Remember the days when you had to go buy those shiny discs (which, if you looked at them wrong, would get a scratch)? Or how about burning discs from a friend because it didn’t make sense to pay for something that you could acquire for free? Technology has almost made cavemen of compact discs, and as for records (big black CDs for turntables, for those of you born in the ‘90s), they’re all but extinct.
Technology’s effect on the music industry is supersized compared to other industries because it’s so easy to download and share music for free. When Napster hit the scene, record labels and artists were, justifiably, in an uproar. Their sales took huge hits and it wasn’t due to a lack of interest – it was because people didn’t want to pay for music if they could get it for free. Napster was a game changer, no doubt about it, but they started off in the wrong direction. The concept was groundbreaking, and these pioneers of the online music world had struck gold; however, they stepped on the toes of music giants and eventually were dismantled. But they opened the door for a new age of music listening and, around the turn of this century, the music industry began to realize the benefits they could reap from embracing online music sales.
In 2002, a supercharged Steve Jobs convinced the major record labels to sell just some of their music catalogue. Initially, they were hesitant, but ten years later, there are dozens of iTunes clones. The major labels have adopted more of a laissez-faire approach to the distribution of their copyrighted works. They’ve shifted from the paradigm that “the CD album is king,” and even away from the notion that consumers must “own” physical copies of their music in order for it to be monetized. Selling a service is all about bringing in revenue, and the music industry eventually saw profit to be made from subscription services like Pandora, Spotify, and the like. The industry could not afford to be stubborn and stick to selling only hard copies of music. Even the behemoth record labels had to jump on board with this new concept.
How it works
In particular, the idea of “leasing your music” is becoming a viable option. The growth of subscription services has been tremendous recently, and signs show that Spotify may surpass revenues generated by iTunes sometime next year. Services like Spotify allow users to legally listen to music, but instead of buying a single song, they pay a single fee (e.g., $10 per month). Whenever they listen to a song, a nominal fee (believed to be around $0.005, although it has never been publicly released) is paid to the label, and it trickles down to the artist. The user is able to choose from a million-song catalogue without having to pay for each play, but they are listening to it legally; it’s like a monthly subscription to the largest jukebox on the planet.
Adapting to demands is key to future success
Compact discs and records will stick around because of the nostalgia factor, but online listening is prominent and here to stay. The music industry has embraced these emerging technology trends, and as a result, consumers and artists are both benefiting. Rather than hold a grudge about what Napster (and similar programs) did to the industry, record labels are welcoming new ideas to bring music to fans. New trends will still emerge, but this ever-growing industry can stay on top by continuing to find the positives that come from change. As long as people listen legally and record labels continue to service a demanding market, it’s a win-win-win for the executives, the artists, and the consumers alike.
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“Listening to Music” image courtesy of Shutterstock.