Due To The Transaction Costs Being Lower Through Online

With the advances in technology and increase in internet broadband availability (The Broadband Commision, 2014), record labels are being forces to innovate and update their business models (M.Coz & Torres, 2013) to keep up with the latest technology (Solis, 2015). Of these technologies, the move away from physical sales (of music) to Digital sales is the most significant. Digital sales have increased over the last 6 years (as shown in Table 1) in terms of revenues, and this is set to carry on this way in the future (Solis, 2015).

The ever-changing landscape of music distribution, due to constant advancements in technology, is sometimes hard to keep up with for artist, producer, and consumer alike. New editions of textbooks in Music Business classes are issued each year, and changes are made in the industry before the semester is even over. Because of this, it is vital for the industry to not only not only be aware of what is currently going happening, but also be able to foresee the direction that the music business is heading in. In this aspect, it seems that we are at a turning point where consumers and artists are taking

ITunes sells single tracks for around $0.99. Most consumers no longer buy entire albums from artists. Instead they buy a few favorite songs. This has shown a decrease in CD sales, therefore a decrease in profit that artists make off of their music.

The Internet has transformed the music industry. Sales of CDs in retail music stores have been declining while sales of songs downloaded through the Internet to iPods and other portable music players are skyrocketing.

In 2000 the digital music was the next big thing in how consumers listen to music. The technological shift in music changed how the relationship is between the artists, recording companies, promoters and music stores on how they operate today. In the late 90’s and early 2000’s Peer-to-peer (P2P) networks allowed free exchange of music files with companies like Napster and Kazaa was a big step that allowed consumers to store large libraries of music. With the cost of hard drive space going down; it allowed for pocket-sized computers to store more information in a smaller space that open the door for apple to step in with the unveiling of the iPod and iTunes. These systems made it possible for storage and playback that gave consumers the

The "business side of music is struggling to generate enough revenue because of the new technology" ("How the Internet Changed Music."). "Most of the people who are part of making a record are paid in royalties, and anytime music changes hands without money being involved, those royalties can’t be paid—which is why so much has been done in recent years to try and reduce music piracy"("How The Internet Changed Music."). iTunes and Amazon has helped by offering cheap downloads for single songs, which allows the customer to only purchase songs they like rather than the entire album ("How the Internet Changed Music."). Spotify and Pandora, who offer either ad-based or paid subscription streaming of their music libraries, are Internet radio stations which have also helped with the piracy problem ("How The Internet Changed

Since the iTunes music store was introduced on April 28, 2003, gross music sales have plummeted in the United States - from $11.8 billion in 2003 to $7.1 billion in 2012, according to the Recording Industry Association of America (Covert). Counterintuitively, during that time consumers were buying more music than ever. How is that possible? It 's because iTunes had made digital singles popular and was selling them cheap. This would change the music industry forever. In 2000, Americans bought 943 million CD albums (Covert), and digital sales didn’t even make a dent in comparison. But by 2007, those inexpensive singles overtook CDs by a wide margin, generating 819 million sales compared to just 500 million for the CD.

Nowadays, teenagers are living constantly surrounded by technology. Even if the younger generation may not see it, technology has had an impact on different factors. The widespread use of digital technology in the music industry has allowed consumers to reproduce digital versions of copyrighted songs inexpensively, with the help of many software and websites. There has been an increase in digital copying activities and those are most of the time claimed responsible for producers’ loss in revenues. While some people claim that the increase of digital technology has killed the music industry, in fact it has lead to innovation and new ways of consuming and sharing music, such as

Over the past decade, the use of CDs has been replaced with online streaming and retailing. This has eliminated much of the record companies revenues as they were used to making most of their profit off of distribution and promotion of physical copies of artists albums (Niemen). This has caused for a major shift and remodeling of major players in the music industries business models. Companies such Sony, Warner Music Group and Universal Music Group have started to completely rethink the way they conduct business (Forbes). In the past record labels were not only responsible for production, distribution and promotion of an artist and his/her music, but they also acted as a bank (Forbes), funding the artists tours and recording sessions. Recently, these music giants have been moving towards becoming more of a modular network organization. What this means is that they are less occupied with the nitty gritty, and more focused on what they do best which is distribution and promotion. This also allows for more freedom of creativity for the artist as well as fairer split of profits (Forbes). This adaption of new business models clearly shows the versatility of the music industry in adapting to new times and technologies.

Introduction: Setting the trend for the future, the distribution and consumption of recorded music transformed dramatically with the launching of Apple’s iTunes in 2001. The proliferation of online music subscription services and other music sharing services exerted a great pressure on the conventional music distribution business model. Combined with this transformation, piracy of digital music had a profound impact on the whole industry. These worsening conditions in the market place for recorded music forced both established and upcoming new artists to experiment with new ways of selling their music.

When speaking economically, the digital music sector of the international music industry is undoubtably the most important sector in the industry. Within the last decade, music has seen cardinal changes in the way both major and independent labels distribute their products. An industry that once relied on Payola 's and mass distribution of physical records and CD 's now relies heavily on the power of the internet. The first instance of mass distribution of music through the internet was by the service Ritmoteca.com in 1998 [1]. Ritmoteca had a library of over 300,000 songs, offering individual songs for 99 cents each and albums for $9.99. After signing distribution deals with many major music labels such as Warner

In the midst of the United States’ “dot com bubble” (years 1997-2000), there was a surge in technology that brought about file sharing and digital downloads. Threatening the survival of the music industry and introducing a unique set of challenges for the industry to overcome. To remain relevant in the new global market of digital music online, the music industry would have to evolve and change with the introduction of each new facet technology had to offer. The introduction of digitally compressed music files, so easily attainable for a small fee or downloaded legally (pirated) for free, made the music industry reevaluate how to make a profit and protect copyrights. Social media created a visible opportunity for both consumers and artists to maintain digital relationships while providing a platform for consumers to follow and discover new musicians and bands, naturally, making the internet a promotional medium for artists. As the corner record shops closed to make way for virtual storefronts and instant downloads; the internet, digital downloading, and social media made an enormous impact on the music industry that has changed the way consumers purchase, source, listen to, and produce music today.

Digitalization, data compression, and the internet have affected the music industry significantly. These technologies have shifted the recording industries from hard-copy recordings to digital music distribution. This has made it easier for consumers to enter the music market through copying. Consumers have access to copying technology that allows them to obtain music without paying the record label. The situations clipped high in 1999 when Napster, a file-sharing service was launched. The service facilitated music file sharing on a wider scale. The consumers just download the music and transfer it to a digital music device. This has negatively affected the trade value of music sales, for instance in

As the Strategic Director of iTunes, to create a barrier against the competition, I would:

I believe that at the heart of this controversy is a drive to bring music production into the twenty-first century. Making CD's more accessible, economical and usable benefits all everyone except maybe the CD producers, in the end. Listeners can access music when, where and how they want to for less money, as the have grown accustomed to doing. Musicians cut out the middleman, allowing them to keep more of the profit. This is undoubtedly the future of the industry. While companies are searching for ways to hold on to 90 percent of the profit and to continue to combat illegal downloading, others are negotiating new terrain