Here's a recent submission for my business class on the subject-
The Death of an Industry
And The Rebirth of Art
Written by: Robert Hooper
Introduction
The music industry is dying. It is terminally ill. It is already in its death throes. Like a drowning man it will drag anyone near down with it. The RIAA, the legal organization that represents the big players in the business, has taken to suing Grandmothers for having unlicensed intellectual property on their home computers. It is trying, and succeeding in some areas, to buy legislation that will hinder technological progress and artistic freedom in order to prevent artists and fans from connecting without a middleman. The reason behind all of this is that they see the writing on the wall: They have outlived their usefulness. The digital genie is out of the bottle and no matter what they do, it cannot be put back. But what is bad news for corporations is excellent news for independent artists.
History
Every industry starts with a niche found that can be exploited. The music industry is no exception. With the advent of audio recording and the phonograph, artists needed a method of delivering their product to market. This was a symbiotic relationship in that the artists needed the record companies to mass produce the product and the record companies needed the artists to create the product to be mass produced. Huge factories and vast distribution and marketing systems were set up and developed in order to reach the greatest amount of potential customers. Radio and television was used to its best advantage and artists were nurtured and groomed to be more productive and more appealing and sent on tour to promote their work.
One of the things unique to the music industry is its great reliance on the youth market. In 1982 the compact disc was introduced, ushering in the era of digital technology and by 1990 the vinyl record had all but disappeared. With the higher cost of the CD and virtual disappearance of the single, the youth market was effectively eliminated from the consumer pool. These are the consumers with very limited buying power, yet who are very in touch with current trends and fads. These are the kids who went to their local record store and bought a single with their allowance every week. The 45 RPM single was the youth market's ticket into the hip world of the current music scene and when it was discontinued a door was slammed in their face. It wouldn't be long before this market found a way around the industry that had cut it off.
In June of 1999 a Northeastern University student released Napster. Napster was the original internet file sharing program which allowed people to freely share music over a large network. Record companies immediately denounced file sharing as tantamount to stealing and quickly coined the term "music piracy" to describe the practice of sharing files among peers on the internet. Many users of Napster, on the other hand, felt justified in file sharing since in their opinion the quality of product had been going down, with many albums only having one or two good songs on them, while prices continued to climb, even though since the introduction of the CD, manufacturing costs had plummeted. Proponents of file sharing also pointed out that a lot of music that had been out of print for years and was impossible to find in music shops was readily available on the internet, rekindling interest in artists that had fallen by the wayside. The biggest factor, however, was the youth market who had been cut off from the industry now had a way back in.
Present
The RIAA, the Recording Industry Association of America, the lobbying and legal representation of the big four record companies, has made it very difficult for its target market to care about its woes. As file sharing increased they decided that the best course of action was to sue everyone they could find who had unlicensed content on their PC's hard drive. This resulted in high profile cases of 65 – 70 year old women being hauled into court and relieved of their Social Security checks because their grand child had used their computer to share music. Music business studies claim to show a direct correlation between the rise in file sharing and the decline in music sales. What they fail to also show is the dramatic rise in DVD sales that have replaced CD (a twenty-five year old format) sales and the reduced standards and quality of current music releases. Take, for example, the release of the compilation of Beatles songs in 2000 called 1. The collection, released on November 13, 2000, sold 3.6 million units in its first week and more than 12 million copies in three weeks worldwide, becoming the fastest selling album of all time and the biggest seller of 2000 and of the decade so far and not one song on the album was less than thirty years old. The collection also premiered at #1 in the U.S. and other countries. All of the songs on 1 have been readily available through file sharing networks for years. The record company’s claim that most people who download songs from the internet would buy their respective albums if free music wasn't available doesn't hold water.
Recently, the RIAA successfully lobbied to have a technical amendment added to the 1978 Copyright Act that effectively makes all music recorded under contract "work for hire." Under the old law, a song composed while under contract would be licensed to the studio for a period of no longer than thirty-five years or as defined by individual contracts at which time the copyright would revert to the author or the authors family. Thanks to the new law music composed under contract remains the property of the studio forever. What this means it that an artist can no longer write into their contract that when they choose not to renew they can take their catalog with them. It also means that artists and their families can never gain control of their material and distribute their work as they see fit.
The industry could have used technology to its advantage. The industry could have adapted its game plan to adjust to a changing market. Instead it has used strong-arm tactics designed to scare its would-be market out of pursuing alternative methods of receiving and choosing new music and underhanded back-door politics to keep artists in check while legislating itself into permanent existence. What it has accomplished is to further ostracize itself from an already indifferent public and caused new artists to resist the corporate temptation.
Future
In ten years the music business landscape will be unrecognizable. Big studios will fall by the wayside to small, independent labels with the open mind and flexibility to change with, and stay ahead of the times. The current trend of personal music devices will grow and physical music collections will be a thing of the past. Music will almost exclusively be bought online and musicians will have the ability to be successful without a recording contract. Custom tailored internet radio like Pandora will be the norm and people will have a kind of access to music that they never dreamed possible. Personalized websites like Myspace will continue and grow to allow more new acts to gain fans, spread the word and deliver product to the consumer. Services like iTunes and Wal-Mart online will grow and become more competitive while offering a more personal service to their customers. Musical content filters, like Google Music, and Yahoo Music, will flourish as people try to weed their way through the mind boggling sea of content. No longer will consumers be restricted to hearing and discovering music that marketing experts for giant corporations want them to hear, but only by the limits of their taste and their search engines.
Musicians are artists, not business people, so there will always be a need for the "suits" to handle things like marketing and public relations. In the future of music performers will much more likely pursue the talents of superstar PR firms than record labels. Factories and distribution systems will no longer be necessary, creating cost savings that will passed down to the consumer. Multi-million dollar record deals will be a thing of the past, weeding out the charlatans that are in it just for the money, making music more pure and honest. A concert tour will no longer be looked at as an advertisement for an album, but quite the contrary. Entertainers of the near future will earn a larger bulk of their living through merchandising and public appearances and licensing of content to advertisers as the worth of recorded music, due to its easy acquisition, will go down.
Conclusion
If the industry can stop trying to use technology to stifle the growth of and use of technology, it can save itself. It still has tremendous assets that could be used to either encourage technological growth and explore new avenues of approach or to continue to try to play the new game by the old game’s rules. If it chooses the latter, it will surely fail, as the brave new world is already upon us and the sky is the limit.
