How Technology Affected Consumer Trends
There has been no doubt that the functionality of the music industry over the past 10-20 years has transformed and has transitioned. Changes in the way artists record, produce, market and distribute recorded music has transpired, due to advances in technology. These technological advances affected functions of major recording companies to include recording, marketing, the availability of recorded music and other functions. The resources that major recording labels and other traditionally necessary entities exclusively provided to recording artists, has become less than necessary and hardly exclusive. Artists are purchasing computer software like ProTools, home recording equipment and producing their own quality sounding musical productions. With the help of tools such as CD Baby, iTunes, Myspace, Youtube, TuneCore and others, they were able to distribute their work to a mass audience as well (McCready, 2009). The power to record, produce, market and distribute has transitioned increasingly in to the hands of artists, independent recording labels and undoubtedly fans. The monopoly that record labels had in the process of discovering, developing, recording and promoting artists has been disrupted.
A&R Executives
Artist-and repertoire executives (A&R), during the 1980s and 1990s, had the most powerful and necessary job in the music industry. They were responsible for discovering the most talented artist, worthy of a recording deal. They were also responsible for developing those artists’ careers. These were the people who went in to venues all across the country, tasked with discovering music’s next big thing. They, along with their respective record companies, dictated to the market, which artists were going to be heard. Something drastically changed in recent history. “127 A&R executives were let go or chose to leave their jobs during 2007 alone, according to business-contract source The A&R Registry.” The catalyst for such a dynamic change in this career was the drastic drop in CD sales, due to digital downloads and file sharing. Digital downloads, file sharing and the many online sources that provided streaming music gave consumers access to more music than ever before. With this newfound access consumers were empowered to vet what music they deemed worthy of their attention as opposed to A&R executives making that decision for them (Rogers, 2010).
Today’s Talent Scouts
A&R executives and the major record labels prior to these advances in technology were completely responsible for discovering artists. Now, an executive can go on YouTube or MySpace and recognize that an artists captured the attention and is being viewed by millions of people, essentially from the comfort of their home. This and other online means is how musical artists are being discovered and stratified in this digital era (Rogers, 2010). Due to the surge in consumers’ access to recorded music, consumers are now able to dictate to the industry which artists deserve corporate backing. There has been a change of the guard. The fans of artists and the consumers of recorded music have effectively replaced A&R executives. Thanks to the limitless, cheap and often free access to music, made possible by the Internet, the customer is in control (McCready, 2009).
Access vs. Ownership
Consumers have more access to music than ever before. Websites like Imeem and Pandora provide a streaming option for listening to music. This incorporation of the Internet to access and listen to music initially was thought to be a viable and profitable option for the music industry. The record companies bet on these Internet sources, hoping that by exposing consumers to new music it would subsequently result in them purchasing more music. The music industry’s plan to license music out to websites that stream music backfired. Consumers were satisfied with just access and cared less about ownership. Access was made so available through the Internet that consumers felt no need to buy music. This contributed to total industry sales dropping from $14 billion in 2000 to $10 billion in 2008, according to the Recording Industry Association of America. These numbers are projected to continue to drop by 4% as reported by Forrester Research (MacMillan, 2009). In addition to the online streaming option, file sharing and digital downloads affected the way consumers acquired music as well.
Single Songs vs. Full-Albums
The peak of the music industry was when CD sales were at an all time high. Since that peak, revenues have been down 64%. According to DeGusta, “10 years ago the average American spent almost 3 times as much on recorded music products as they do today.” Digital sales of music to include downloads, mobile sales and online subscriptions have increased. These increases have not; however, been nearly significant enough to make up for loses from decreased CD sales. One would think that digital consumption of music would merely replace CD sales as CDs did for cassettes and cassettes did for vinyl records. Unfortunately for the music industry, this has not been the case. This increase in digital sales allowed for sales of individual songs to spike and for full album sales to plummet. Per person, consumers purchased just over one physical album a year and only a quarter of a digital album per year. The music industry missed the opportunity to capitalize after the advent of the Internet. With the Internet and the increasing prevalence of digital downloads etc., no one buys whole albums anymore and as it turns out, “the recording industry makes almost all their money from full-length albums” (DeGusta, 2011). The record companies have to find other ways of generating revenues with regards to the recorded music they produce.
Revenue opportunities
The music industry is still one of the most profitable industries in the world. Despite an 11% decrease in shipments of recorded music, the 2010 Recording Industry Association of America (RIAA) Shipment Data reports that $6.9 billion was generated overall from recorded music (Friedlander, 2010). Money is not being generated from album sales, which record companies, had become so dependent on. Money will be made in merchandising and live performances as opposed to recorded music sales, as bizarre as that sounds. Now that recorded music sales have dropped; artists, managers, and record labels are figuring out new ways to generate revenue. The future looks like this; recorded music is going to be the attention grabber not the revenue generator. It is what is going to lead to other revenue opportunities. Artists are not necessarily working to sell their music directly, after all consumers are not buying it as they once did. As stated previously, consumers are satisfied with access to the superfluous amounts of music, made available to them by online sources. Labels and artists are realizing the greater value in earning the attention of their fans, rather than the money of their fans for their recorded music respectively. McCready said, “Most agree that the currency of exchange for recorded music will be the attention of the fans instead of their money.” Once artists get the attention of their fans they, in turn, will be able to sell tickets to their shows, sell merchandise, sign advertisement and movie deals, and generate revenue from other unorthodox means (McCready 2009). Fans and music consumers should continue to enjoy the unprecedented access and availability of recorded music. Record companies and other industry professionals better start getting creative if they intend to survive because recorded music is out of the box.
References
DeGusta, M. (2011). The real death of the music industry. Retrieved July 30, 2011, from
http://www.businessinsider.com/these-charts-explain-the-real-death-of-the-music-industry-2011-2
Friedlander, J. (2010). 2010 year-end shipment statistics. Retrieved July 31, 2011, from http://www.riaa.com/keystatistics.php?content_selector=2008-2009-U.S-Shipment-Numbers
MacMillan, D. (2009). The music industry’s new internet problem. July 30, 2011, from
http://www.businessweek.com/technology/content/mar2009/tc2009035_000194.htm
McCready, M. March 11,2009. The future of the music industry. July 30, 2011, from
http://www.huffingtonpost.com/mike-mccready/the-future-of-the-music-i_b_173481.html
Rogers, P. Feb 11,2010. A&R star makers: the vanishing gatekeepers. July 29, 2011, from http://www.laweekly.com/2010-02-11/music/a-r-star-makers-the-vanishing-gatekeepers/1/
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