What is the music industry? The music industry is one of the most universal and profitable industries in the world. Among the many individuals and organizations that operate within the industry are: the musicians who compose and perform the music; the companies and professionals who create and sell recorded music; professionals who assist musicians with their music career. The current music industry, present today, emerged around the 20th century; for the music industry to be as it is today, many changes had to happen in the course of the previous decades.
In the past ten years or so the music industry has undergone drastic changes and the internet has been a major factor in this evolution, especially since the advent of widespread distribution of digitalised music online. A conspicuous indicator of this is the total music sales since the year 2000, recorded music have dropped off substantially, while live music has increased in importance. This is because people have had more access to music online and are no longer interested in buying CDs due to the fact that there are the iTunes and Amazon websites (and many more) that allow you to download music (normally $.99 – $1.29) and music videos (normally $1.29 – $1.99). This shows that technology has completely changed the way we listen to music.
How has this rise in the distribution of digital music affected the music industry? Despite increasing digital sales, the largest record labels have all reported a considerable decline in overall revenues from sales of recorded music to consumers in the first decade of the 21st century. Revenues in the U.S. dropped by half over a decade, from a high of $14.6 billion in 1999 to $6.3 billion in 2009, according to Forrester Research. Atlantic Records reports that digital sales have surpassed physical sales. Worldwide revenues for CDs, vinyl, cassettes and digital downloads fell from $36.9 billion in 2000 to $15.9 billion in 2010 according to IFPI. The Economist and The New York Times report that the downward trend is expected to continue for the foreseeable future. This dramatic decline in revenue has caused large-scale layoffs inside the industry, driven retailers (such as Tower Records) out of business and forced record companies, record producers, studios, recording engineers and musicians to seek new business models.
Piracy occurring mainly on the internet has affected the music industry and has been said to be the cause of the loss in revenue, or has it? Take two separate published reports from just last week. In the European Commission report “Digital Music Consumption on the Internet: Evidence from Clickstream Data” (PDF) all signs point to piracy leading to a slight increase in sales. In OfCom‘s Online Infringement of Copyright: Implementation of the Online Infringement of Copyright report – the second wave of a two part report – which basically leads us to believe that people download music illegally because they are cheap. So which is it? Are people pirating albums to circumvent actually purchasing the music or are they testing the waters before making a purchase? Can it be both? However piracy has been taken into consideration with regards the decline in the music industry’s revenue.
Technological advancements have also influenced the change in the music industry, starting from the creation of recorded music. At the dawn of the early 20th century,