Future Of The Music Industry


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Future Of The Music Industry

  1. 1. Future of the Music Industry<br />By: Shawna Hambly, Heather Goldie, Courtney Knight and Katherine Vukasinovic<br />
  2. 2. Pre-Historic Music<br />Instruments such as the seven-holed flute and various types of stringed instruments have been recovered in archeological dig sites<br />*http://www.butterflyflutes.com/middle-eastern-F-sharp-padauk.jpg*<br />
  3. 3. Baroque Music<br />Music began to progress when the era of Baroque music began in the 1600’s<br />The first operas were written<br /> Composers wrote for small ensembles including strings, brass, and woodwinds, as well as choirs and pipe organs<br />*http://www.andante.com/images/Articles/OperaSeriaActIII350x193.jpg*<br />
  4. 4. Music of the 1800’s <br />First recording was in 1884 by Emile Berliner<br />In 1887 Berliner discovered a method to record directly onto the surface of a disc as well as producing copies of an original disc <br />By 1895 recorded music as a medium of entertainment had become firmly established with the public. <br />*http://www.hebrewhistory.info/images/factpaper/27-II.c.gif*<br />
  5. 5. Gramophone<br />Phonograph cylinders were the earliest medium for recording and reproducing sound. <br />Invented by Thomas Edison in 1877<br />Cylinder shaped part had an audio recording engraved on the outside surface which could be copied when the cylinder was played on a phonograph<br />In 1886 Edison changed the tin foil coated cylinder that projected the recordings onto the surface to a wax coated recording cylinder which changed the sound dramatically<br />*http://z.about.com/d/inventors/1/5/4/T/gramophoneLarge.jpg*<br />
  6. 6. 1900-1950’s Music<br />In 1903 the first 12 inch diameter records were released<br />1923 the first electrical recordings were issued<br />In 1948 a multipurpose thermo plastic, polyvinylchloride (PVC), suitable for making recording tape and gramophone records was developedwhich allowed for discs with 20 minute recording time on either side<br />*http://www.papermag.com/blogs/vinyl-record.gif*<br />
  7. 7. Record Player<br />Replaced the phonograph cylinder in the 1920s<br />Was the main form of digital media by 1980s <br />left the main stream in 1991 but they are still made today<br />Popular now with Indy labels to release on LP (long play) or EP’s (extended play)<br />*http://www.vinko.com/images/temp/turntable.jpg*<br />
  8. 8. 1950-1970’s Music<br />In 1956 Stereo LPs became available and new releases were issued.<br />1965 the first pre-recorded musicassettes were releasedand appeared on the in-car market.<br />1971 records appeared on the market but public reaction was unenthusiastic<br />1977 the average house contained two or three music devices.<br />*http://www.howdididoit.com/wp-content/uploads/2008/05/install-car-stero.jpg*<br />
  9. 9. Walkman<br />1979 Sony introduced the Soundabout cassette player which was later renamed the Walkman. <br />Initially considered a novelty and priced at $200 it was not considered a product for mass marketing. <br />1981 The Walkman II was introduced and was 25% smaller than the original version and had 50% fewer moving parts. <br />Its price dropped considerably and it was to become one of the most successful audio products of the post war period.<br />*http://www.gearfuse.com/wp-content/uploads/2009/07/walkman.gif*<br />
  10. 10. 1980-2000’s Music<br />1983 CD was officially launched in the UK<br />MTV (Music Television), a cable channel began transmitting music videos. <br />In 1998 the "Big 6“ became the “Big 5” — EMI, Sony, BMG, WEA and Universal<br />1998 Music piracy on the Internet, using the MP3 format, became a cult activity. <br />1995 Rewritable CDs were introduced which allowed for mixed CDs, boosting the popularity of Discmans.<br />*http://cws.gtc.edu/departments/Library/Library%20Technology%20Tips%20webpage/68859-insert-cd.jpg*<br />
  11. 11. Disc Man<br />1983: Again introduced by Sony together with Philips, CD players, also known as the Discman, eventually replaced cassette players by the end of the 1980s with their superiority in sound quality and ability to skip tracks.<br />*http://www.cip-informatica.com.ar/imagenesOfertasSemanal/discman%20%20jwin%20jx%20%20cd%20925%20%20mp3.jpg*<br />
