And as Savannah Haspel, vice president for media relations at IBISWorld confirmed to me, Pandora ( P), Spotify and iTunes ( AAPL) be damned, the damage is nowhere near done. Worldwide music sales are expected to continue to crater through 2018, to $26.3 billion from $27.6 billion, she said. Investors most definitely cannot merely subtract today's $27.6 billion music sales from 2004's $49.5 billion in revenues to take a $22 billion or so Digital Age loss. Remember, we're talking about sales here -- the lifeblood of market cap. Every dollar not earned was not "not earned" just once, but lost over and over and over through the past decade. Assume that at the industry's height -- say in 1999 -- the average music consumer spent $50 per year on music. That's a reasonable three CDs bought per year at $15 per CD. Then figure that there's roughly a 3 billion-person global music market -- or the half of the 6.8 billion global cellphones that can buy a song or stream music. If we multiply that $50 average per-user spend by today's 3 billion person worldwide music consumer market, we get a fabulous $150 billion per year in expected music sales. Now comes the damage: If we back out today's $27.5 billion sold worldwide, that leaves a massive $123 billion or so in lost music revenues. Give these missing sales a conservative 10-times revenue public-market valuation and that's $1.3 trillion in missing market music industry cap -- about equal to what has been destroyed in all violent storms since 1900.
Better grab something steady, here comes the real carnage: If we bake in all the sales blasted out of all the markets by the wider information economy -- that is, the billions lost in motion pictures, legal and financial services, corporate IT and higher education revenues -- investors are easily wandering through tens of trillions in market-cap devastation. All of which makes perfect, sad sense. How else can you explain that we live in a time of truly seismic value creation technologies, such as the cracked human genome or libraries of knowledge under our desks or free global communication yet, somehow, our miserable Dow still trades at the same 15 some-odd thousand it has been for the last half-decade. Think about it: When our indexes should easily be trading at 40,000 or 60,000, yet aren't, it's not the mortgage crises or government spending or nickel-and-dime national health care that's killing us. It's the fact that all that market cap, prosperity -- and happiness -- has simply been blown away.