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Music Business

Many of us believe that increasing the use of digital media has improved our lives. Thanks to social networks and the way it works, digital media is now integrated in much that we do, improving our productivity and facilitating communication.

Our life is made easier by digital innovation. The positive impact on our life of the digital innovation is big and we cannot ignore the advantages of the digital world. You can very quickly collect music playlists on the Internet that suit your specific taste.

Now your car has computer technology that can make decisions for you and, ultimately, will move on its own.

Your financial adviser can combine all the important information of your life into one point of view, and then analyze the information using a system specifically designed for financial planning and management. Physical activities such as visiting a bank, a doctor or a shopping center are actually replaced with applications and websites that allow you to achieve the same goals in less time.

Like most other creative industries, the development of the music industry is largely determined by media technology. This is equally true in 1999, when the world record industry experienced two decades of continuous growth, largely due to the rapid transition from CDs.

The transition motivated the listeners of music again and again to acquire most of their music collections in order to listen to their favorite music with digital sound. As a result of this successful product innovation, recorded music sales have more than doubled from the early 1980s to the late 1990s.

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It was against this background that in 1999, college student Shawn Fanning developed and released the first public file-sharing service that was released to the mainstream music market in 1999. The service is called Napster, and it marks the beginning of an new era in the industry.

File-sharing services, such as Napster, followed by a number of similar services in their path, reduced the sales of physical devices in the music industry to levels that have not been seen since the 1970s.

Digital innovations have a big impact on the music industries. The digital revolution in the music industry has not only changed the concept of music distribution, but also radically changed its value-added network.

Companies that previously did not have or at best only had weak ties with the music industry, suddenly became a very important part of this process. For example, Apple was dominant in the music download market.

We can also find online retailers. such as Amazon, an Internet search engine and a micro advertising platform, Google, a social network, Facebook and Twitter’s short message service, more or less involved in providing access to music.

If for decades before the music of the millennium was relevant only for the electronic media, film industry, games and advertising, now companies from many other industries use music to sell their products and services: car manufacturers sell their latest models with car radios pre-programmed with popular music streaming services; airlines open music download stores to offer bonuses in their customer interaction programs if customers buy music on their portals; supermarkets offer collectible cards for downloading the latest hits from online music stores.

As a result of the digital revolution, artists have become less dependent on traditional players in the music industry. Numerous groups and individual musicians began to distribute their music directly through the Internet. A very early and perhaps the most notable example is the British rock band Radiohead. On October 1, 2007, Radiohead announced that their latest album “In Rainbows” was finished and will be released for free in ten days. Fans were asked to receive a registration code for downloading a new album in MP3 format. Consumers of music had to determine the price they were willing to pay for downloading, and the group set the price range from $ 0.00 to $ 99.9. The fans’ response was overwhelming, and over the course of a few weeks, over 1.2 million downloads were counted. According to an online survey, 38% of fans paid an average of $ 6 per album, which generated $ 2.4 million in revenue.

However, the release of a non-traditional album turned out to be a clever advertising campaign for the CD-Delix version, which became available for $ 81 two months later. In a very short time, more than 100,000 copies of boxes with CDs were sold, resulting in an

additional income of $ 8 million. (Wikstrom, 2015, P.13-14).

The technological revolution, which the music industry has faced since the 1990s, the emergence of ICT and the Internet is specific. It simultaneously affects both competitive advantages of the majors: distribution and promotion.

In a relationship digital revolution is characterized by significant improvements in compression, broadband Internet access and storage. With regard to promotion, ICT and the Internet allow growth of consumer stimulation. According to statistics, 35% of sales in Amazon proceeds from recommendations.

The value proposed by the recommendations, in contrast to Media, is personalization.

Social networks have also become powerful advertising tools in music industry, with the opportunity to challenge the promotion of the media and especially broadcasting (Moreau, 2009, p.8).

As we can see the evolution of music consumption has developed quite rapidly over the past few decades. From the first portable music system – a player playing in the style of a casette from Sony in the late 70’s, to the first iPod of the early 2000s, consumers went from buying cassettes, CDs and paying individual MP3 files. The computer has become the main center for the production of music, and it has now become possible to manage a home recording studio.

Content aggregators, such as The Orchard, Believe Digital, Finetunes and Rebeat, allow musicians to download their works to distribute them to all music streams and download portals around the world, such as iTunes, Amazon, Google and Spotify. Last but not least,

Creative Commons licensing allows artists to control the use of music beyond traditional collecting societies. Now, artists have at their disposal a network of support services, which not only provides them with autonomy from traditional players in the music industry, but also transfers them to the center of the value-added network. (Wikstrom, 2015, p.16).

But let see how the digitalization has impact on artist centred economy.