  12. 12. MiniDisc<br />1992 Philips introduced the Digital Compact Cassette. <br />Sony responded to the challenge of DCC by introducing the MiniDisc which combined the reproduction quality of a CD with the ease of recording of the audio cassette. <br />*http://www.learnoutloud.com/images/Minidisc.jpg*<br />
  13. 13. 2000’s Music<br />Legal digital downloads became widely available with the debut of the iTunes Store in 2003<br />In 2004 BMG merged into Sony and left the “Big 4” Sony Music Entertainment, Universal Music Group, Warner Music Group and EMI. <br />*http://www.applian.com/replay-av/screenshots/itunes_radio.gif*<br />
  14. 14. Apple<br />2001 -Apple joined the market with the iPod Classic comprising of 5/10GB of space and a mechanical scroll wheel<br />2002/04 - iPod Classic Generation 2 pioneered the use of touch sensitive controls to scroll through playlists. <br />2004/05: smaller players such as iPod Mini, Nano and even Shuffle.<br />2007/08: iPod Touch marks a whole new beginning for the media player industry with never before heard capabilities<br />Apple enjoys 73.7% of music player market shares<br />*http://www.yugatech.com/blog/wp-content/uploads/2006/09/ipod-nano.jpg*<br />
  15. 15. Who is involved in digital music downloading?<br /> recording artist<br /> music producers<br /> software companies<br /> licensed website owner<br />Internet service provider<br />Consumers<br /> government for licensing, taxes and regulations<br />
  16. 16. Facts On the Digital Music Consumer<br />Men are 50% more likely to have downloaded songs compared to women (Solitude, 2004)<br /> 38% of those ages 18-29 say they download songs (Solitude, 2004)<br /> Internet users who have never tried music downloading, 60% say the RIAA lawsuits would keep them from downloading music files in the future. (Solitude, 2004)<br /> The number of Internet users paying for digital music increased by just over 8 million in 2008 to 36 million Internet users in 2009 (Nusca, 2009)<br /> Only 58 percent of Internet users reported purchasing CDs or digital music downloads last year, versus 65 percent in 2007 (Nusca, 2009)<br />
  17. 17. Who is involved in buying CDs?<br /> recording artist<br /> music producers<br /> record/CD companies<br /> licensed distributors<br /> retail outlets<br />consumers<br /> government for licensing, taxes and regulations<br />
  18. 18. Facts On the CD Music Consumer<br /> The Wall Street Journal notes that CD music sales are down 20% from the same week a year ago (Smith, 2007)<br /> The sharp slide in sales of CDs has far eclipsed the growth in sales of digital downloads (Smith, 2007)<br /> CD sales still counts for 85% of music sales (Smith, 2007)<br />
  19. 19. CD sales, however large of a percentage they make up of over all music sales, are slowly declining in percentage compared to Digital Music Retail. (Crooks, 2009)<br />
  20. 20. How much does it cost to produce/purchase CDs for the consumer and Producer?<br />Consumer’s Costs<br /> purchase of a CD can vary between $14.99 and $29.99 depending on characteristics such as:<br /> popularity<br /> date of release<br /> number of CDs in package<br /> quality<br /> number of songs<br /> retailer<br /> mark-up in sale price<br /> taxes<br /> shipping costs<br />Producer’s Costs<br /> production of a CD can include the costs of:<br /> artist’s costs<br /> musician costs<br /> technician salaries<br /> equipment purchases<br /> rental costs<br /> over head costs for the studio<br /> vendor supplies<br /> album cover artists<br /> licensing<br /> taxes<br /> hourly rate for producer’s salary<br />
