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How has the internet affected the music industry

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by Thomas White on 12 October 2012

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Transcript of How has the internet affected the music industry

The Music Industry in the Online Age How the internet has affected the music industry iTunes was released in September 2001 by Apple as a platform for customers to purchase digital music in a suitable format for their iPod product easily, at a reasonable price.The Apple Lossless Codec allows for more tracks to be stored in MP3 Players, allowing customers to make more purchases overall. Digital downloads as a whole have allowed record labels to release their music without the extra charges of manufacturing CDs, eventually allowing them to stretch their profit margin. It also allows users to download individual tracks rather than purchase entire albums, making it more useful to the customers.
iTunes & Digital Downloads YouTube has allowed users from all over the world upload their own videos, and in turn allow them to share their own music with people who may have never heard it otherwise. This gives the music industry to scout for talent and sign potential artists, for instance, Justin Bieber was discovered by Usher through the videos he uploaded himself, and has now gone on to become highly successful. YouTube also allows artists to have their tracks promoted and overall earn more money, especially through companies like Vevo, who work in partnership with EMI and Sony to promote their artists legally, having a stake in the earnings made. YouTube Illegal downloads have been the largest negative factor in the music industry's place online. Due to the ease of illegally downloading music, masses of people do it without any form of lawsuit, costing the industry a lot of money. An example of a lawsuit would be the Metallica Vs. Napster case. Napster was originally a Peer-To-Peer file sharing programme, used to illegally share music. Metallica was one of the many bands losing money from the downloads, so they filed a lawsuit against Napster in 2000. Eventually, Napster became a legal service allowing users to stream music for a fixed monthly rate, similar to Spotify. Although, illegal filesharing did not stop, as Limewire was released in 2000 doing the same thing as Napster, peer-to-peer sharing. Limewire managed to operate for a long time, until 2011 when they were sued by the RIAA for $75 Trillion, and eventually was discounted. Illegal downloads are still at a high, with torrent websites such as The Pirate Bay hosting downloads of all types of media. Illegal Downloads Bandcamp is an online music store, mainly for independent artists. Artists on Bandcamp have a customizable microsite with the albums they upload, allowing all of the tracks to be played for free, and allowing the artists to charge whatever price they want, even allowing the user to choose how much they pay, giving them the choice as to whether they support the band or not. Bandcamp takes a 15% stake in all sales made, dropping to 10% when $5000 is made. It is also free to join, and overall improves the relations between the user and the artists as they dictate how much money they want to pay, lowering the chance of illegal downloads. Bandcamp In 2011, a website named ReDigi was launched,which allowed users to sell their used digital music files, something which had never been done before. Like eBay, users uploaded their files, then sold them to other users, as well as allowing online streaming. It only allows music which has been verified as a legal download to be sold (Primarily iTunes), making it a legitimate service. In 2012, Capitol Records filed a lawsuit against ReDigi, claiming that they were liable for contributing to copyright infringement, and demanded that they remove Capitol-owned material and pay $150,000 per track. The legal standpoint is complicated, as the US' First Sale Doctrine states that anything a person owns, they can sell. Although, this raises the question as to whether a file on a computer is an object, and also has the issue of not knowing if a person does own the tracks they sell legitimately or not. Second Hand Digital Downloads Online marketplaces such as Amazon, eBay and Play.com have been revolutionary in how they have changed the way people make purchases and what they purchase as a whole. For the music industry, websites such as these have been a great advantage, particularly for niche artists and labels. Before the internet, music was purchased in specific shops such as HMV, and they would stock depending on the demand, and usually the demand was for mainstream artists, leaving no room for niche artists in popular shops. But, the internet has allowed users to browse freely through music archives due to the massive infinite amount of space online marketplaces have, meaning that they do not waste money in purchases niche products that will not bring in enough sales. As the long tail theory dictates, this has also allowed niche products to bring in more money than mainstream artists, due to the larger amount of niche artists collectively beating the sales of the significantly smaller amount of mainstream artists. Online Marketplaces Social networking sites such as Facebook, Twitter, Reddit e.c.t have been a huge impact on the music industry. Social networking allows users to share anything they want with people they know, and in some cases people they don't. The ability to share anything has allowed certain artists who wouldn't have attracted a large audience before the internet to become popularised. For instance, Enter Shikari put songs on there MySpace page during 2003-2004, to the small fan base they had built up through live shows. This allowed for people to easily share their music with anyone, and in time has allowed Enter Shikari to build up a significant fan base, as well as make their albums reach the Top 40 charts in the UK. Social networking also allows artists to reach out to their fans in a simplistic manner, building a stronger relationship between them and their fans and in turn increasing the positivity surrounding the band and increasing their sales overall. Social Networking Spotify is a music streaming service, with both free and premium capabilities, which allows users to browse a huge catalogue of music with both niche and popular artists being available to listen to. It launched in October 2008, and had approximately ten million users as of September 2010, 2.5 million being premium customers. The main positive of Spotify for the music industry is that it combats illegal downloading in a way which still benefits the industry, as artists still earn money on the songs which are played, whether the user is free or premium, and Spotify uses advertising for the users on the free plan to earn revenue, allowing both the service and the industry to make money from music instead of losing out through illegal downloads. It has received criticism though, as the company has been accused of failing to compensate artists fairly, and Helienne Lindvall of 'The Guardian' stating that "artists who 'signed up to a label' there's a tangible risk that revenue which comes from a possible sale of shares by the label would end up in the proverbial 'blackbox' (non-attributable revenue that remains with the label) and that "indie labels... as opposed to the majors and Merlin members, receive no advance, receive no minimum per stream and only get a 50% share of ad revenue on a pro-rata basis." Spotify
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