The music business has experienced tremendous growth in the last few decades and established itself as a multi-billion industry. It has immensely influenced the global economy in numerous ways. In 2017, the music industry in the United States recorded revenue of 18.3 billion dollars. According to statistics, the revenue is estimated to grow from 15.87 billion dollars in 2014 to 22.61 billion in 2021. Also, the International Federation of the Phonographic Industry (IFPI) estimated that global recorded music revenues increased by 8.1% in 2017. This paper focuses on how different music industries work together and impact each other. It involves a discussion of the structure and future of the recorded music business and how streaming services have affected it. While the future of streaming services looks promising, the future of the recorded music industry is unpredictable.
It may be difficult to understand the correlation between music and business. Therefore, it is of significant importance to understand how the music industry becomes a business through economics. Economics is concerned with the production, distribution, and consumption of goods and services. The music industry participates in economics through the production of music. The music is then distributed through various platforms such as radio, television, or smartphones. Consequently, this music is consumed by people in the form of goods (different types of music) and services such as concerts. The business of music is a promising one when considered from an economist. The economy has benefited from the music industry especially through streaming services. According to IFPI, streaming revenues grew by 41.1% in 2017 with 176 million users. Streaming services are becoming the biggest driver in the music business with a recorded 38.4% of total recorded music revenue. Streaming services refer to watching or listening to media content on a computer using the internet. Streaming services are becoming more popular that recording labels.
Streaming music revenues have boosted the whole music industry in general. It has assisted in returning the revenue growth in the industry that had declined over the years. The music revenues recorded by IFPI for 2017 show tremendous growth after 15 years of decline. However, the boost has been largely influenced by earnings from streaming services. The reason streaming services have become popular can be attributed to the flexibility and cost savings. In streaming services, offers are usually available from less than $10 per month. The offers are higher depending on the services an individual requires. However, when it comes to cable companies, packages can become expensive. Streaming services are also much better on cost-cutting since packages can be canceled or changed without incurring any costs. On the other hand, canceling cable services before the contract is over can lead to termination fees. Therefore, streaming services have become more popular over cable or cinemas since they are more cost effective. The flexibility of streaming services has also made it a popular option. For instance, one can download any music from around the globe using a computer or smartphone. It is much easier than waiting for your favorite musician to make a live concert for the release of a song.
One of the major impacts of the digital era has been making music more accessible. The accessibility has increased the amount of recorded music and the number of artists. In the previous years of the music industry, there existed a barrier to entry. It meant that artists could not interact at a higher level with their fans, but the digital world has reduced this barrier. Due to the digital revolution, the idea of crowdfunded participation in recorded music is plausible. Crowdfunding is a model that involves the participation of fans in the funding as well as decision making. It is becoming a popular activity that is chosen by artists to avoid record companies from tampering with the final form of music. It allows fans to get a glimpse of the pre-release of the product and a chance to meet the artist. Another advantage of the digital era is the impact it has on storage. With platforms such as iTunes, it has also become easier to add songs to a playlist without necessarily deleting other songs to make space. It is through such music services that the music industry has grown greatly.
The accessibility of music globally brought about the realization of ownership rights in the music industry. While consumers were able to purchase music in the form of CDS or DVDs, the value of ownership became debatable. The increased awareness of accessibility allowed people to purchase more music. However, instead of wanting to own the music, people wanted access to all music. It brought about the debate on what the consumer owns and what the artist owns. Therefore, rules and regulations on copyright had to be put in place. In streaming, music belongs to the service providers and the subscribers can access whatever they want. Subsequently, the subscriber has to pay a monthly fee or no fee. However, in case the subscriber does not pay any fee, listening is interrupted by advertising in every few songs. Copyright on recorded music allows artists to have complete authority over their songs. As such, people can download the song and make sound recordings of themselves but cannot release the song as their product. However, there continues to be numerous debates on copyright laws. The certainty that the laws will keep pace with technological advancements is still unclear.
