyl Albums can Generate Profit for the Music Industry

By Tyler Harris

Spring 2010

**Table of Contents**

Executive Summary 3

Introduction: Illegal Downloading 4

Trends in Gen-Y Showing Increase in Vinyl Sales 5

How Vinyl Albums will decrease the Chance of Piracy 6

Vinyl Albums are Nostalgic 6

Vinyl Albums as an Advertisement for Artists 6

Recommendation 7

Attachment 1: The White Stripes Releasing their Album Elephant on Vinyl to Battle Piracy 8

References 9

** Executive Summary **

The music Industry has seen a continuing decline in CD sales, and a rise in illegal downloading. Due to the pressure to earn a profit, the music industry has to come up with a solution to the problem. Promoting vinyl albums seems to be a solution to fighting illegal downloading sites. Generation Y is showing a trend of purchasing vinyl albums and the sales of albums are on a steady incline. One reason vinyl sales are on the rise is because there is a sense of nostalgia buying a vinyl record, creating a unique niche for Gen-Y. The format of vinyl albums is also hard to pirate, almost eliminating the risk of piracy. Artists can also use vinyl albums in the hope to gain recognition and promote their work, which can generate revenue for Proximity’s clients. It is estimated that in a few years, vinyl sales will outsell CD sales and because of this, our clients should invest in the production and distribution of vinyl albums.

Illegal downloading has been steadily increasing. This is most likely due to new technology, making it faster and easier to download an album than ever before. Gen-Y has shown a trend of not purchasing their music, but rather obtaining it for free online. This problem has significantly impacted the profit of the music companies. An example of technology making it easier to pirate music is a CD-R:
 * Introduction: Illegal Downloading **






 * Trends in Gen-Y showing an increase in Vinyl sales **

The escalating increase of vinyl sales is due mostly to Gen-Y purchasing these records. Many vinyl albums available today are including free media downloads so the consumer can have both their vinyl album along with an electronic version. New record players are including USB connectivity so one can purchase a vinyl album and easily import that music into their online library. The chart below shows how vinyl sales have increased from 2008 to 2009, and that they are expected to outsell CD’s in a matter of a few years:






 * How Vinyl Albums will decrease the Chance of Piracy **

Music piracy has become very prevalent and a primary source of obtaining music for many people, including Gen-Y users. The production of vinyl albums will decrease the risk of piracy due to the complexity of converting to an electronic digital format verses piracy of CDs, resulting in more profit for our clients.

The music industry knows better than anyone that creating a special and unique niche is what can maximize profit. Vinyl albums have created that niche. There is a nostalgic feel to playing a vinyl album just like in the 1970’s, when vinyl albums were the main source of music. Many users, especially in Gen-Y claim that vinyl albums have a sound very different from a CD. It is also agreed, that vinyl albums tend to stay true to the artwork portrayed on their covers. Vinyl albums have a way of becoming collectibles as well as the preferred music source for many people, resulting in increased sales.
 * Vinyl Albums are Nostalgic **
 * Vinyl Albums as an Advertisement for Artists **

Artists can use vinyl album covers as a form of product placement. Alton Kelley and Stanley Mouse, artists for the Grateful Dead albums, have become world renowned and recognized for their artwork. Their work has even been shown in exhibits. Our clients can use new artists featured on vinyl album covers in the hopes of gaining recognition. If the artists featured become recognized, this too will add to the increase in sales. There are many art fans that buy records based on the artwork featured. This is a similar idea to music being played on the radio. When a song is played that a person likes, they are likely to go out and purchase the album. If there is artwork featured on the cover of a vinyl album that a person likes, they might be incentivized and purchase the album. Featured artists on vinyl albums can result in increased profit for the music companies, helping to reduce the losses from illegal downloading. Below are some examples of popular albums and their famous artwork:




 * Recommendation **

Although it might take a few years for vinyl albums to outsell CDs, this report recommends that Proximity’s clients should increase the production and the distribution of vinyl albums immediately. This is because: · Trends in Gen-Y are showing a steady increase in the sales of vinyl albums, resulting in vinyl albums outselling CDs in a matter of years. This will become the “final nail in CD’s coffin.” · Vinyl records can reduce the risk of piracy, resulting in more profit for our clients. · Vinyl records will create a new niche and market for Gen-Y, resulting in many new profit-generating opportunities for Proximity’s clients. · Record companies can use the artwork of upcoming artists on album covers in hopes of gaining recognition and additional profit for our clients. Much like Pink Floyd and the Grateful Dead album covers displayed in figures 3 and 4.

