The Music Industry

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Table of Contents

Introduction
Current State of the Music Industry
Current Income Generation Strategies for the Music Industry
Licensing of Music to Intermediate Users
Challenges the Music Industry Faces
Responses to the Problems Facing the Music Industry
Conclusion
Reference List

Introduction

The music industry is dealing with many issues that are affecting how it operates. The industry is among the many that have endured the most of technological and social changes in the last three decades. The forces of globalization have changed for good how people access, use, and distribute music.

In addition, there are very powerful forces in the music supply chain that will influence the music industry at least in the near term. The industry had many commercialization approaches before the emergence of the internet as a force driving globalization. Some of them remain valid ways of running a career in music but some are becoming obsolete.

The relative ease with which new entrants can make music has reduced in a significant way the barriers to entry. It is no longer enough to be a talented musician to succeed in music. It takes business acumen, intelligence and a keen appreciation of subtle changes in consumer tastes and preferences to keep up with the rapid rate of change in this industry.

This paper will explore the driving forces in the music industry. It will also look at the strategies used in the development and marketing of music, the challenges to the industry and some potential strategies that can help to overcome these challenges.

Current State of the Music Industry

Scope of the Music Industry

The music industry is a very varied establishment. Understandably, music was not an invention in a lab or a unique cultural element in a specific part of the world. Rather, music evolved in different cultures independently leading to very many classes of music. Even within the same cultures, there were songs for each occasion.

There were songs of celebrations such as when a child was born or when there was something important in the community, and there were songs for funerals and general mourning. Some communities had songs to accompany work while almost all cultures had singing games for children. In this sense, the evolution of music is a human phenomenon that grew with the technological development of each culture.

The emergence of the musician as a career person is also a new development in the world. Advanced cultures allowed people to specialize in music but they often had another trade to make it possible for them to earn a living. Otherwise, music was a community endeavour where all the people took part in singing and dancing.

In last century, mass communication and rapid transit systems made it possible for some people to become career musicians, travelling from town to town to play music for varied audiences. As this art grew in commercial meaning, many other people joined the commercial facets of music to support the careers of popular musicians.

The current scope of the music industry is very large. There are still elements of the traditional sense of music where whole communities participate in singing. This is common in churches and in institutions of worship where the entire audience participates in singing as part of their spiritual expression.

There are also songs that families sing such as during birthdays. Lullabies help children go to sleep. Perhaps the most common expression of communal aspects of music is the singing of national anthems, which every country sings during important national functions. Apart from these expressions of music, there is a fully-fledged commercial music industry. This industry packages music as a product and presents it to a paying audience. This paper will concentrate on this type of music.

Stakeholders in the Music Industry

In order for music industry to function, several stakeholders must cooperate to ensure that a song leaves the music writer’s pad and ends up in the earphones or stereo speakers of a music enthusiast. While the list below describes these stakeholders individually, is common for an individual to play more than one role.

Composer: This is the originator of songs, the person writes the actual words of the songs. This role calls for someone well versed in music to understand musical language, and has the gift or skill of writing songs.

Singers/Musicians: A singer or musician is the person that performs the song because of their ability to sing. Their talent gives them this role. It is not strange to find musicians that write their own songs. In fact, many of the talented musicians that songwriters seek start as their own composers.

Instrumentalists: This category of stakeholders refers to the people that play musical instruments to accompany music. They have a much-reduced role in recorded music especially because of the use of computer-based instrumentals. However, their role in live music is still intact. They are also in demand by instrumental music enthusiasts.

Producers: These are the professionals managing the music production process. They ensure that all necessary factors of music production come together to produce music

Technical personnel: There is a class of technical personnel necessary for the effective recording of music. They include sound engineers and recording technicians. Their role is to manage the technical factors of music production.

Record label companies: Since the advent of the gramophone record, companies came up to profit from the music industry. These companies continue to sign musicians and then support their careers at a fee. In other words, they provide musicians with everything they need to get their music out and then they share the proceeds.