The artists take refuge in the internet that offers them new opportunities for direct connection with their fans. A fan can go directly to the singer’s or group’s web pages to listen to a part of the song, watch photos and events, read group news, leave comments, give advice or buy tickets for the concert, album or song. You can even create your own fan page devoted to a particular artist. The interaction between producer and consumer changes. The digital age offers a range of products with which it is difficult to compete without somehow renewing sales strategies and offering new services.

The increase in connections has given power to social networks to determine which song or group will succeed. the word world has always played an important role for the industry, but digitization has made the process faster and more powerful . You can listen to something new and send it by e-mail to your friends, comment on it or post it on a personal blog in seconds. Many web sites allow users to see what other people are listening and recommending music or sharing it with minimal effort. The value of social networks is promoting music under a digital profile.

While at one time there was no choice but to buy an entire album in order to have a song that particularly liked, now with the sale of digital music formats and the prevalence of music downloaded, legally and illegally, and the popularity of file-sharing they have given consumers the power to choose what to pay in a more specific way. These changes have had a big effect on the operability of professional musicians.

The album that is the full work of the artist is fragmented into singles thus making him lose his essence.  In the pre-technological era the CDs brought the music industry from 12 billion in 1981 to 29 billion in 1992, but now with the digitization there is no longer CDs.

In the digital age the album, a compliment of good and bad songs is no longer a primary product. Thanks to download services like itnues, yahoo! Music 75% of downloads are single tracks.  We are talking about a global 18.2% increase.

People now listen to different music formats and listen to them in different ways : they can download music directly from a laptop, watch music videos from youtube or even from their mobile phones and this gives the consumer the possibility to replace the purchase of a cd (which was the only way to listen to music) with other listening methods. The cd is no longer necessary.

The way to understand royalties in the traditional music industry is to look at compensation for creators on an individual basis. Of the $ 15 that a consumer could spend on a CD in 2000, the average recording artist usually received about $ 0.70.For a 12-song CD, it costs $ 0.058 per song. If an album is tapped 100 times, the effective audition royalty will be $ 0.00058.

For composers, mechanical royalties set by the Copyright Office apply to retail sales. In particular, publishers in 2000 were paid $ 0.0755 per song; with overhead and contract deductions, it was about $ 0.03 per song for the author (s). For a 100-play CD, this will be $ 0.0003 per play. Unlike recording artists, composers also receive fees for radiobrodcasts. These rates may vary depending on station size, PRO, and other factors (Wikstrom, 2015, p.158).

In addition to creators, publishers and labels, it is also important to know that the music lis­tening public, is an important stakeholder in the recorded music economy, as both the primary source of funding and the stated beneficiary of copyright law and policy.( Wikstrom, 2015, p.158).

The sources have been changed: 34.5% pay online music 28.1% use p2p 26.7 streaming from social networks, 26.6 radio, 21.2 from artists’ sites. Google has now also created its paid music platform.

We are invaded by our mobile phones / cameras / mp3 players and other devices hidden in our pockets with their small lCD screens. Their small memory contains the equivalent of a CD box. 2000 is the era of disintermediation, file-sharing, digital recording, ipod. In inaugurating a new millennium, the internet has swallowed a culture and has turned it out faster, smaller and cheaper (for those who are online). The possibilities for the artists (and therefore also the rivals) multiply exponentially. The art they make can be created with alternative tools that are much cheaper.

Already in 2001 with the arrival of the ipod a new era had begun. Five years later itunes became the biggest seller in the USA, although its success was slowed down by Napster (1999) and the possibility of using the same mp3 files for free.

Even though it was closed now the files circulate everywhere making the efforts of copyrights useless. Today it has to increase itunes there is the iphone and all the applications that allow you to remix directly on the phone, making the audience participate. It is therefore a process that can not be stopped, but rather, grows exponentially.

Today, Napster could not even compete with the new ways of downloading music. There are websites where files are uploaded and made available for download for anyone, anywhere. You can download an entire album with one click. It is the era of immediate distribution.

It is obvious, therefore, that technology is having a real impact on the way music is made and used. Specialized music softwares and decreasing hardwer costs now make it possible to record, publish and distribute high quality work from home.

Today, artists and musicians want the internet to reach global audiences .

The download and streaming economy

In the years since the turn of the 21st century, digitalization have helped create new distributions and business models for recorded music.

Today we have advanced streaming services that allow consumers to play music without downloading individual files. Some of the streaming giants (by the number of subscribers) have Apple, Tidal, Spotify, Pandora, each of which has its own unique offers.

In an era when music has become so accessible and easy to download (regardless of whether you pay for individual MP3 files or illegally torrent a free version), the preferred method of listening to average music fans, however, is streaming. Streaming from problems with data storage, offers personalization and allows you to easily switch between artists and genres.