The White Stripes have sent out copies of their new album to a select few on vinyl, but fret not, come tax day, you'll have your //Elephant// spinning in your CD player. While other bands have toyed with everything from watermarked CDs to hermetically sealed CD players to keep their music from leaking to the Internet, the White Stripes took a decidedly more retro approach when sending out advance albums to critics, the logic being that any music journalist worth their weight in free CDs owns a record player. "[Frontman] Jack [White] wanted people to hear the music the way it was meant to be heard, which is on vinyl. [He wanted them] to listen to it as [we] used to listen to records," V2 Records president Andy Gershon said. "In addition, it just creates one extra step before someone can put it up on Limewire or KaZaa." In October, Jack White said that his band had always intended to release one album per year but got derailed from that schedule after the runaway success of //White Blood Cells.// As for what fans can expect from the album, which has been finished for nearly four months, //Elephant// features an actual //bass// lick on its first single, "Seven Nation Army." It also boasts a Cowboy Junkies-esque ballad called "In the Cold, Cold Night" sung by Meg White and a ferocious cover of Burt Bacharach's "I Just Don't Know What to Do With Myself." The Stripes plan to film a video for "Seven Nation Army" in mid-March. The band said it hopes to tap indie film icon Jim Jarmusch to direct it. —Gideon Yago
 * Attachment 1- The White Stripes Releasing the Album //Elephant// on Vinyl to Battle Piracy (2003) **




 * References **

Cheng, Jacqui. Digital albums, vinyl made a comeback in ’09 while CD’s slide (2010, January 7). Arstechnica.com. Retrieved April 15, 2010 from http://arstechnica.com/media/news/2010/01/digital-albums-vinyl-made-a-comeback-in-09-while-cds-slide.ars.

Corey, Russ. The Return of Vinyl (2010, February 16). Timesdaily.com. Retrieved April 15 2010 from http://www.timesdaily.com/article/20100216/articles/2165035?Title=The-return-of-vinyl Dark Side of the Moon Album Cover. Google.com. Retrieved May 11, 2010 from http://scrapetv.com/News/News%20Pages/Entertainment/images-4/pink-floyd-dark-side-of-the-moon-cover.jpg Dell, Kristina. Vinyl Gets Its Groove Back (2008, January 10). Time.com. Retrieved April 16, 2010 from http://www.time.com/time/magazine/article/0,9171,1702369,00.html Grateful Dead Album Cover. Google.com. Retrieved May 10, 2010 from http://dummidumbwit.files.wordpress.com/2009/03/the-grateful-dead-photo-4.jpg Grateful Dead: Now Playing at the New York Historical Society. Nyhistory.org. Retrieved April 16, 2010 from https://www.nyhistory.org/web/default.php?section=exhibits_collections&page=exhibit_detail&id=5798416 Growth in Disc Piracy fueled by CD-R. Google.com. Retrieved May 10, 2010 from http://www.fsa.ulaval.ca/personnel/vernag/eh/f/noir/lectures/Music%20Piracy%20Report%202002_fichiers/ap2002-01.gif.

Van Buskirk, Ellen. Vinyl May Be Final Nail in CD’s Coffin (2007, October 29). Wired.com. Retrieved April 14, 2010 from http://www.wired.com/entertainment/music/commentary/listeningpost/2007/10/listeningpost_1029. Yago, Gideon. White Stripes Battle Piracy With Vinyl (2003, January 30). Addict.com. Retrieved April 15, 2010 from http://www.addict.com/news/articles/1459763/20030130/white_stripes.jhtml.