Hi folks,
In 1999 the global recorded music industry had been enjoying a long period of expansion for more than a quarter of a century. In 1974, approximately 1 billion records had been sold worldwide and by the end of the century this figure had more than tripled. At the end of the 1990s, record company executives had very high morale and very few in the music industry suspected that a group of teenage hackers, led by Shawn Fanning (then a student at Northeastern University in Boston, United States) , were going to unleash the turbulent process that has ended up undermining the foundations of the sector. Shawn Fanning created and launched a file-sharing service called Napster that allowed users to download and share music without any compensation to the rights owners. Napster was immediately sued by the music industry and forced to discontinue its service. But instantly a whole series of increasingly sophisticated services took over. The aggressive methods, both legal and technical, used by the traditional music industry to stem the ripple effect of online piracy services such as Napster, Kazaa, LimeWire, Grokster, DC++ and The Pirate Bay were futile. As soon as one file-sharing service was taken to court and forced to cease operations, others appeared to take its place. By the end of 2013, physical music sales (i.e. cassettes, CDs, vinyl) measured in units had fallen back to the relatively low figures of the early 1970s. In the 15 years since Napster launched, the music industry has been completely transformed and the prevailing model for most of the last century has largely been abandoned. This dizzying transformation of the music industry is a classic example of how one innovation can disrupt an entire industry and make its capabilities obsolete. The power and influence of the pre-internet music industry was fundamentally based on control of physical distribution. The Internet has made physical music distribution increasingly irrelevant and the main companies affected have had to redefine themselves to survive. In this article I will examine the impact of the internet on the music industry and the current state of that sector in the era of digital distribution. THREE MUSIC INDUSTRIES To understand the dynamics of the music industry, first of all, it is necessary to know that it is not just one, but several, different ones, closely related to each other, but based on different logics and structures. The music industry as a whole lives off the creation and exploitation of musical intellectual property. Composers and lyricists create songs, lyrics and arrangements that are performed live on stage, recorded and distributed to consumers, or licensed for any other type of use, for example, for the sale of sheet music or as background music for others. media (advertising, television, etc.). This basic structure has given rise to three core music industries: the record label, focused on the recording of music and its distribution to consumers; music licensing, which above all grants licenses to companies for the exploitation of compositions and arrangements, and live music, focused on producing and promoting live shows, such as concerts, tours, etc. There are other types of companies that are sometimes included in the music industry family, such as manufacturers of instruments, software , sound equipment, music merchandising , etc. Although these are important industrial sectors, they have not traditionally been considered an integral part of the music industrial core. In the pre-internet music industry, the recording industry was the strongest of the three and generated the most revenue. Most solo artists and bands who aspired to be something in the traditional music industry dreamed of being able to sign with a record label. A contract meant that the company would finance a studio recording, which would open the doors of the international record distribution system to the performer, something that was out of reach for most bands without a contract. The second sector, music licensing, was much smaller and more conventional than the recording industry sector. The music publishers, which operated in this business, worked mainly with other companies in the industry, without any direct interaction with the public. His main responsibility was to collect licensing fees when one of his songs was used in any context and to ensure that these royalties were distributed fairly between composers and lyricists. The third sector, live music, generated its own income from the sale of concert tickets. Although live music has a long and rich history, during the 20th century it was always in the shadow of the recording industry. It was clear that the biggest revenues came from record sales, and record labels generally viewed concert tours as a means of promoting studio albums, regardless of whether the tour was profitable or not. Sometimes even the record company helped finance the tour. In this way, the bands could give all the scheduled concerts and promote their album, even if ticket sales were a failure. This industrial structure, including the relationships between the three sectors, developed in the mid-20th century and was deeply entrenched when the Internet suddenly emerged and put the entire system in check. The short-term effects of the Internet on the music industry were felt primarily in the distribution of recorded music to consumers. This means that while record labels were seriously threatened by the loss of distribution control and rampant online piracy , the other two sectors were, in principle, barely affected. In fact, while record labels have suffered over the last 15 years, the other two segments have gained strength and presence. There are several reasons for this change in balance. One of the main reasons is simply that, as one source of revenue declines, the music industry has to re-evaluate its other businesses and try to offset record label losses by increasing revenue from licensing and production. live music. For example, revenue from music licensing has more than doubled in the last 15 years due to the use of new, more active procedures and also to the fact that the media industry has changed in a similar way to the music industry. There are now many more television channels, radio stations, video