Marketing companies: After the production of music, record label companies hand them over to marketing companies to send the music to the market. Some record label companies own the marketing companies that handle the marketing of the music they produce.

Retail distributors: The final important stakeholder in the music industry is the retail distributors. They make copies of the music available to the eventual consumer.

The stakeholders above represent the music supply chain where the eventual music gets to the consumer via tangible means, in this case, a disc. Other stakeholders benefit from music such as advertisers, movie producers and television companies. The important thing to note is that the industry is very large and the number of stakeholders is very large depending on the supply chain used to market a particular piece of music. For instance, there is no role for a record label company if a band or a musician decides to use concerts and music tours as the only way they distribute their music. On the other hand, they will need other people to support their business model.

Current Income Generation Strategies for the Music Industry

An analysis of the music supply chain reveals the fact that the musician is only a small part of the entire process. The process of commercializing a musical production is a very complex business undertaking that needs more than just the musical skills of an artist to succeed.

In the same vein, it is imperative for musicians to have a working knowledge of commercial aspects of the music industry to ensure that they get the most out of their work. There are direct ways and indirect ways that the music industry uses to reach consumers. Direct ways refer to those that aim at reaching the eventual consumer and hence earn revenue from it. Indirect avenues refer to uses of music where the music forms part of the final product, or accompanies another product before reaching the final consumer.

Direct Strategies

This paper classifies indirect strategies used in the distribution of music as concerts, selling of a music bearing product, and thirdly, internet sales of music. These strategies feature actual transfer of the music from the musician to the end user.

Concerts

Concerts are still a popular method used to earn revenues from music. With the globalization of music, musicians normally have fans in vary vast areas. Many fans of popular musicians have never met of seen their idol performing in person. This makes concerts a very powerful means of facilitating this interaction.

Revenue from concerts comes in different ways depending on the popularity of the musician. For very popular musicians, organizers sell tickets to cover the concert expenses and to pay the artist their performance fees. Some of these organisers use the concerts as a means of making a profit.

They bring in a musician to a local fan base, and organize the concert in such as a way that in the end they have a profit from ticket sales. A musician can also use personal resources to organize the concert and make a profit from it. In situations where the musician needs publicity, a concert can also help to raise the required awareness. In this case, the musician may either meet the cost of the concert as part of their marketing fees, and hope to recover their expenses by selling CDs.

A concert is also a good place to sell merchandise products to fans. A musician may arrange to sell t-shirts, jewellery, shoes and other fashion accessories that carry their brand. If well planned, this method can help meet the costs of organizing the concert. The advantage of converts is that they eliminate the risk of piracy. If a musician uses concerts as the exclusive means of distributing music, then there will be no copies of the music to pirate.

Selling CDs

In the life of the commercial music industry, there has always been a means of conveying music to consumers. While technology has moved from the gramophones to iPods, the principle remains unchanged. Mass commercialization of music took place when the magnetic tape came into existence.

This tape had certain advantages over the gramophone record such as portability. It was possible to carry a number of tapes on a trip using a very tiny carriage space. The walkman was also a revolutionary invention in the development of music. It made music personal. The magnetic tapes introduced the problem of piracy.

Magnetic tapes were erasable and easily reproducible. However, the impact of piracy in the era of the magnetic tape was not as serious as the impact of piracy on CD sales. Original tapes had a superior sound quality and there was a sense of prestige in having original tapes. CD’s do not have the same qualities.

The output quality of a pirated copy can match the original. CDs are still popular nonetheless as a means of selling music. In the late nineties, the success of a musician depended on the number of albums sold, while in the last ten years, the measure of a musician’s success is the number of CDs sold. Outlets for CD sales include local retail stores, bookshops, supermarkets and music stores. In addition, CD sales can form part of the revenue streams for a concert.

