The technological development in recent years, has bankrupted record companies with the rise of legal downloading and the demand for live performances. What is more artists who try to sell their CDs during their concerts realized that fans prefer to buy a T-shirt for $20 instead a CD for $10…
The technological development in recent years, has bankrupted record companies with the rise of legal downloading and the demand for live performances. What is more artists who try to sell their CDs during their concerts realized that fans prefer to buy a T-shirt for $20 instead a CD for $10. Therefore, artists now focus their attention on how to market T-shirts and other extra-musical extensions. Word of mount and internet sites like MySpace play a huge role in boosting popularity and music consumerism. Many groups decide to undertake the marketing of their music by themselves and succeed. An example is Take to the Skies which was the second unsigned band to sell out 2000 seats in London. In the past groups often tour to present their music losing the investment. Nowadays, is the other way round.Free downloading is perceived as excellent promotional tactics which will increase the audience and will stimulate the fans to attend concerts. Prince, is giving his fans a free copy of his newest CD if they come to his concerts at O2 in London. Music business analysts comments that record sales are in decline because of the wider music market today - live performances, video-clips, social networking, merchandising - they all influence the transformation of the consumer attitudes. Because of this the four big labels - Sony/BMG, Warner Music, Universal and EMI are struggling to keep up and apply cost-cutting operations for many years now. The publishers are trying to gain profits through different licensing, advertising, additional charges for films and outlets that try to open music stores.
An example of the decline of record sales in given with Spice Girls debut album in 1996. Virgin a subsidiary of EMI sold the album for 13 GBP and the company's profit was more than 5 GBP. Today a CD costs no more than 9 GBP, and the actual expected profit (if the label is lucky) might be 2GBP. In comparison, the market for top-selling CDs in Great Britain decreased with 20% in the first quarter of 2007, as to the same period in 2006. The label's hope is that the demand for physical formats will be replaced by the growth of the download market. The last figures in the U.S show that the digital download was worth $ 981 million.
The author notes that the music moved from being a high-margin product, into low-margin commodity. Buying an album with 10 songs when you like only three of them is an old-fashioned and uneconomical way of constructing a MP3 player music library. At the end of 1990s a single is sold for $5, today you can get a track for 99 cents at the iTune music store. The authors explains that the creation of the CD, brought it to its own destruction. Record companies manufactured CDs in remote places and sold them as more expensive format than the cassette or vinyl LP. CD burning software made it the easiest task to produce thousands of copies in just few minutes.
Yet, another reason which ruined the music industry was the emergence of "file-sharing" illegal websites like Napster in the late 1990s. The industry underestimated the damages that this can cause and said that these activities were no harm to the music sales. The ultimate drop-off of the CD sales coincided with the emergence of the iTunes and the portable MP3 players.
There is another fact which blames the music industry for the decline of the CD and that is the free distribution of albums through newspapers and magazines, which devalued the recorded music in general. Live music and tickets for live performances soared in comparison, however, it is difficult to prove that this directly affected the record companies. Finally music appreciation should be something more than just consuming, buying and listening to the song, music is sharing and that is why people shifted from individual at home consumption to attending live concerts.
B) To what extent do you agree with the author's explanation for the current state of the music business Justify ...
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