The music industry is all about connecting the creators of music to the consumers. The industry is divided into two distinct music industries, the recorded music industry, and the live music industry. Hence, it is the function of the music industries either recorded or live to make the connection between artists and consumers possible. Regardless of having one similar trait which is the product, music, the delivery of the connection in the two industries is different. The live music industry depends on people and services to facilitate the connection between live musicians and a live audience. On the other hand, the recorded music industry depends on the creation of sound recordings. Since the creation of the phonograph in 1877 by Thomas Edison, sound recordings continue to be used by recording companies. The recording music industry has an oligopoly market structure. It means that the market is dominated by a small number of firms that occupy 40% of the music market. The firms include; Warner Music Group, Sony Music Entertainment, EMI, and Universal Music Group (Vivendi). The firms are responsible for setting up prices and the products they sell. Since the market has been declining for the past ten years, the firms have been tapping into a new alternative to cut costs.
The recorded music industry is responsible for creating, manufacturing, and distributing music. Streaming has become the new force in driving music revenues, but the work invested by record companies is also overwhelming. During IFPI's global music report, Frances Moore posited that record companies are putting in a lot of work to put the industry back on track. According to Moore, the recent growth saw a great revival of the music industry. Some of this success is attributed to record companies that create a fair environment for music to thrive in the market globally. Record companies work towards creating music that can be disturbed in all forums around the world. It does not target a specified audience or concentrate on markets in specific countries. Rather, most record companies geared towards developing content that can be distributed to fans on multiple platforms and services. In 2017, there was 17.7% growth in revenue in Latin America while in Asia and Australia it grew by 5.4%. By extending music distribution globally, record companies will compensate the revenue earned with outdated forms such as CDs and DVDs.
The recorded music industry has seen a drastic shift in structure from creation, and distribution of albums to independent artists. The accessibility of tools that enable artists to self-record has enabled them to produce their music. ProTools and other home recording programs have enabled artists to record their music and get it out to consumers. The independence comes with a disadvantage since most of these artists do not have the money and manpower to operate. When an artist decides to do everything independently, it may become difficult without consultations. Every musician needs people who are specialists. Without such a support system, an artist may end up doing other bulky work thus, leaving out time to be creative while recording music. It is for this reason that record companies are important because they offer assistance. An artist with a record label only has time to create music. Thus, such an artist will go into the studio and create music and leave the distribution of the final product to the record label. Unfortunately, the number of independent musicians continues to rise with the advancement in technology.
The increase of independent artists is becoming a growing concern for the future of the recording industry. Furthermore, with the empowerment of independent musicians by companies such as Disk Makers, the recording industry continues to decline. Disk Makers enables artists to make replicas of their product. Consequently, with digital services such as iTunes, such artists can distribute their products out to consumers. Other technological advancements such as the iPod have made the recording industry a mirage. Consumers are no longer confined to listening to music on a CD player or radio. With the emergence of the iPod, people can listen to music without any restrictions. This transition has seen the sales of outdated recording materials such as CDs, Vinyl, and DVDs reduce drastically. Instead, the sales for digital materials is plateauing by the day. Moreover, independent record labels are getting a boost from streaming music services. Independent labels are gathering huge support from streaming services to distribute their product. According to the Merlin Network, 70% of labels registered their digital revenues come from streaming. The group also found out that most independent artists have their music more streamed. Hence, the streaming sector has influenced the entire music industry especially giving a boost to independents.
In conclusion, the figures on music revenue are a clear indicator that the music industry is becoming a booming business by the day. The statistics gathered show that more people today prefer streaming music and videos online rather than buying music from record labels. The emergence of streaming has led to the decline of the recording music industry. The two entities are supposed to work together to connect people to music. However, the two industries are in constant competition over the music industry. The future of streaming looks very lucrative, but it may bring an end to the recording music industry.
Aguiar, Luis, and Joel Waldfogel. "As streaming reaches flood stage, does it stimulate or depress music sales?." International Journal of Industrial Organization 57 (2018): 278-307.
Brzozowska, Blanka. "Crowdfunding from the perspective of music fans-participation or exploitation?." Prace Kulturoznawcze 19 (2016): 73-88.
Dimont, Joseph. "Royalty Inequity: Why Music Streaming Services Should Switch to a Per-Subscriber Model." Hastings LJ 69 (2017): 675.
Garner, Tom A. Echoes of Other Worlds: Sound in Virtual Reality: Past, Present and Future. Springer, 2017.
Guidolin, Mariangela, and Renato Guseo. "Technological change in the US music industry: Within-product, cross-product and churn effects between competing blockbusters." ...
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