  21. 21. How much does it cost to produce/purchase digital music?<br />Consumer’s Costs<br /> to legally download songs from an online distributor can cost the consumer anywhere between $.69, $.99, $1.29 per song depending on popularity (Crooks, 2009) (Based on the #1 digital music distributor, iTunes) <br /> the illegally download songs are often free or a fraction of the distributors price, however many count the cost of free music to be viruses and cookies infecting the users laptop/computer<br />Producer’s Costs<br /> the cost of producing digital music is dependant on the digital music retailer that is chosen to provide the service to consumers<br /> distribution rights are also involved<br /> licensing of the software<br /> programming costs<br /> equipment purchasing and up-keep costs<br /> over head costs for the distribution company<br /> technician salaries based on hourly rate<br />
  22. 22. A break down of the selling prices between the top 6 digital music distributors. (Crooks, 2009) <br />
  23. 23. Graph showing the transactions made per digital music retailer per month.<br />Pie chart displaying the market share between the top digital music retailers.<br />
  24. 24. What are the pros of digital music?<br /> Costs are Minimal (McDonald, 2010)<br /> not paying for artwork or press<br /> artwork costs make up most CD costs after recording the physical CD<br /> only need a website set-up large enough to run the downloads<br /> Less Pressure for Profit Sharing (McDonald, 2010)<br /> no need to share profits with physical distributor and store<br /> small percentage for an online music distributor, however much smaller percentage than with physical distributors and retail shop<br /> Prices Kept Low for Selling – Consumer Friendly (McDonald, 2010)<br /> CD prices are at record high<br /> album pricing can be made consumer friendly due to lack of sharing profits with distributor and retail shop<br />Fast and Easy (McDonald, 2010)<br /> cut down on relations with other companies and consultants (which usually includes making appointments) which cuts down on length of time for production<br /> digital music distribution can be as fast as point and click compared to physical music distribution<br />
  25. 25. What are the pros of CDs?<br /> Profit Comparable to Cost<br /> generally the costs for producing, distributing and selling a CD is comparable to the profit made<br /> 85% of music sales are still made up of CDs which shows the trusted value a CD has in stores and with consumers <br /> Trusted by Consumers<br /> CDs have history in the music industry<br /> record companies and buyers trust CDs to be unique and reliable<br /> many large online companies are still skeptical in regards to online digital music retailing and distributing<br /> Competition can be Overcome<br /> competition for CDs in a physical retail store can be overcome by ads and in store retail staff<br /> consumers, if looking for a specific artist will often want the whole CD release instead of just purchasing each song specifically <br />
  26. 26. What are the cons of digital music?<br /> Promotion (McDonald, 2010)<br /> finding good web promotion can be difficult and continuing promotion is hard work<br /> larger production companies still show resistance to online releases<br /> Competition (McDonald, 2010)<br /> there is large competition online for music distribution<br /> so many larger companies and individuals have adopted the online release direction for their music that it’s often difficult to make yourself known <br /> Only you Can Sell Your Music (McDonald, 2010)<br /> when in shops, you have the store retailer actively selling your music for you with recommendations and ads<br /> when online it’s up to you to sell you stuff<br />
  27. 27. What are the cons of CDs?<br /> Expensive Distribution<br /> distributing CDs in bulk get expensive and takes up time<br /> large boxes require physical labor and cost to distribute<br /> Promotion<br /> CDs are expensive to promote<br /> requiring specific attention to promote one artist over the other<br /> consumers are constantly divided between purchases<br /> catching the attention and promoting to consumers can be a never ending use of money and can combat with overall profits<br />
  28. 28. Music Downloading<br />There is a lot of confusion over what types of music downloading are illegal and what types are not.<br />Laws also differ between Canada and the US<br />There are two major ways to download music: <br />From a Stored Media Server network<br />From a P2P (person to person) network<br />