games, websites and other access systems than there were just two decades ago, and most of them require music as primary or secondary content. Music publishers have also generally been more agile than record labels in capturing demand from new media channels. A clear example of how music publishers have changed their business practices is their attempts to establish themselves as a comprehensive music intellectual property rights service, which allows the granting of all music rights with a single contract. Although it may seem like a pretty obvious service, the traditional music industry hasn't always had it. On the contrary, there was a legal entity that controlled the rights to the composition and another that was in charge of the recording rights of the musical work, the master . Music companies in the era of digital distribution increasingly control mastering and composition, making the licensing process more efficient. The music licensing industry over the past 15 years has evolved to become the most profitable sector of the music industry and is also often considered the most innovative and agile of the three. Although the licensing sector is the most profitable in the music industry, live music has grown the most. There's a fairly simple explanation as to why live music has seen considerable expansion over the last 15 years. It is simply easier to control live music than recorded music. A musical group that is going through a good time can multiply its income from performances by giving more concerts and raising the price of tickets. Although the financial crisis of 2007 and 2008 left its mark on the live music industry, it has nevertheless surpassed the recording industry in size. For most of the second half of the last century, the largest music companies were record companies, but after the transformation of the Internet and the industry associated with it, the largest company in the music industry is Live Nation, a concert production company. based in the United States, which was spun off from Clear Channel in 2005. Here is another indication of the change in power relations within the music industry. However, we must keep in mind that the borders that separate the three sectors are not as clear as they were before the internet. Music industry companies, such as Live Nation, act as a general business partner for performers and songwriters and support their activity in live concerts, merchandising , licensing or distribution to the public, and promotion of recorded music. This means that it is no longer easy to pigeonhole a music industry company into one of the three sectors mentioned. However, in the case of Live Nation, its income still comes primarily from live concerts, so it still makes sense to say that it is, above all, a live music company. In this section I have explained how the emergence of the internet has affected the three sectors of the music industry and how this has transformed the size, strength, routines and relationships between these sectors. The next section will focus specifically on recorded music and examine how new business models in music distribution can clear the way for the recording industry's recovery. AN EXPANDING DIGITAL MUSIC MARKET At the beginning of the century, the music industry put all the means at its disposal to stop piracy, but it was not as ambitious and innovative when it came to developing new models of legal online distribution . There were, admittedly, some weak attempts on the part of the more powerful record labels, but the fundamental criterion for the development of these services was that they in no way jeopardize existing revenue streams and instead were limited to being a means of raising some extra income for record companies. The largest companies at least achieved one of their goals, namely that the new services did not compete with sales of existing physical products. The truth is that, unfortunately, these services were not able to compete with anyone, much less with online piracy . The first company to successfully create an online music sales and distribution service within the law did not operate in the music industry. It was Apple Computer (as it was called then). In 2003, Apple convinced major record labels that music consumers would buy legally if they were offered a user-friendly service that allowed them to buy and download music for less than a dollar a song. The service was called iTunes Music Store. In one sense, iTunes marked a radical change in the music industry. It was the first online outlet that could offer music catalogs from major record labels, used a novel pricing model and allowed consumers to buy only the songs they really liked from each album custom sc plays. On the other hand, iTunes can also be considered a very measured innovation, which was developed leaving the positions and power structures of the record labels practically intact. Rights owners still controlled their work, and the royalty structures per song submitted were predictable and transparent. Apple was right in its prediction of consumer response and the only thing we can say about the iTunes Music Store is that it has been a huge success. As of 2013, it is the largest music commerce site in the world (offline and online) and has sold more than 25 billion songs since its launch in 2003. This type of service has evolved substantially over the decade it has been in existence, and they have A whole series of competitors have emerged in the digital music download market that use more or less the same business model. Although competition has increased, iTunes continues to lead, with a more than 50% share of the global digital music market. In Figure 1 we see how the global record market has evolved since 1973 and we can see that, although the digital market has partially compensated for the drop in physical sales, the record market as a whole has lost more than 50% of its sales since its inception.
2 comments
farhan set
19 Sep 2024
Reflect on the artist’s journey of self-discovery and personal growth through powerful lyrics, capturing the essence of overcoming obstacles and embracing change in their music. Rakim 86 money Loving every minute till not a moment is left
robertfc rocker
19 Sep 2024
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