Now, this is primarily true for less established bands - major label and macro-indie acts still largely hew to the full length album format, although 40 minute indie rock albums were never really a rarity - but particularly when you get down to bands self financing their shit through Bandcamp, etc. or on micro indie budgets, the short LP/EP format almost becomes holy writ.
I guess this shouldn't be surprising: pundits have been predicting the internet will bring about the end of the album format for 10 years now. The problem I think is that it's not so much that the classic era of the single is returning as that bands are just dumping out material on the public at whatever rate they're finishing it... there's very little quality control, and unlike in the past, a band putting out a single in 2011 is no guarantee that the artist believes that song to be amongst their best (or most accessible) material. It just happens to be the most recent thing they've completed.
Furthermore, for those that are actually shelling out hard cash for these releases instead of downloading them illegally, the value starts to plummet the more brevity comes into play; ie. a band may not have the balls to charge the standard $9.99 going rate if they only have seven 3-minute songs on their new release, but it won't necessarily be half-price either; they may try to get $5.99 or higher despite the fact that 21 minutes is at most half the length of what anyone would consider a proper full length... the per minute rate takes a backseat to the per song rate, and, coupled with the fact that many of these bands are self financing their own recordings, there could easily be a trend towards artificial brevity.
In fact, if current trends persist, future generations won't know what the fuck an "album" is in the first place. Freed of the need to maximize space on physical media tied to a fixed cost, there's no compelling reason to have any kind of hierarchy at all; out with the single, out with the EP, and definitely get rid of those albums: those are shackles that impose artificial packaging concepts on the artist. They should be free to create at will... so now you can just pay by the song.
That's playing Devil's Advocate. I don't believe the album concept will ever fully go away for one specific reason, if nothing else: it will always be in an artist's self interest to package their lesser material together with their best to get you to have to buy it all. They don't want you snacking on their product; they only make money if you go in for the whole meal. In an age where people can sample every single song before they buy, you're going to make more money selling someone an album at $9.99 than by assuming you have 10 songs that they're willing to shell out 99 cents for a la carte.
A lot of people don't seem to realize that music packaging started off as a singles format - the term "album" itself describes the photo album-like book of sleeved 78s sold back in the day that were basically just compiled singles - and it was marketing forces more so than artistic conventions that steered the industry toward the album format. When I worked in a music store in the late 90s you couldn't even find most songs that were on the radio on CD or cassette single. If you dug through our CD single bin most of what you'd find would be dance music and rap... and they were basically attempting to double dip by getting completists who already owned the album to buy the single for the remixes.
A lot of tech predictions that people take for granted surprise me these days, not so much in their likelihood of coming true but in the blind acceptance in the march of progress. Not to sound like a Luddite, but a lot of what constitutes this march of progress is dictated by corporate business models, so this idea that things like streaming content, death of the album, etc is destined to result in more choice and lower prices for the consumer seems a little naive at best.
For instance, if streaming ever does fully kill off physical product, the streaming providers will be able to charge pretty much whatever they want for their services, since that will then be the only means you have to get it. It's also very possible that as streaming becomes the dominant model that record labels and film studios will want to maintain control of their own cash cows, and that "one stop" streaming services like Netflix and Spotify will disappear in favor of things like HBO Go and record label subscriptions.
Anyway, none of this is intended to come off as alarmist, but it's something to be on the lookout for. Corporate interests are always going to try to maximize the cash they get out of you. Don't assume that they're just going to cave in to technology and willingly fork over their copyrighted material cheap and convenient. Vote with your dollar: reward streaming services and "buffet"-style services like Netflix while eschewing pay-per-view and 99-cent digital downloads as much as possible.
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