The Digital Music Age; Why Artists are Losing Profit Essay

Ultimately, technology is linked to the long tail theory. While this is a heavily debated topic of whether the long tail is in fact truly favored or not, one thing is for certain; the long tail definitely exists. Online sharing and purchasing has become a whole new economic model for the media. The long tail theory allows for not only the hits, but rather all music, to be used, followed and appreciated through digital media. An article by Chris Anderson states that people are willing to go deep, well past the long list of popular titles available at such record stores. He adds, the more they find the more they like (comp. 360). These online sources are allowing people to discover that their interest in music may not be as mainstream as they once thought. This theory demonstrates that popular culture is not all about the hits. Alternatively, it is about the long tail. It is the want and need for everything else. Anderson reiterates, “As fast as Rhapsody adds tracks to its library, those songs find an audience, even if it’s just a few people a month, somewhere in the country” (comp. 361). Kevin Laws, a former music industry consultant quotes, “The biggest money is in the smallest sales” (comp 362). These are just a few brief examples of how the long tail theory is upheld.

Over the years vinyl has seen a decline in the stock market after its success starting in the 1950s. In the early 80s, vinyls saw a decline because of the cassette tape and later because of the compact disc. Both of these were much more portable, and the CD was much more durable than either platform. Although now, vinyl is seeing a spike in sales with the new generations. No one truly knows the reason behind the new popularity of the vinyl. Some believe it is because of the warm sound given by vinyls and no other music platform. The silky sound of the vinyl and the reboot in interest in this vintage music platform has led to the creation of the annual Record Store Day. This day is also thought to be a very important

Rojas, Fabio. The history of recording industry sales, 1973-2010. 2011. The History of Recording Industry Sales, 1973-2010, United States of America. http://orgtheory.wordpress.com/2011/07/13/the-history-of-recording-industry-sales-1973-2010/. Web. 3 Apr. 2014.

Funny enough, even CDs today are slowly fading away from society as digital formats and players are taking over. Apple’s release of the iPod in 2001 was a game changer for the music industry. It was now possible to store over a 1,000 songs on a device that weighed similar to a deck of cards. As of 2011, digital file formats such as mp3’s that are transferrable to small music players are now the industry standard. As widely “petite” music recording formats have become during the past century, it’s mind boggling to even think where technology will take us next. But like I’ve mentioned

In “The Music Industry Has Been Revolutionized,” Greg Kot explains musicians in the music industry are experiencing unwanted change around the world from technology since the popularity of file-sharing websites available online. Consumers of music don’t want to pay for music because of the increased availability, although not doing so prevents revenue for musicians. Explained in Kot’s article, increased popularity of file-sharing has made access to music so convenient to the point where the music industry is confused about how to respond to the lack of revenue while still keeping music readily available for consumer use. New technology has allowed the music industry more opportunities in being efficient with producing music. Furthermore, it

Sometimes it seems that no one buys music anymore. A digital download has replaced going to the music store and picking up a CD for most people. As a result CD sales have been slowly dropping over the years. It isn't the case that no one wants physical media though. Vinyl record sales have nearly doubled in the last few years. As Alice Cooper

There aren’t many industries that are as changing as the music business. The different tools and devices with which we spend our music are an important part of this. New technology ousts the old, and the motivation to create the next new thing. People are the driving force for change and some of the greatest or worst technological advancements have been found by accident and others have been made by ideas. The last twenty years, the music industry has experienced a drastic change. New leaps in technology have evolved almost every part of the industry, from the artist to the label to the publisher. Similar to other media industries, music has been forced to change with the times, which has resulted in a much different circumstance for the industry

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.

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.

The market is dominated by the “Big Three” (Sony, Warner Music Group, and Universal Music Group) who continuously buy out competition and all have many smaller companies who have front names to cover up the fact that they are owned by the larger corporation. Ten years ago there were five major companies that controlled the market place, in the beginning of 2005 Sony and BMG, Bertelsmann Music Group, decided to form a 50/50 partnership that would spread worldwide. Together they controlled a vast majority of American music and the only place in the world that was not apart of this corporation was Japan because the business would be affected too much. Then in 2008 BMG announced that they were not going to renew the contract because of falling sales which would have been really bad for Sony financially, so they decided to buy BM’s portion of the company for 1.2 billion, which included all of BMG’s record

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.

The world market of record music in 1990s was dominated by only five big corporations: BMG Entertainment, EMI, Sony Music Entertainment, Warner Music Group and Universal Music Group. The majors could maintain their status thanks to patents and agreements, technological improvements and M&As. The majors had the complete control of patents and music rights from the artists. Even though the artists tried to directly contact to the customers, they could not afford the attempt. Thus, they relied on the professional signers and on the publishing company. The

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.