  29. 29. Stored Media Server Networks<br />Server networks work by having an administrator of the website upload media (music) to a server on the website<br />This server is where the music files are stored and where users of the website download music from<br />When the website does not have permission from recording companies to store and distribute copyrighted music, it is illegal (in both Canada and the US)<br /> If the website does have permission they are usually required to charge users for music (like iTunes does) and in this instance, downloading this way is legal <br />
  30. 30. P2P Networks<br />Person to Person networks work without the help of a server to store music files<br />When users download music, it comes directly from the computer of another (usually anonymous) user who already has the music<br />When downloading music from this type of network, usually music files are downloaded in small chunks from more than one other user simultaneously to speed up the process<br />In Canada, this type of downloading is NOT illegal, however in the US it is<br />
  31. 31. Downloading Controversy<br />There are two schools of thought when it comes to the legality of online music sharing and downloading<br />One side believes illegal downloading and P2P file sharing hurts artists and the music industry<br />The other side believes that downloading and sharing music online actually helps artists, especially less-famous ones and has little to no effect on the music industry’s recent downfalls <br />
  32. 32. Pro-Downloading Arguments<br />Downloading allows the user to have only an artist’s songs they want, rather than an entire CD <br />Lesser-known artists gain fame through online music sharing which in turn boosts their CD sales<br />Most musicians make their money from touring and merchandising and get a very small fraction of CD sales anyway<br />People who have bought an artist’s music in the past on either vinyl record or on tape are able to get a free upgrade<br />
  33. 33. Pro-Downloading<br />Most artists are for online file sharing – its like free advertising<br />Some studies even suggest that the people who illegally download the most music are also the people who spend the most money on legal downloading of music, which helps the artists and industry<br />Suing people who download music doesn’t pay artists<br />File sharing doesn’t effect CD sales – just because you can listen to a song on the radio for free doesn’t mean you wont buy the CD; same goes for music downloading <br />
  34. 34. Anti-Downloading Arguments<br />CD’s are reasonably priced considering the effort that goes into making one, so there’s no excuse for illegal downloading<br />Reliability of files from P2P networks is often questionable (quality, viruses, etc.)<br />Illegally downloading is stealing, even if digital audio isn’t a tangible entity, and stealing is wrong<br />Music on CD’s and through legal downloading is much better quality than past forms, such as vinyl records or cassette tapes, so no one is entitled to a “free upgrade”<br />
  35. 35. Anti-Downloading<br />Illegally downloading music hurts the music industry and the economy in general because its not making money from music sharing (less CD’s sold)<br />Creativity in the population suffers because people don’t want to risk getting into the industry if they’re not going to make any money<br />
  36. 36. New Technology<br />Countries around the world are secretly drafting an Anti-Counterfeiting Trade agreement (ACTA)<br />Cops will have the right to ISPs and delete any supposed pirated material<br />This could severely effect websites offering music downloads, even those that are legal, like iTunes and Rhapsody<br />*http://www.megalithrecords.com/store/images/digi-rhapsody.jpg**http://www.textually.org/ringtonia/archives/images/set3/itunes.jpg*<br />
  37. 37. New Technology<br />Anyone accused and convicted of using your ISP for downloading illegal material will have their internet banned for a year on top of having to pay a fine<br />Customs officers will have the right to force you to prove that you legally own the music on your laptop or MP3 player<br />If you are suspected of having even 1 illegal song, you will be subjected to search and seizure without a lawyer<br />*http://www.crunchgear.com/wp-content/uploads/2009/04/ipodgingerman.jpg*<br />