Some music fans are concerned that increasing the number of tracks will jeopardize the

quality of the releases, but this is not necessarily so. The digitalisation of the music industry

had a remarkable impact on the amount of music released. Because we are in a single-player music economy, artists are experimenting more, because the pressure to release one record is much less than to improve the whole album. This new music format allows artists to create and share their own sound on the platforms such as Sound Cloud, regardless of the label’s support. Not surprisingly, the purchased MP3 downloads and CD sales have been steadily declining over the past several years by as much as 20% per year. The last fruitful year in terms of income for the music industry was 1999, the same year Napster was created.

We know how music – licensing is gaining in importance at the expense of recorded music.

Today the recorded music is a declining business and that the new music economy is primarily based on revenues from licensing and concerts. However, consumers demands for recorded music is greater than ever. While the worldwide sales of music CDs have dropped rapidly since 2000, the total number of songs acquired by consumers legally or illegally via various peer-to-peer networks has dramatically increased. It is estimated that for every track legally downloaded online, 20 songs are being illegally downloaded from peer-to-peer networks. The question is whether it is possible to transform the online pirates into legitimate services in the cloud, all experimenting with different business models and revenues models.

Digital music sales during 2011 were estimated at $5.2 billion and accounted for 31 per cent of the global recorded music market (Wikstrom, 2013, p.102).

The needs of music users rose sharply after the growth of the Internet, the popularity of smartphones and streaming music playback. Digital technology has changed the way consumers access music content today.

In the year 2014th Pop-star Taylor Swift (i want to remind she Taylor Alison Swift has grammy awards and so on) has decide not to release her album “1989” on Spotify. Because all the songs and musics were available to the users, who were able to listen or to download for free. So she also withdrawn the rest of her music from Spotify that were previously available to the users. That news was shock for many people. She done such an act.

Currently, people are controlled by music streaming services. They would prefer the music to find them, than actively look for artists, as before. Music consumers automatically download popular content via streaming platforms.

For example, Spotify has easily accessible playlists of different genres, which in different browsers are suitable for different users, so that users can listen to them too freely. There is no doubt that streaming services became, as one of the new technological innovations in the music industry and it has tremendous power and great influence on the modern music industry.

Now, with more than 100 million subscribers on streaming platforms, it was a particularly profitable venture for record companies – although not traditionally (through sales), but through a percentage of streaming subscriptions and advertising for their performers.

According to various experts, the music industry depends on streaming. We cannot say if it is true or not, relative – your opinion may depend on whether you are an artist, a label, performer or a consumer. Sure, streaming has changed the music worlds in several key ways.

The focus is on creating singles, not albums, income models, and customer satisfaction.

Top Streaming Music Companies – YouTube / Google, Spotify, Sound Cloud, Apple and others are regularly accused of poor work with artists due to duplication of contractual structures and low paymzents. Apple seems to be taking serious steps to fix it, and Tidal has become a more convenient platform for artists.

But unfortunately, most artists have no idea what they should get.Some of the famous singers have limited their music in streaming services and asked to change the payment structure. Services are still young, and industry standards are still being formed to fit all aspects of the industry.

Reduced sales of the music industry. The total income of the music industry has plummeted from the new millennium. Many believe that piracy is associated with digital downloads, the transition from sales to downloads for a single user, and the recent decline as the reasons for this trend. While piracy was somewhat reduced by the closure of peer-to-peer services, torrent flows have increased, which perpetuate the free acquisition of music, further devaluing music in the minds of consumers.

As the speed of data transmission over the Internet and cellular communication increases, streaming music on the Internet, such as Spotify, Pandora, YouTube and Apple Music, are very easy to reach, and the concept of owning music has changed significantly. More and more people are accessing streaming subscription services. Instead of digital or physical music purchases, consumers listen to streaming services for free or for a monthly subscription.

These services pay record companies and performers a percentage of each song that users use, creating a situation where an artist whose song plays hundreds of thousands of times earns only a relatively small amount.

In addition, the copyright agreements on the label with their artists are outdated. Labels typically contain offers in their contracts that give them an additional percentage of the artist’s sales revenue to offset the costs of developing infrastructure and technologies, such as producing and copying CDs. Some companies are still holding these percentages, even if they do not incur any costs for developing and maintaining streaming services.

References

  1. Wikstrom, P. (2015). International Perspectives on Business Innovation and Disruption in the Music Industry. Edward Elgar Pub.
  2. Hesmondhalgh, D. (2013). The Cultural Industries 3rd edition. SAGE Publications Ltd.
  3. Wikstrom, P. (2013). The Music Industry: Music in the Cloud, 2nd edition. Cambridge: Polity Press.
  4. Moreau, F. ran?ois (2009). The Disruptive Nature of Digitization: The Case of the Recorded Music Industry.

Cite this page

Music Business. (2019, Dec 17). Retrieved from http://studymoose.com/music-business-essay

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