Over the last half century or so, the advent of culture industries, in which large-scale businesses became involved in the creation and distribution of cultural commodities (records, films, and television shows, for example) has come to dominate the way people perceive and respond to such commodities. Recognizing the financial rewards that were possible, corporations began to invest on a large scale in these cultural industries in the mid-20th century. Over the subsequent decades of the 20th century, these companies grew larger, often merging and amassing more influence and control over cultural sectors. Conglomeration and vertical integration allowed such companies to coordinate their efforts across a variety of platforms, as the controlled content, advertising, and distribution of their cultural commodities. As the Internet age and digital communication and new forms of recording and distributions took hold, the traditional models developed in the cultural industries were often challenged. Nowhere is this clearer than in the music industry, which has seen significant and often drastic changes to the prevailing business models of earlier decades.
The music industry was not the only industry affected by the digital revolution, of course, but it does serve as an example of its impact. For decades, large companies controlled virtually every aspect of the music industry. These companies kept musicians under contract, and often controlled some or all of the rights to own and distribute songs and recordings. These companies also owned the manufacturing plants that produced the physical media on which music was distributed, such as vinyl albums, cassette tapes, and –later- compact discs. It was this last form of recording media that was, perhaps, the most profitable for record companies, but it was also the means by which digital recording was introduced to the public, an introduction that would forever alter the industry.
As Hesmondhalgh asserts, “power in culture and communication inheres in the control of distribution or circulation” of cultural commodities (2012; p198.). While Hesmondhalgh makes this comment in the context of a discussion about Google’s purchase of Youtube, it is at least as applicable to the music industry. With the advent of the Internet it became possible for consumers to quickly and easily share music files, which led to pass piracy and a loss of control of distribution for the record companies. They still had artists under contract, and they still had the means to create and advertise recordings on compact disc, but they did not respond quickly enough to the potential offered to consumers by file-sharing and other means of free digital distribution.
It was, in fact, a company with no significant prior stake in the music business that would move most quickly and effectively to capture the profits made possible by the Internet and digital recording. Apple Inc., the computer manufacturer, developed its iTunes system by which music files could be sold as individual songs. The music industry had long resisted the inevitable changes brought on by digital recording and distribution (Simon, 2009), but the iTunes model allowed them to license their intellectual property so that Apple could sell it to consumers though its already-developed system of computers and proprietary software. This did not bring an end to digital piracy, of course, but the ease and convenience of purchasing music files (as opposed to stealing them), along with the ability to store and play back thousands of songs on Apple’s iPod music devices, helped to reshape the industry at the same time as it cemented the fact that record companies were going to have to adjust to these new circumstances on a permanent basis.
As sales of compact discs have declines sharply in the last decade (Christman, 2013), record companies have been forced to look for new ways to make money. While they still own a vast amount of intellectual property (or at least the rights to license or sell it) they no longer have a monopoly on the distribution of the music they own. Along with new distribution channels such as iTunes, streaming music over the Internet has become increasingly popular. Sites such as Spotify and Rhapsody provide on-demand streaming, and record companies or other rights-holders negotiate deals with these services for the rights to stream the music (Thomson, 2013). The money paid in these deals is divided up and distributed in several ways. Organizations such as ASCAP and BMI receive some, and then in turn pay out to the songwriters and publishers. The bulk of the payments go to the record companies, who then pay artists different rates per their individual contracts. Similar deals are struck with other types of online services and with the satellite radio company SiriusXM (Thomson).
There are some other forms of deals and arrangements that can be made between rights holders and distribution channels, but what is clear and overriding in all of this is that the monopoly of the record companies is over, at least in terms of how the used to control every aspect of the supply chain. There are still enormous profits to be made from the control, licensing, and sale of songs and other musical properties, but the virtual disappearance of the compact disc and other forms of physical media proves that the 21sr-century music industry is very different from the 20th-century model.
Christman, Ed. “Album Sales Down in 2012, But Digital Shows a Healthy Boost.” Billboard. N.p., 3 Jan. 2013. Web. 8 Sept. 2013.
Hesmondhalgh, David. The Cultural Industries. 3rd ed. London, UK: SAGE, 2021. Print.
Simon, Michael. “The Complete iTunes History — SoundJam MP to iTunes 9.” Mac|Life. N.p., 11 Sept. 2009. Web. 8 Sept. 2013.
Thomson, Kristin. “Music and How the Money Flows | Future of Music Coalition.” Future of Music Coalition | Education, Research and Advocacy for Musicians. N.p., 18 June 2013. Web. 8 Sept. 2013.