Internet Sales

The internet is a new avenue for the distribution of music. With the development of digital versions of music, it is possible to transfer music by digital means. Selling music via the internet has several advantages. First, it eliminates the need to transport music physically to retailers. The consumer simply logs in to a site such as eBay or iTunes and buys music. It is very easy and convenient to pay for music online using one of the many online money vendors. The most popular vendor is PayPal, but a number of competitors exist.

Sales from the internet cut out a number of intermediaries from the music supply chain. It is possible for a musician to pay studio time to record their music, and to make sales online without passing through a record label. The only copy the musician will need is the master copy of the music from the studio.

After that, it is theoretically possible to sell millions of copies of the music at no additional cost, or the need to make physical copies. This method of sales is becoming more attractive even for record labels because it reduces their distribution costs by a very large margin.

Licensing of Music to Intermediate Users

The final means through which musicians commercialise their music is by licensing. This refers to selling rights to the music, in whole or in part to a third party for their own use. Since music is an intellectual property, copyright laws protect the composers and the musicians by outlawing the use of the music without the consent of the musician.

The demand for licensing will increase as more and more people selling products online and advertising products through mass broadcast develop the need to piggyback their advertising messages on the music of popular musicians. Clients for licensing include moviemakers, advertising companies, video game makers and producers of television programs. A good example of this method of making money is the use of Celine Dion’s Song, “My heart will go on” in the Movie “Titanic”, produced by James Cameron.

Indirect Strategies

Some musicians have successfully developed merchandises from their music brand. The idea behind making products unrelated to music comes from the realization that a fan base is also a market niche. Developing products that can help fans to identify more with the brand makes the fans feel more attached to the musician.

The products that make successful merchandises are fashion items such as shoes, clothes, armlets, caps, bracelets, necklaces and T-shirts among others. It is feasible to produce perfumes, cosmetics and beauty products as a means of commercializing music. The basis of their success is the strength of the musical brand they represent, and the loyalty their fans have to them.

Challenges the Music Industry Faces

The music industry has been on the receiving end of both the positive and negative consequences of technological growth. In fact, music makes for a very viable subject when it comes to the study of the impact of technology in the modern world. As music becomes more and more reliant on technology for production and distribution, it is clear that the most significant challenges the industry faces are technology related.

These challenges include piracy, influx of software alternatives to musical instruments, ease of file sharing and file transfer, and the death of the album as a measure of success in the music industry. Another problem related to technological developments is the creation and retention of a fan base.

Piracy

Piracy in music in its simplest terms refers to the production and sale of illegal copies of music. It does not matter whether it is a single song or a complete album. Piracy is not new in the music industry. Its recognition as a problem came about with the emergence of the magnetic tapes.

Magnetic tapes were easy to reproduce even at the domestic level. However, the real threat came from commercial piracy where people set up entire business systems that made counterfeit copies of music and sold them for profit. Often pirated copies of music had a lower quality compared to the originals hence the market put up some form of resistance against pirated music.

With the advent of digital technologies, it is almost impossible to detect a pirated copy of music from an original one by listening to it. This is making pirated music more acceptable. Moreover, CDs lack the prestige magnetic tapes had.

They are not very good show items. This has led to a lack of attachment comparable to the one that original magnetic tape owners and gramophone records enthusiasts exhibited.

In fact, it is very easy to simply take an original CD and in just a few minutes copy it onto a laptop’s hard disk. Unless new technologies inhibiting the making of digital copies of CDs get widespread use, the problem of piracy will continue to affect the music industry.

The Software Influx

On the creative end, music is suffering from an influx of softwares for use in the production of music. This comes from the fact that it is possible to make a song, complete with beats and instrumentals using a headset and an open source software. It is no longer necessary to learn the art of making music such as playing a musical instrument in order to produce the sound of that instrument.

What a person will learn in three months about playing a guitar, an average computer user with access to a music making software can reproduce within a day. The remaining frontier that computers have not yet conquered is singing. Theoretically speaking it will not be long before it becomes possible to reproduce voices of popular artists or to create fictionalised ones and synthesize their voices into music!

