Free «The Development and Changes of the Music Business» Essay

The IT revolution and the rapid development of the communication technologies have already made a significant impact on the modern world and continue to shape our way of life. Nowadays we witness an unprecedented increase in the amount of information to percept, process, store and use, both in terms of technical devices and human mind. The greatest challenge is to learn to handle that flow of information effectively. The new world order is being built under the influence of information technologies. The non-equal access to information and communication technologies leads to the so-called information inequality and a widening gap between the developed and the developing countries. Currently the economy has become knowledge-based, and those who understood this earlier than the others and took respective measures will prosper and will always be one step ahead of the rest. This true not only for individuals and groups of people, but also for states and governments, and for separate business industry spheres. The up-to-date music industry is no exception.

The problem of technological influence on music industry is relatively young: it appeared as soon as the recording devices did, namely in the middle of 19^th century. According to Gelat (1977), “The story of the sound recording industry is mostly a story of musical entertainment on phonograph discs for the whole period from the invention of the phonograph in 1877 to about the 1950s, when new technologies emerged” (p.49). The issue of copyright first seriously appeared when the recording industry began to service the entertainment market in full force. Before that, mainly businessmen and lawyers used those contemporary devices to record their business related messages and transmit them. By the beginning of the XX century, the company called Victor Talking Machine Company was the first to shift their attention and their activity to the mass market of entertainment music. Today most of people remember this enterprise by the name of its most successful product, victrola. That was the time when, unlike now, performers, singers and bands, earned their living mostly from selling records – of course, if they had managed to set a profitable agreement with the recording company beforehand. One of the most commercially successful genres of music in the mid-war time was jazz, namely the performers of the so-called Harlem Renaissance and swing, which was played by large orchestras and sounded equally good live and on record (Burns, Marsalis 1994). Of course, the music and recording industries witnessed naturally caused period of decline during the World War II.

Of course the first, foremost and the most significant transformative tendency of todays is the distribution of information, including the media content like music in all possible formats. The issue of pirate uploading and usage of information is getting increasingly serious. People who breach copyright law justify their actions by claiming they only make music content available to everyone. Just access to information and communication technologies is officially confirmed in the Universal declaration of Human Rights and in the finalizing documents of the World Summit on the Information Society: “everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers. Communication is a fundamental social process, a basic human need and the foundation of all social organization. It is central to the information society. Everyone everywhere should have the opportunity to participate and no one should be excluded from the benefits the information society offers”. However, the activity of pirates does not protect the rights of the citizens to information, but rather violates the rights of the copyright holders.

Recently, a very interesting and illustrative Internet-based research was conducted. The core of the whole conduct was the anonymous questionnaire on the peculiarities of music consumption, so to say. According to the conditions of the Internet questionnaire 3 thousand people took part in it; their age ranged from 17 to 55 years and the geography of citizenship included Russia, CIS countries, Baltic states, Europe and Middle East. All respondents are amateurs in terms of music who listen to it literally everywhere: at home (91%), on the subway (31%), in the car (48%), at school or gymnasium (26%) and even at work (57%). 81% of the music enthusiasts use their personal computers for this purpose, 50% use a musical center, 49% prefer an MP3-player and 40% give preference to a radio receiver. 27% of the respondents still own a portable CD or MP3-player, 22% have a player based on flash-memory principle and only 6% have a player based on a hard disk. Market competition position of MP3-format is unquestionable, because it is popular with 92% of the audience. There is a format of WMA (54%) on the second place and on the third stands the OGG format (19%). The 72% polled answered that they do not consider copying digital compositions piracy. In support of theses put forward by experts, the basic part of the respondents, more than 70%, see the advantage of the Internet, first and foremost, in the fact that it gives a possibility to find necessary compositions in a necessary amount, but not to buy the whole disk because of a few songs, and also internet is preferable because it makes possible to find unique and a brand new composition. Practically half of the respondents (47%) acceded to that the producers of digital mobile devices must not foresee technical decisions enabling illegal copying of files. 52% of the polled claim that licensed music quality is higher than the unlicensed one.

The technology today known as the CD was first presented for general appreciation in 1982. The commercial success of the new technology was limited, to a certain extent because of the high initial cost (the price of a player could reach 2000 dollars, and the discs themselves cost around 15 dollars). Nevertheless, by the year 1985, a player became available for 350 dollars or even less, and only a year later the prices reached 150 dollars. Many purchasers refused being pressured to get rid of the collections of LP records they had gathered over the years. However, the CD technology eventually won over the hearts of most music fans.

