The Music Industry and the Internet, Essay Example

In the modern business world, individuals in the music industry are becoming increasingly concerned about profitability. While the sales of physical music in the form of records, CDs, and tape cassettes are failing, the incidence with which people are engaging with music online is increasing. Companies such as Spotify, Pandora, and Apple are attempting to monopolize on this growing trend, but are ultimately failing (Olivarez-Giles, 2012). Because music is readily available online for free through a variety of illegal and legal sources, it is becoming challenging for music vendors to main profitability. Since most sources of music can be acquired for free, music vendors have needed to become creative with regards to how they raise funds.

In previous decades, musicians and members of the industry in general would make money based on the number of records they were able to sell. However, this form of direct selling is no longer applicable to the modern industry (Dolata, 2011). Music vendors often make their funds by working with companies that wish to advertise on their stations. It is these investors that allow music to be free for the general public. However, in exchange for this, they are required to listen to or view advertisements after every few songs. Some subscribers have the option to pay a small monthly fee to bypass these advertisements, which contributes to the ability for these companies to make a profit.

In order for legal streaming companies to provide music to their listeners, they must pay for the rights to use this music. Licensing fees allow the record labels to make their money in today’s climate. However, it is ultimately the user or the marketer who ends up compensating for these costs. Successful streaming companies are able to raise funds by these means, allowing for the provision of seemingly free streaming capabilities to the general user. While there is some profit involved in this process, both artists and record companies are complaining that they are not seeing the same level of profitability they had prior to the popularization of digital media.

Even though artists and record companies are lobbying Congress to increase their ability to maintain a profit for the work they complete, modern culture and attitude does not support this plight. The average internet user believes that creative ideas should be free to share. If laws regulating the music industry were to be passed in the United States, these laws would not prevent people from being able to share this music for free in other parts of the world. Therefore, this result is not completely resolvable by implementing laws. Rather, it is important to accept that the music industry has altered significantly. Instead of selling music, artists and record labels are most likely to thrive from putting on performances and selling merchandise. It is important for the focus of the industry to shift on this basis. The internet now operates as a free marketing device, which, if used correctly, could be used to generate profit.

Record companies can survive alongside start-ups like Spotify and Pandora, but it is important for all of these companies to update their practices if they wish to remain relevant. It is necessary for these organizations to understand that music is now being purchased for less money than it ever has been in the past and that this money may not be coming from the consumer. Thus, it is important for them to become involved in other aspects of the marketing process and determine new areas for making sales.

References

Dolata, U. (2011). The Music Industry and the Internet. A Decade of Disruptive and Uncontrolled Sectoral Change.Research Contributions to Organizational Sociology      and Innovation Studies. Retrieved from https://en.wikipedia.org/wiki/Music_industry

Olivarez-Giles, N. (2012). Spotify’s Losses Grow Despite Revenue Doubling. The Verge. Retrieved from http://www.theverge.com/2013/7/31/4575506/spotify-doubled-revenue-in-2012-but-losses-grow