There is a real threat to music as a form of art. The space for creativity is reducing more and more. As people become more accustomed to music made by computers, the sounds of authentic artists playing authentic musical instruments will become strange.

As voices undergo scientific manipulation to perfect them in digital sound studios, there will be lesser recognition for the effort it takes to perfect a singers natural voice. It may not matter anymore.

Ease of File Sharing

Another problem that music faces today because of technological change is the ease of file sharing enabled by the internet. It is true that “Illegal downloading remains to be a continuous challenge for the recording industry”. Once one person in a clique of friends finds an interesting song in digital format, it is then very easy to pass on the song by forwarding the file to their friends.

In the context of social media, it may be hundreds of people in an instant. This whole clique will not need to buy the music thereafter, which wipes out that market. Sharing files is much harder to track especially when the sharing takes place in privately held email accounts. This problem eats into the potential revenue a musician can make from their music.

Death of the Album

The next threat to the development of music is the death of the album. Musicians are working harder to produce near perfect singles rather than committing time to produce full albums. The current distribution systems of music make it easier and more economical to produce a hit single and then go find the next big song rather than sell a whole album to an audience.

In addition to this, people no longer listen to whole albums the old-fashioned way. Rather, they listen to specific songs of interest from different albums. People are listening to music on digital media more and more. Whether it is a CD player, a laptop, a phone or an iPod, a user creates a playlist and listens to the particular songs of interest. Unlike records and magnetic tapes, picking specific songs is not a laborious activity.

The response on the side of musicians has been to provide music in detachable formats hence fuelling this new trend. The problem it posses to music is that it reduces the power of music as a communication tool. The art of producing music albums revolved around the capacity of the musician to produce a set of songs based on a particular theme thereby increasing the communicative value of their music.

Creating and Keeping a Fan Base

Globalization and “increased amateur activity” in the music industry because of the lowering of entry barriers have made it very difficult to develop and retain a fan base. Music markets span the world and are not in specific geographical confines. For a musician to reach such a diverse audience, it calls for a lot of work.

The challenge of raising a fan base also stems from the difficulty of getting through to the fans because of the high number of musicians looking for their attention. Remember, music is not the only input an average music fan receives. It is a constant struggle to keep looking for an appropriate means to find and maintain a fan base.

Responses to the Problems Facing the Music Industry

In order to address the issues facing music, it is important to have certain things in mind. First, there is need to recognize that a successful music career depends on the soundness of the business strategy used to distribute it. The musician needs a source of income, and the most efficient way of making a living is through the music.

A successful musical career requires dedication and focus, which a part time hobby just cannot allow. Secondly, music is essentially an art form. Therefore, the commercial aspects of music do not have the last word on the success of music.

The intrinsic appreciation of music by enthusiasts transcends the challenges that modern music must deal with. In this sense, the technological challenges music faces cannot kill music. However, every musician must find a way of overcoming these challenges.

Using Piracy to Advantage

While piracy imputes illicit gain on the part of the commercial pirate, some concession on the part of the musicians can reduce the impact that piracy has on their careers. For instance, a musician can decide to use pirate networks to build publicity and to grow their fan base.

After all, it is the demand for the music by their fans that makes the music pirates find it attractive to make illicit copies. Even better, if the perceived losses in revenue by the distribution of illicit copies do not outweigh the benefits from the resulting publicity, then it may make sense for a musician to allow their music to pass through pirate channels.

Another safe way of avoiding pirate channels can be the use a business model that does not rely on the digital copies for success. This can include the sale of merchandize to raise funds for the music. If fans know that a musician does not sell their music but instead uses merchandise to pay for its production, they will be supportive of the efforts.

The other way to beat piracy is to release music free of charge for personal use but to position the music as a product for licensing. If the song is popular, them someone will want to use it for their promotional campaigns.

This model will make it easy for the musician to monitor commercial uses of their music and to make money from royalties. Giving out the music without cost will also make the music available to many people thereby growing the fan base.

