Sbcrox iitkgp - Audio and Music SectorPresentation Transcript
Audio and Music Sector
Shilpa Gautam (09BM8085)
Sujit Singh (09BM8054)
From Phonographs to Mp3
Until the 90’s the development of music industry and its innovation was guided by the industry itself.
In 1935 magnetic tape started to be used for recording , while in 1963 Philips introduced the first music cassette and standardized the first 8 track’s music players
1983 Sony and Philips joined forces and created the Compact Disk( CD ) Player , which became the standard for physical music storage
From Phonographs to Mp3
The release of the first sound cards for the consumer market in 1991 , changed the attitude of people towards the use of computers to listen to music.
The commercialization of the internet was becoming more and more evident at this time.
In 1996 was the official release of the first popular compressed format MP3. That was the turning point of the music industry , which took it to the new age of digital distribution of music.
Old Vs Digital Music Industry Model Old Music Industry Model Digital Music Industry Model
The Industry in Numbers
Global digital music trade revenues reach US$4.6 billion, up 9.5% in 2010 with 400 services licensed worldwide by music companies with ISPs, mobile and other partners.
Digital music, as defined by the Recording Industry Association of America (RIAA), includes mostly music downloaded over the Internet for a fee, music downloaded from subscription sites, and music downloaded to cellular phones and
other mobile devices.
There is almost 33 % decline in the profits of the record studios , while online distribution channels have a growth of more than 1000% in 2004-10
The Industry in Numbers
95% of the music downloaded online is not legally obtained.
The digital supply chain for music Is becoming dominant in the music industry.
Sales of music downloads, the dominant revenue stream in digital music, are seeing steady growth. Single track download sales increased by an estimated 10%, while digital albums rose an estimated 20% in 2009
The report shows that, while the music industry has increased its digital revenues by 940% since 2004, piracy has been the major factor behind the overall global market decline of around 30% in the same period
Source: IFPI publishes Digital Music Report 2010
What has changed in music industry in recent years? Business profile Revenue in music industry in mln USD
Types of Online Music business
Subscription services (Rhapsody, Online Radios)
Streaming services with application
Artist Communities Online (MySpace)
Music Tax (ISP taxing)
biggest selection of music tracks on the planet
o ver 6 million collections available
biggest downside is that the vast majority of the music is in the .MP4/.AAC format, and that means it will only play on the provided digital player or an iPod
Prices: $0.99/track, ~$9.99/album
become one of the powerhouse download destinations.
download individual tracks and entire albums from the service at $0.99 and $9.99, respectively
once your subscription lapses, they’ll no longer play on computer
$0.99/track, $9.99/album, Subscriptions: $9.99 and $14.95.
currently has the second-largest catalogue of any download service, with around four million tracks.
the application includes an excellent search facility
program also allows you to listen to a number of songs completely for free
$12.99 and $14.99, respectively. With the former, you can only play tracks on your computer, but the latter allows you to transfer them to your portable player
$0.99/track, ~$9.99/album. Subscription rates are $12.99 and $14.99
Amazon’s a late entrant to the music download market
Downloads are simple too
Allows dumping to and playing it on compatible devices like the iPod
$0.89/$0.99/track, albums from $4.95
Catalogue now approaching three million track
Everything is in MP3 format, with no copy restrictions
If your subscription lapses the tracks you’ve already bought remain yours
$9.99/month for 30 songs
Yahoo Music Unlimited
The service is doing a lot of things right and trying hard
Downloads in WMA format, which means iPod won’t handle them
To listen subscriptions are dirt at $5.99 a month
The subscription lapse, you can’t listen to them anymore
$0.99/track, albums $8.00 and up. Subscriptions cost $5.99/month, which allows users to download tracks for $0.79/tune.
Digital rights management (DRM)
DRM, often referred to as copy protection, limits what functions a user may perform with digital media.
It provides a way to control if and how many times a digital music file can be copied.
Apple, for example, reserves the right to change at any time what you can do with the music you purchase at the iTunes Music Store. For instance, in April 2004, Apple decided to modify the DRM so people could burn the same playlist only 7 times, down from 10.
Microsoft, similarly, utilizes Microsoft's Windows Media Audio (WMA) DRM.
The future: Sony has announced that it plans on shipping CDs with DRM built-in.
DRM has become and will continue to be an essential element to control access of downloadable music.
Store Selection (approximately) Geographic restrictions Platform DRM Preview Trial 7digital 11,000,000 songs Some Platform Independent for MP3 songs No 30 seconds None Amazon MP3 14,815,786 songs US, UK, and Germany only Platform independent for individual tracks and browsing the store, Amazon MP3 Downloader is required for downloading albums (Windows 98 or later, Mac OS X or Linux)7 No 30 seconds None BuyMusic 1,000,000 songs United States Windows 98 or above, IE 5.01 or above10 Yes,PlaysForSure Unknown None eMusic 6,000,000 songs, 100,000 artists, 200,000 albums, 40,000 labels Varies by track Windows 98 or later;Linux; Mac OS 9/X11 No 30 seconds 25 downloads iTunes Store 14,000,000 songs Some Mac OS X 10.4.11 or later; Windows XP Service Pack 2 or later. No 90 seconds None Rhapsody 10,000,000 songs United States Windows 98 or later, Mac OS X, Linux30 Partial, Real DNA31, has DRM-free MP3s 30 seconds 14 days Walmart Music 1,000,000 songs United States Windows 98 or above No, since Feb. 2008 30 seconds None Napster 12,000,000 songs United States, Canada, Germany, or United Kingdom Napster Web application (Windows/Mac/Linux), Internet Explorer 7.x (Recommended), Purchase: no (DRM-free MP3 in some geographical areas); Subscription: Yes,PlaysForSure.20 Napster subscription-Entire song, unlimited; Free Napster-Entire song; Napster MP3 Store-30 seconds. 7 days
iTunes, is the largest revenue source in the online sector and has more than 100 million accounts across 23 countries.
Apple has greater than 85% of the market share of downloadable music, according to Nielsen SoundScan.
Subscription base music downloading model for various company’s.
Porter’s 5 Forces Analysis Rivalry – High
Numerous services are popping up
Partnerships and shakeouts are prevalent
Some countries and locations may not offer ways to expose your music.
Possibility of rejection due to copyright law.
There should be enough disposable income with the people to use such services.
Useful to new entrants to the sector, as very low initial investment is required.
Industry is very dynamic, demand will change with changing consumer patterns and music formats.
The demographics, particularly age of the target segment is very limited.
Action, Opinion and Interest of People are shifting towards online form of music.
Penetration of Internet in percentage terms is still very low.
Technology is changing continuously.
Moving towards online form of music from physical form positively affect the environment.
digital piracy is choking revenues
the net effect of illegal file-sharing is reduced purchasing of music, Overall music sales fell by around 30 per cent between 2004 and 2009.
To Tap new market
In order to take the business to the next level and capture the enormous potential that’s still untapped, we need new services to truly break through to the mass market. To do that, an attractive user interface , a strong value proposition and a clear marketing message are essential, as is an effective way of curbing piracy.
Consumer education has a vital role to play, and the music industry is currently involved in more than 70 awareness programmes across the world.
A graduated response model is used involving escalating warnings to infringers culminating, as a last resort for those who refuse to stop, in he sanction of temporary account suspension.