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The Digital Skeptic: Here's All the Music Money Lost to the Web

EN ROUTE TO VENICE, Italy ( TheStreet) -- When Liz Kennedy called to tell me I could touch every music industry sale for the past 40 years, I had no idea it would feel this sad.

It's not her fault. Kennedy is the very professional director of communications for Washington, D.C.-based Recording Industry Association of America. She is the gatekeeper -- among her other duties -- of the so-called Industry Shipment Statistics database.

Here, since 1973, the RIAA has kept a running tab of how much music giants such as the Warner Music Group, Sony Music Entertainment or Universal Music Group sold in any recorded format: CDs, vinyl disks, download singles, cassettes, 8-track tapes -- if it made music and somebody paid for it, the yearly totals go here.

"We are very proud of the depth and transparency of this database," Kennedy told me. "It's a fantastic resource for anybody looking at the scope of our business."

Kennedy was granting me run of the place: I could model, sample and tinker with the numbers, as long as I gave the association credit. But now, taxiing for takeoff flying to the once-and-future monument of decay -- Venice, Italy -- all I can say is, it's stunning how sad a song these numbers sing.

Musicians really are innovators
The single greatest takeaway of wandering through four decades of music sales and revenue data is how this industry reinvents itself in the face of technological change. Heavens, there were lame ideas: the CD single, music kiosk or DVD audio? Please. And money was lost. Roughly $400 million went away when the vinyl single business went south in the late '70s.

It took until the early '80s for the cassette to replace those sales.

But overall, time and again, the music industry faced a new tech world order, embraced it, found an audience with it and made money. It all culminated with a remarkable 1999 peak of 1.3 billion total units sold, earning North American revenues of $19 billion or so.

Then the digital Terminator dropped from the sky, and the music biz became just another John Connor huddling in the wreckage trying to stay alive.
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