Strategic Analysis of Itunes Essay

Ask anyone how they listen to music the answer will likely be through any means of easy access at an affordable cost. A study conducted by news outlet Nielsen 's Music 360 claimed, “Americans streamed 164 billion on-demand tracks across audio and video platforms in 2014”. The rapid increase in popularity music streaming platforms are experiencing leaves people wondering what that means for the music industry. When more consumers utilize the on-demand method of entertainment access, how does that translate to the artist being accessed? Astra Taylor contributes to this discussion in her book, “The People’s Platform: Taking Back Power and Culture in the Digital Age”. She lays criticism upon the idea of a more digitized

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 the music industry, there are several methods of sharing content. Between playing live shows, producing physical records, and now, streaming over music streaming services, artists and musicians from around the world contribute to the entertainment industry each day; however, in light of today’s technological age, more and more content is being shared and consumed through the later. In 2015, music streaming services grew to 317 billion streams, doubling the record amount of streams from the year prior—a figure that is only projected to grow in the years to come (“Nielsen: Music Streams”, 2016). Any consumer with an Internet connection can access these services’ content with

Vinyl records will always be remembered as an iconic creation for the music industry and world as a whole. This development brought music into the homes of millions of individuals for them to enjoy. It provided musicians with a new, major profit which supported many struggling. While vinyl records may be seen as a thing of the past, they have made a monumental comeback in 2013, increasing by 52%. Currently, over 9 million units are sold annually. In the digital age, vinyl records are still adored by millions of individuals and will continue to be for many years to

The dawn of the internet brought forth a revolution that, by now, has seeped its way in the the very fibers of almost every human experience. Education has changed. Communication has changed. Entertainment has changed. Business has changed. Entire industries have been built, and destroyed, by the information age. The music industry, in particular, has felt both. With precursors of the Compact Disc (CD) and digital music formats, Shawn Fanning single handedly eviscerated the music industry. Napster, his peer to peer mass file sharing service, is what landed the fatal blow, and the industry has been bleeding out since.

In the recent year, illegal downloads have been dominating the music industry not only in the UK but worldwide. In 2015, numbers showed that a massive 62% of people in the UK either illegally download or steam music online, this affect artist’s income when it comes to illegally downloading music as when they see how much money they have made it will be plummeting each month. Throughout the UK many people were surveyed and results showed that, 26% of the people surveyed downloaded music illegally online. In the USA, The Recording Industry Association of America (also known as RIAA) reported that music sales have dropped massive 42% ever since illegal download was invented. This can affect the music industry in many ways some may be that if illegal downloads keep rising it will make sales lower and potentially make it harder for artists getting worldwide recognition and will make it harder for new upcoming artist to get signed by record labels. Spotify, the world largest streaming service, could be affected by people illegally downloading music as Spotify will end up losing money which will be used to pay artist royalties but won’t be able

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

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.

“Before the days of YouTube and the Internet, a band 's chances of striking it big depended on record companies. If a band was lucky enough to get a record deal, it gained access to a label 's vast resources and connections. The company paid for the band 's studio time, … and got its music played on the radio, reaching millions of record buying Americans” (Majerol, 1). Now, anyone with talent can post a video of themselves and become an internet sensation, only to then receive a deal with a label to continue growing their career. The issue is, with the Internet came digital downloading, and with the growing popularity of digital downloading came illegal downloading, known as Digital Piracy, which has affected the music industry greatly. This issue affects everyone involved in the Music Industry. From the small CD store owner to the Artist on stage, everyone has and continues to be affected by the growing popularity of digital downloading services. Artists, producers, and songwriters lose an estimated 12.5 Billion USD every year to illegal digital music services. Further, the economic impact from [digital downloading] is an estimated loss of 2+ Billion USD (Storrs, 1). This money affects the “little guys” in the industry and the average worker within the industry.

The music industry is an oligopoly. Since the late 1800’s people like Thomas Edison have been buying up patents in communication technology, forming monopolies, leading to a non-competitive entertainment industry. With only a handful of corporations controlling all aspects of acquisition, distribution and marketing of music, harsh business principles create an exploitative industry that takes the best of what artists have to offer and leaves many of them unable to support themselves. Beginning in the 1950’s with payola and white cover music and ultimately evolving into iTunes and Spotify, the music industry has grown into a billion dollar industry with far-reaching influence and control. Contracts rarely serve the artists’ best interest and many are left out to dry when their usefulness has expired.

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.

The evolution of the music industry follows the familiar pattern of digitization. Innovation began with the introduction of the vinyl record, transitioned from the cassette tape to the compact disc and landed us in an era of digital downloads. The emergence of music streaming services like Spotify has progressed the industry even further, giving consumers the ability to access music on demand using download-free online platforms. Spotify faces criticism from artists as a result of the overlap of creativity and commerce. They argue that business activities corrupt creativity, transforming it into a tool for profitability rather than an outlet for expression. Artists insist that Spotify deters album sales, favors established artists and fails to support them financially. However, Spotify was created for consumers. It delivers an accessible alternative to purchasing and downloading music. The interplay between creativity and commerce is changing the nature of the music industry. Spotify has adapted to this change, providing a platform that supports both artists and consumers. Through analysis of the market, artist’s revenue, record labels and consumers, I will argue that artists should accept the evolution of the industry and support Spotify.