Sony also became a record company in the 1980s through the purchase of CBS Records (formerly Columbia). Sony followed this up in 1989 with the purchase of Columbia Pictures Entertainment (McCardle 2010).

In the studio where musicians recorded their tracks, digital technology was making a significant change. During quite a short period of time it became a lot easier and relatively cheaper to use digital devices to compose, perform, record, edit and mix songs (Lopes, p.57). Before that, musical instruments had been far from and rather unlike most recording devices, and both had been separate from computers, but new technologies combined all three.

According to Peitz: “Downloading digital products for free may harm creators and intermediaries because consumers may no longer buy the version for sale. However, as we show in this paper, this negative effect may be overcompensated by a positive effect due to sampling: consumers are willing to pay more because the match between product characteristics and buyers' tastes is improved. This indeed holds under sufficient taste heterogeneity and product diversity” (Peitz 2004, p.515).

Musical industry nowadays is not witnessing its best years - the sales of audio transmitters continue to fall, music spreads free of charge over the internet, and even large musical business labels are not able to influence this. When you ask how the record label can earn money in today’s circumstances, when music is selling not very well, there are obvious answers. As the label helps to organize appearances, it has a percent from its profit, which constitutes the lion share of the overall sum any singer or band earns today. Also one can sell music into advertising and cinema business, and distribute the accompanying merchandising goods. At the same time, digital and mobile sales of the music content do grant some profit (Borland 2004). To cut a long story short, a modern record label must encompass an association of people, and organization where the complete cycle of tasks is carried out for each of their client performers. These include building a musical concept, sound production and record service; also, visual concept building and producing its material equivalent (album covers, posters, moderating internet-resources, original appearance of performers, photo shoots, making video clips); organization of public appearances, PR events and presenting the new product on the market. Therefore, the primary task here is to give a performer everything needed for decent representation.

To survive at the modern market, the record labels must either supply an exclusive product (for example, CD or vynils in the non-standard and attractive packing, which the consumer would want to purchase and make and object of collection) or take into account the ongoing tendencies of this market, namely - the sale of mp3 now gives performers the same amount of income as physical transmitter sales. While major record companies sued internet-piracy and tried to limit illegal mp3 sales, Apple Company earned millions of dollars on trading in its iTunes stores. More and more music listeners and customers wonder why should they buy content if it is possible to get free of charge. It is a question not of terms, but of market culture already (Peterson p.101-103). The unsolved question also remains, is a little label able to survive, selling digital content only? Most likely, they will have to support themselves additionally by selling concomitant goods and services like shirts, posters, limited editions on transmitters for collectors and organizing booking agencies for the performers.

Nowadays there is no doubt that Steve Jobs and his iTunes revolutionized music industry. Lewis (2011), in his article quotes some of the people who had worked with the late businessman and said that “what Jobs has done with the iPod and the iPad rank on the same level of importance and significance as the invention of the Walkman, the cassette, even the LP and the phonograph in general”. To many, especially the ones involved in the music industry, iTunes store became a beam of hope that money can be still made from selling records in the era of Internet. Again, according to Lewis (2011), “during iTunes' first year in operation in 2003, 30 million digital downloads of songs were sold. Within two years that figure had mushroomed to 1.2 billion song downloads”. One of the most curious transformations that had occurred during the triumph of iTunes, was that consumers began to give preference to listening music in albums rather than in singles. Before that, it was a widespread practice to buy a CD with one recording and a couple of cover songs for it. However, purchasers who wish to download a one certain song from the list are also given an opportunity to do so. Some say that Jobs saved the music industry. The market strategy of iTunes included the pattern of 99 cents for a song. Of course, another tendency introduced by iTunes, was the increased portability of music libraries. A huge amount of songs can be stored on an iPod and carried around everywhere.

Finally, although the introduction of iTunes revived the very idea of selling music for money (although the music in electronic format, of course), “with the birth of iTunes came the demise of the neighborhood record store. The winnowing of brick-and-mortar outlets is a direct result of digital delivery, which is immediate, affordable, and democratic, allowing anyone from young children to seniors a way to buy music without needing to step outside the house. Physical sales represented 80 percent of all music sales in 2007; today they represent 64 percent. By contrast, digital sales increased 80 percent in the same time period” (Guarino 2010).