  38. 38. Advancements in Technology<br />The current decline in the music industry has been an issue in recent years<br />Declines have been common in the past, and will be in the future, but can be helped with cooperation from the record industry<br />In a nutshell, the internet hit the music industry hard<br />Record companies need to take advantage of the resources that are available to them in order to take back the music industry<br />
  39. 39. Advancements in Technology<br />Mechanical reproduction allowed for all areas of the media industry to produce mass amounts of material to the public for cheap<br />The internet made it possible to do the same, but for barely any cost at all, hurting the revenue of the media industry<br />Even though many blame peer-to-peer sharing networks for the downfall of the music industry, they were already sinking without its help<br />
  40. 40. Advancements in Technology<br />Music as of late are seen as fads, and people won’t invest in an artist or band that may not be around for very long<br />Consumers want the most convenient form of music, but the music industry resists change<br />LPs took over the 78s, and then the cassette tape took over the LP, eventually falling to the CD which later would become MP3 due to rip/burn technology<br />Had the industry embraced selling music online instead of fighting it, they might have stood a chance<br />*http://www.toxel.com/wp-content/uploads/2009/02/mp3players03.jpg*<br />
  41. 41. Advancements in Technology<br />People weren’t happy with the online purchasing of music because of the digital rights management<br />Consumers went to where they could happily get music online, and peer-to-peer sharing was there<br />Peer-to-peer sharing started a generation of children who thought music was free<br />With the rising prices of CD’s when production costs should have been lowered, record companies were getting too greedy for money<br />*http://static.guim.co.uk/sys-images/Guardian/Pix/pictures/2009/1/8/1231435335531/Downloading-music-iPod-Mi-001.jpg*<br />
  42. 42. Advancements in Technology<br />The internet has actually helped boost creativity, and digital tools allow any amateur to share their creations<br />Genres, subgenres and microgenres now exist because of the internet<br />Professionals can still make money from live shows, licensing and merchandizing, while using the internet to promote themselves and gain fan-bases<br />
  43. 43. The Future of the Music Industry<br />The music industry’s current business model is flawed, and soon the CD will be old news, just like cassette tapes and vinyl records<br />Revenue was based on physical production and distribution of music, which is now of no value<br />As seen in the long tail theorem, record companies could make just as much money off of 100 small hits as they could from a physically produced mega-hit<br />
  44. 44. The Future of the Music Industry<br />The public decides the fate of the music industry, as consumers decide how they want their product<br />People will want their music available through the computer, online, instant, and very portable<br />The music industry needs to make music easier to buy and a source for music discovery in order to thrive<br />In the future, there may be something along the line of a subscription service for people to get their music legally and at low cost<br />*http://gadgetsteria.com/wp-content/uploads/2009/11/downloading.jpg*<br />
  45. 45. The Future of the Music Industry<br />Since the public is used to the notion that music is free, the music industry will need to find a way to make money while providing free music<br />Ad supported free service is the next step in generating revenue for the music industry<br />New developments that will enhance the quality of MP3s or even going above and beyond will be essential to profiting in the future<br />*http://resonantvibes.com/blog/wp-content/uploads/2008/10/illegal-downloading1.jpg*<br />
