I have decided to write my second piece about the music industry and the developments and enhancements of technology within it. I will talk about the way in which this has affected the industry and the ways in which the record labels are trying to retain control o the market.
The digital enhancements within the industry have affected the way in which music is recorded, whith the majority of it being done through the use of digital media applications such as Protools and CakeWalk. But the real problem for the industry have been through the digialization of the distribution and reproduction of music via file shareing networks such as Kazza and Napster. According to sources withn the industry, this has obviuosly greatly decreased the revenue made from Album and single sales. Although people expect a further decline of power by record labels due to the ease of recording and distribution, but record labels will always have the power when it come to A&R (artists and repertorie) and marketing, the job of the A&R department is to find new talent, and this is an aspect that the file sharing networks fall short of, although they did used to claim that they did offer this which was clearly a smoke screen as a user would have to know the artists name of song title in order to search for the product.
The digitalization has not completely destroyed the model of the industry, but the recored labels have had to addapt there strategy, for example the company Zavvi.co.uk, which recently took over from Vigin records, now has plans to install stations within its outlets which allow consumers to come into store and download music straight to there I-pods or music player. For example it cant just be ingorned that digtial delivery of music is far more conveniant and cheaper for the consumer, and the implication of i-tunes, which currently has a t least a 70% share of the PC-based download market according to www.news.com, has proved that the consumer is increasing interested in cheaper ways of aquiring music.
A news article of the BBC’s website clearly shows that the music industry is worried about the implication of new techonlogy, to begin with they tried to close down the file sharing networks but as fast as they closed one, two new ones opened, now they have shifted their focus towards consumers themselves, with one consumer being ordered to pay in excess of $100,000 recently. But according to some people this is down to the music industries slow reaction to new technology and not being able to meet the needs of consumers, but according to one news article, this is because the business doesnt want to abandon its business practices which have brought it such good success in the past.
Somebody who, on the birth of the digital era, showed his relucance to change stratgy and see what was happening before his very eyes was CEO of universal music group, Doug Morris. He blasted Mp3 players as, ‘reposiories of stolen music,’ and branded youtube and MySpace as, ‘copyright infringers.’ Morris did eventually sense that he needed to extend his digital IQ and it was inevitable to switch from a product-based business, to a service based one, which forced him to make a u-turn and the start of last summer by beggining to sell unprotected Mp3′s to Amazon.com and other online retailers, in order to set out to change Apples near monopoly of the legal digital music download market.
A quoto by morris refering t0 illegal downloads sums the situation up and in a way hits the nail on the head. ‘is it correct that people share their muisc? fill up these devices with music they havnt paid for? if you had coca-cola coming through the faucet in your kitchen, how much would you be willing to pay for coca-cola? there you go. thats whats happaning to the music industry.’
According to Gerd Leonhard, founder and former chief executive officer of licensemusic.com and founder of digmarketing.com, the music industry is clinging onto the past and a strategy that has worked for the past 50 years, but music sales are drtically dropping year on year, this year alown has seen a 6% drop in album sales.
An interesting statemnet made by Leonhard was that the music industry is not makeing the most of its back catalogue and appealing to the over 35 year olds, this can be related back to the long tail theroy. He states that only 10% of over 35’s still buy music.
To be continued . . . . . . .
Continued. . . . . . . . . .
The digitalization of the industry can be put down to the development of web2.0, when the original web1.0 was around, all people used the internet for was to access information, but due to the increases of usability of the internet and the introduction of online applications and stores, this opened the door for revolutional ways of doing business over the net. The music industry is understandable very worried about the future of the internet, due to the massive decreases in sales since the introduction of web2.0.
After reading an article of www.wired.com i discovered that a number of people within the industry, including Timothy White, a respected music critic, believe that the whole structure of the music industry is set to collapse and Timothy put a time scale of between 5 to 10 years. This is shocking, when you think of the scale of the industry, but the evidence is there to see, last year alone there was an 11 percent drop in CD sales but a 40 percent increase in blank Cd sales aswell as the number of users of kazzas file transfer network tripeled. The five major players in the industry are all losing money and are either going to have to totally reinvent the way in which they do business or face total collapse.
At the moment the major players are leading a two pronged attack in order to restore their market dominance, they are firstly trying to makie file transfer more difficult and turn these users into paying customers, and secondly trying to drive down the price of CDs down or to utilize digital music download, either through in store burning of CDs or changing artists contracts to reflect the new economic reality.
Jarme mattew’s also contributes his thought to the chnaging structure of the industry, he works with independant artists in the business and states, ‘giving away music for free and ditigal downloading doesnt hurt music sales, it is in fact the only way music is purchased and has been for some time,’ he states that the fact so many believe this is because of propaganda by coperations trying to cover up the fact that they are losing control of the buisness. He goes on further to say that, ‘the web2.0 phase of the internet can be used by artists to independantly build a strong business without corperations due to the vast ammounts of resources,’ he belives that the future structure of the business is shifting away from the focus of selling a product and more towards building and selling relationships.
In conclusion the introduction of web2.0 has drastically changed the music industry forever and unless the major players in the industry change their stragtey to reflect this change then they will risk collapse.
Below is a short video with the founder of tower records, he explains the rise and fall of the company, trends in the music industry and why the CD isnt dead.
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