It's not a bubble, the product just became obsolete with newer technology and demand for industry slacked with internet marketing. CDs were (and still are to some extent) a fantastic media for storing music, but mp3 has huge advantages.
The late 90s was also the end of the pre-internet era, where the dominant way to market music was radio, TV, and print. In 1995 you had to try hard to discover music outside the mainstream. In 2005 you could go to MySpace and listen to an hour of music without ever hearing a top 40 song.
Well, there was a period when CD's were the cool new thing and everybody was buying all their record collection on CD again.
So, not only the labels were selling music by new artists at their usual pre-Internet levels, but there was also a big demand for old music in CD format. I suspect many older people that would not usually buy new music ended up buying many of their old albums again.
The question they must be asking themselves is how to repeat the bubble. The last one came from instituting a new technology which (in the popular imagination) rendered the old technology obsolete, and triggered a lot of repurchases. What kind of disruptive force, if any, could trigger this again?
> Obviously the answer was MP3s, but I think they might have missed the boat there...
The problem was that it was too close to their current bubble at the time. These are the kind of things that large businesses try to artificially separate out so that they can maximize profit. Why bring in a new technology now when I can wait until later and make more money in the interim?
I don't know if that's entirely true - it's tough to tell without including 'illegal' dowloads in this chart, which is equally difficult to accurately measure against the RIAAs sales data.
However, it is very interesting to not how Vinyl, Cassettes and CDs all dovetail into each other nicely. I would be willing to bet that the rise of mp3 downloads and the decline of CDs would dovetail equally as well.
The problem was, I think, the mp3 wasn't a media format invented by/for the music industry.
You can't include 'illegal' downloads in there. Something that is free doesn't have the same market pressures as something that costs money.
If I download music illegally, I can download GBs upon GBs of music which would cost me thousands of dollars were I to purchase it. What if I don't have those thousands of dollars? It's not like you can say that I would have bought all of those albums if it was impossible to pirate and then add the thousands of dollars to 'lost CD/Legal Download Service sales.'
No doubt. I don't disagree with that, as old as the argument is, but it would be interesting nonetheless to see how the rise of downloads dovetails with the decline of the CD format. If it's an even flow from CD to mp3, as it appeared to be with vinyl>cassette, then cassette>cd, or if it's disproportionate. It would actually go towards supporting or disproving your very argument.
However, I don't think there will ever be any trustworthy comparison like this, as the number of downloaded tracks was never reliably tracked in a manner that would be comparable to the RIAA unit sales data. Even if you could estimate the number of tracks downloaded, it would end up including things the RIAA doesn't include, like mashups, indy tracks, concert bootlegs, simpson quotes, etc.
To continue that train of thought it would be interesting to see a similar data visualization of consumption of all entertainment mediums (dvd video,blu ray video,video rentals,video games,video game rentals,etc) including piracy of those mediums as well.
I have a feeling that (other than the 'legal' vs 'illegal arguments) it would be very telling of the way that media consumption habits have trended over the past decade or so.
There was no bubble.. just a market whose time has come and gone, much like the fabled buggy-whip.
The record industry (as opposed to the music industry) was a 20th century anomaly. Prior to the invention of the gramophone, music was largely a participatory affair.. singing to pass the time while working, to celebrate at a social function, to amuse and entertain friends and family and to pass on folklore from generation to generation.
The record as a social object and the idolatry of the rock star were temporary aberations.
The live performance end of the music industry will likely survive, but once all the big stars of the last few decades die off, even that will likely shrink dramatically in size.
