Change is hard for any business, not just the music industry. Part of why the labels are fighting so hard over DRM is the raw panic being induced by the sheer speed of change - something Raghav Gupta wrote about this morning. We are simultaneously seeing two things: rising demand for music on the consumer side, and declining revenues from the model in use on the label side. That's part of why the industry cries "piracy" so loud - yes, there's piracy, but there's also the fear of a new, not well understood business that is being built while they try to cling to the old one. Consider:

Of most concern is the removal of shelf space devoted to music products at retail stores. Tower’s bankruptcy removed millions of square feet and property owners will look askance at music retailers looking for space. The last decade saw the rise of discount retailers, Target, Wal-Mart and Best Buy being the big 3, use cheaply priced CDs as a loss leader to drive foot traffic. This has been a successful strategy, however the question is how long these discount stores will continue to sustain this strategy. If they start devoting the space to other products -- games, DVDs or even iPod and related accessories, it will hasten the demise of the CD-driven business model. As one executive at a major told me, ‘if Wal-Mart removes just 8 less square feet per store to CDs, it’s like losing 300 stores.’ This will be a major story to watch in 2007.

That changeover has been a rolling shock to the system. It's kind of like the change from animal driven traffic to machine driven traffic - there are lots and lots of little niches that make a living off the old model, and it's obvious that the new one doesn't need the same level of "middle men". Sure, there will still be middle men - but fewer, and in different roles. All of that is terrifying to people who've built their careers on the Album/CD model. It's also scary for the artists - there may well be fewer album driven mega-stars, and more traveling roadshows.

It all represents change, and it's no easier for the music industry than it is for anyone else - it's just that the amount of $$ involved is pretty big, and it's playing out in mass media.

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