The music industry in Britain has seen significant changes over the past two decades. Recording artists now rely primarily on live performances and merchandise for income rather than recorded music sales. Record companies have introduced "360 deals" where they take a percentage of artists' revenues from all sources in order to benefit from their entire income stream. While digital singles sales are rising, digital and physical album sales continue to decline in the UK due to high levels of illegal downloading. More than three-quarters of downloaded music in Britain is obtained illegally, costing the music industry over £1 billion since 2007.

1. MS4 – Text, Industry, Audience (Music Industry)
The Music Industry in Britain Today
The music business can be broadly split into four sectors: recording,
song writing and publishing, live music and artist management.
(www.bpi.co.uk)
(the following statistics taken from the British Phonographic Industry – BPI –
website)
Where is the music industry now, and how did it get there?
In the 2000s, consumers spent far less money on recorded music than they
had in 1990s, in all formats. 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 music retailers out of business, and
forced record companies, record producers, studios, recording engineers
and musicians to seek new business models.
In the early years of the decade, the record industry took aggressive action
against illegal file sharing, shutting down Napster in 2001 (the leading online
source of digital music) and threatening thousands of individuals with legal
action. This failed to slow the decline in revenue and was regarded as a
public relations disaster.
Legal digital downloads became widely available with the debut of the
iTunes Store in 2003. The popularity of internet music distribution has
increased and by 2007 more units were sold over the internet than in any
other form. However, as The Economist reports, "paid digital downloads

2. grew rapidly, but did not begin to make up for the loss of revenue from
CDs."
The UK Official Download Chart was launched on 1 September 2004, and
included any Permanent Digital Download track, under 10 minutes long,
being sold for a minimum price of 40p. In January 2005, downloaded tracks
outsold physical singles for the first time in UK music history, prompting The
Official UK Charts Company to begin to incorporate downloads for the first
time into the UK Singles Chart on 17 April 2005, at which time Radio 1
stopped broadcasting the separate download chart, although the chart is
still compiled. Initially this was on condition that the song must have a
physical media release at the same time; this rule was fully lifted on 1 January
2007 meaning all download sales are now eligible in the chart.
Recording artists now rely on live performance and merchandise for the
majority of their income. In order to benefit from all of an artist's income
streams, record companies are beginning to implement what is known as the
"360 deal", a new business relationship pioneered by Robbie Williams and EMI
in 2007. (In a 360 deal, the company agrees to provide financial support for
the artist, including direct advances as well as funds for marketing,
promotion and touring, as an investment to the artist's lucrative potential.
The artist agrees to give the company a percentage of all of their interests,
including sales of recorded music, live performances and any other income).
Inexpensive recording hardware and software has made it possible to create
high quality music in a bedroom and distribute it over the Internet to a
worldwide audience. This, in turn, has caused problems for recording
studios, record producers and audio engineers. Changes in the music
industry have given consumers access to a wider variety of music than ever
before, at a price that is gradually approaching zero. However, consumer
spending on music related software and hardware has increased dramatically
over the last decade, providing a valuable new income stream for technology
companies such as Apple Computer.
List pros and cons (for a variety of different people/organizations) of these
key recent changes in the industry:
Pros
Cons

3. What is the situation in Britain, specifically?
Generally, there has been a decrease in album sales (physical and digital) over recent
years. This decline overall in UK music sales is due to the still-increasing levels of
illegal downloading.
Last year, combined 2011 digital and physical album sales declined by 5.6% overall in
volume to 113.2m.Adele‟s 21was crowned overall year-end album chart champion, with
3.8m sales (beating last year‟s winner, Take That‟s Progress, who sold 1.8m).
Pop and Urban titles continued to dominate the bestsellers list, with albums by
Bruno Mars, Rhianna, Lady Gaga, Michael Buble and Coldplay also coming in the top
ten for the year.
In terms of album sales, in 2011, digital albums sales rose to 26.6m, whilst CD sales
dropped by 12.6% to 86.2m (although this format is clearly still the biggest seller in
terms of albums).
The singles market recorded an all-time saleshigh of 177.9m, an increase for the
fourth year in a row.
99% of the UK's singles market is now digital. The growth of this format has
provided flexibility for consumers and opportunities for the music business to
innovate.
Geoff Taylor, BPI Chief Executive, said, “It has been another record year for digital
singles, but the most encouraging news of the year is the strong backing consumers
are giving to the digital album format. British music fans understand that the album
remains the richest way to connect with an artist‟s work. Digital developments grab
the headlines, but the CD remains hugely popular with consumers, accounting for
three-quarters of album sales. Physical ownership is important to many fans and the
CD will be a key element of the market for years to come.
“British artists continue to produce incredible music that resonates at home and
around the world. But while other countries take positive steps to protect their
creative sector, our Government is taking too long to act on piracy, while weakening
copyright to the benefit of US tech giants. The UK has already fallen behind
Germany as a music market. Unless decisive action is taken in 2012, investment in
music could fall again – a creative crunch that will destroy jobs and mean the next
Adele may not get her chance to shine on the world stage.”
So, while the UK digital music market has expanded, widespread illegal downloading
means it is growing much more slowly than it could be. The lack of action against
illegal downloading continues to undermine the potential for the digital music sector
to expand.

4. More than three-quarters of the music downloaded in the UK is illegally obtained,
with no payment to the musicians and songwriters or music companies who invest in
them.
Filesharing, the activity of trading digital files with other users over the internet,
where users trade files by downloading (to obtain them) and uploading (to distribute
them), is illegal when copyright material is made available without the permission of
the rightsholders; which, in the case of sound recordings, are the record companies
that created them.British record companies invest tens of millions pounds annually
in new artists, and recoup that by having the exclusive right to copy, distribute and
make available their recordings.
The BFI argue that illegal downloading and filesharing is enormously damaging to
music sales.
If record companies are unable to derive income from music sales, that means less
money to invest in new music. This is potentially not only bad news for record
companies but also for musicians who rely on that investment and for consumers,
who want to keep on listening to exciting new British music.
Online copyright infringement cost the UK music sector an estimated £200m in 2009
Between the years 2007 and 2012 – according to research conducted by Jupiter
Research – the cumulative cost to music companies will be £1.2bn.
Questions:
1. Where does most recording artists‟ revenue come from?
2. Explain in your own words the „360 deal‟ that record companies have
introduced, and why they have done so.
3. Why might the Pop and Urban genres dominate the bestsellers list?

5. 4. Why do you think singles sell so much better than albums?
5. Why is the recorded music market still in decline, despite the success
of legally downloaded music? Give reasons.