The Internet's $10 Million Mix Tapes
As the music industry struggles to find its way in the digital era, it is seeing unlikely trailblazers in the likes of Beethoven, Mozart and Bach.
Last year, the classical-music charts were dominated by two distribution companies: the world's largest record label and a five-year-old, Stockholm-based digital company with 43 employees, no performers under contract and virtually no profile in the broader music business. The contrast between the giant Universal Music Group and the tiny X5 Music Group AB offers insight into the future of music distribution.
Traditional labels like Universal, a unit of Vivendi SA, tend to focus on new releases and CDs, which last year represented 73% of total U.S. album sales. CDs accounted for nearly 54% of all recorded music sales, when paid downloads of individual songs were measured, too. X5 releases no new music and sells no CDs. Instead, it licenses the catalogs of about 50 other companies -- most of them small classical labels based in Europe -- and repackages their recordings into compilations, sort of like classical mix tapes. It sells music only through online outlets like Apple Inc.'s iTunes Store and Amazon.com Inc.'s MP3 store, with cover art designed to stand out even at the thumbnail sizes displayed on the services. And most of X5's collections, even those with 50 and 100 songs, are priced below $8.