  46. 46. Sources<br />Borland, John. "Canada deems P2P downloading legal." Technology News - CNET News. CBS Interactive, 12 Dec. 2003. Web. 16 Feb. 2010. <http://news.cnet.com/2100-1025_3-5121479.html>. <br />Crooks, Ross. "Music Retail: Rise of Digital." Music Sale Trends: CDs versus Music Downloads | MintLife Blog | Personal Finance News & Advice. Mint Software, Inc., 2 Nov. 2009. Web. 16 Feb. 2010. <http://www.mint.com/blog/trends/music-retail-the-rise-of-digital/?display=wide>.<br />Cross, Alan. "Music fans be very afraid." Metro - Music fans be very afraid. Free Daily News Group Inc., 27 Nov. 2009. Web. 16 Feb. 2010. <http://www.metronews.ca/toronto/entertainment/article/380978--music-fans-be- very-afraid>. <br />Dubner, Stephen J. "What?s the Future of the Music Industry? A Freakonomics Quorum." Opinion - Freakonomics Blog - NYTimes.com. The New York Times Company, 20 Sept. 2007. Web. 16 Feb. 2010. <http://freakonomics.blogs.nytimes.com/2007/09/20/whats-the-future-of-the-music-industry-a-freakonomics- quorum/>. <br />"File sharing in Canada." Wikipedia, the free encyclopedia. Wikimedia Foundation Inc. Web. 16 Feb. 2010. <http://en.wikipedia.org/wiki/File_sharing_in_Canada>. <br />"File sharing." Wikipedia, the free encyclopedia. Wikimedia Foundation Inc. Web. 16 Feb. 2010. <http://en.wikipedia.org/wiki/File_sharing>. <br />"For Students Doing Reports." RIAA - Recording Industry Association of America. Web. 16 Feb. 2010. <http://www.riaa.com/faq.php>. <br />Infoplease: Encyclopedia, Almanac, Atlas, Biographies, Dictionary, Thesaurus. Free online reference, research & homework help. Infoplease.com. Web. 13 Jan. 2010. <http://www.infoplease.com/ipea/A0151192.html>.<br />Jenci, Keith. "File Sharing: A debate." Mredkj.com. Novusoft LLC, 27 Sept. 2002. Web. 16 Feb. 2010. <http://www.mredkj.com/other/sharing.html>. <br />Johnston, Casey. "US digital music sales to eclipse CDs by 2010." ArsTechnica. Condé Nast Digital, 14 Aug. 2009. Web. 16 Feb. 2010. <http://arstechnica.com/media/news/2009/08/global-digital-music-sales-to-overtake- physical-by-2016.ars>.<br />
  47. 47. Sources<br />McDonald, Heather. "Music Downloading: Should I Go for an Internet Only Release?" About.com. The New York Times Company. Web. 16 Feb. 2010. <http://musicians.about.com/od/musiciansfaq/f/digitalalbum.htm>.<br />"Music -." Wikipedia, the free encyclopedia. Web. 13 Jan. 2010. <http://en.wikipedia.org/wiki/Music>.<br />"Music download." Wikipedia, the free encyclopedia. Wikimedia Foundation Inc. Web. 16 Feb. 2010. <http://en.wikipedia.org/wiki/Music_download>. <br />"Music industry -." Wikipedia, the free encyclopedia. Web. 13 Jan. 2010. <http://en.wikipedia.org/wiki/Music_industry>.<br />"Music Record Industry: The History: 1900's-1920's." Sociology Department :: Duke University. Web. 13 Jan. 2010. <http://www.soc.duke.edu/~s142tm01/history2.html>.<br />Nusca, Andrew. "CD sales drop, digital downloads on the rise." ZDNet Technology News. CBS Interactive, 17 Mar. 2009. Web. 16 Feb. 2010. <http://blogs.zdnet.com/BTL/?p=14758><br />"Portable Partners - History of Portable Media Players." Oracle ThinkQuest Library. Web. 13 Jan. 2010. <http://library.thinkquest.org/08aug/01589/mediaplayers_history.html>.<br /> "Recording Technology History." History web pages. Web. 13 Jan. 2010. <http://history.sandiego.edu/GEN/recording/notes.html>.<br />RetroDJ. "Digital Music Downloads - The Pros and Cons plus How to Find the Most Requested Songs of 2009." HubPages. HubPages Inc. Web. 16 Feb. 2010. <http://hubpages.com/hub/Most-Requested-Songs- of-2009>.<br />Smith, Ethan. "Sales of Music, Long in Decline, Plunge Sharply." WSJ.com. Dow Jones & Company, Inc., 21 Mar. 2007. Web. 16 Feb. 2010. <http://online.wsj.com/article_email/SB117444575607043728- lMyQjAxMDE3NzI0MTQyNDE1Wj.html>.<br />Solitude, Chuck. "The State of Music Downloading." Slyck.com. Slyck.com, 27 Apr. 2004. Web. 16 Feb. 2010. <http://www.slyck.com/news.php?story=461>.<br />"The Vinyl Years - A history of the music industry : 1960's." 20th Century Nostalgia: When We Were Kids. Web. 13 Jan. 2010. <http://www.wwwk.co.uk/music/vinyl-years/60s.htm>.<br />