“Live Music” Tag to Mitigate Software Threat

The threat posed by software will be very difficult to beat. Music lovers are listening to more and more computer generated music that it is only a matter of time before music from real instruments becomes odd. The only way to ensure that the taste for music made from real instruments remains is by providing opportunities for the fans to listen to live band music.

It is possible to use concerts for this purpose. Another method would be to add the label, “made from real Instruments” to such productions to differentiate the music from the rest. This approach will likely create a market niche for music lovers who value the art of making music from real instruments.

Education that File Sharing Constitutes Piracy

After establishing a fan base, it may be necessary to educate fans on the fact that file sharing is as bad as piracy. While a fan does not derive economic value from the copies they share, they deny the musician potential revenue when they share musical files with their friends.

A musician can exercise a certain amount of persuasion over loyal fans hence it makes sense to try to persuade them against sharing files. Moral persuasion is the best tool available for a musician because any other method of dealing with piracy will be very expensive. Policing piracy is a very expensive undertaking, which is difficult even for organised law enforcement agencies.

Letting the Album Die and Creation of Collector Albums

The traditional album seems headed for certain death. However, it is not a trend worth trying to change. This is because the way people listen to music no longer supports music delivered in album format.

From today’s standpoint, it is inconceivable that people will revert to the old ways of listening to music the way magnetic tapes and gramophone records forced them to. They do not have to listen to music sequentially but can choose to shuffle them, skip, or rearrange them in the way they wish.

On the other hand, it may be helpful to sell collections of singles such as the best hits by an artist in the last two years. Just as people no longer look for whole albums, they will only be interested in songs that please them.

Another way of looking at this situation is to consider it a marketing situation where the old way of packaging music does not support current consumption trends. Artists will therefore have the increased burden of planning their songs in a way that they each song stands alone. What should guide them is more of a philosophy rather than a theme when writing their songs.

Use of Social Media to Create and Maintain Fans

The need to raise and maintain a fan base will not become easier with time. The good thing is that technology has solutions to the same problems it has created for the music industry. The difference between a successful musician and a non-starter may well be their social media strategy.

The young generation, who support the emerging music industry, spend a lot of their time on social media platforms. With a good strategy, it is possible to grow a fan base using the tools available there. In fact, a musician today has more opportunities to build and maintain a fan base by adopting existing technologies to do the work that old musicians travelled thousands of miles to do.

Alternative Income Sources

It is incumbent upon musicians to continue thinking about more income streams that they can use to bolster their financial standing. Granted, there is a point where too much commercialization of music can actually kill the art. However, without some kind of income, artists cannot commit themselves fully to the art of making music.

Musicians should do their best to find new ways of utilizing their talent for income. As they do this, record labels also should work hard to find ways of making music available to users at a lower cost and in a manner, which discourages piracy. It is vital to develop CD technologies that will resist duplication. While technically it is very complex to do this, it is vital to find ways of reducing this vice. Piracy is a real vice that threatens the future of music.

Conclusion

The music industry is not exempt from changes in technology. If anything, the music industry bears the brunt historically whenever there are groundbreaking changes in technology. For the music industry to survive beyond this point as a commercial venture, it will need to adapt its systems to fit the current circumstances.

Reference List

Holmes, D 2005, Communication Theory: Media, Technology, and Society, SAGE, London, UK.

Mather 2012, ‘Print & Digital Audience Pricing Strategies’, Mather Economics, Roswell, GA.

Project Management Institute 2003, A Guide To The Project Management Body Of Knowledge, Project Management Institute, San Diego.

Weichmann, D 2009, The Impact of Online Music Services on the Music Recording Industry: Opportunities and Challenges, GRIN Verlag, Berlin.

Wikstrom, P 2010, The Music Industry: Music in the Cloud, Polity, Cambridge.

Wilson, HJ, Guinan, PJ, Parise, S & Weinberg, BD 2011, ‘What is your Social Media Strategy’, Havard Business Review.

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