Economics Of The Music Industry Economics Essay

Economics Of The medication Industry Economics EssayThe Industry has reacted very badly to the manipulation of CD gross revenue. Many people blame the decline of CD sales on illegal file sharing and downloads besides also to be considered is the look that CDs have been distributed and marketed over the last few years. Some of the reasons could embroil non competitive pricing of CDs, reduced number of shops stocking them and some of the major labels involuntariness to experiment with other form of entertainment sedulousness much(prenominal) as video games and DVDs which hold a consider equal force on the industry.1The aspiration from other media such(prenominal) as the gaming industry has also unnatural CD sales. EA (Electronic Arts) is incorporating medicine and cinema experiences into the games themselves2.Piracy through CD electrocution has affected the sales badly unlike other industries such as the softw atomic number 18 and gaming industry which is foral meanss updating itself. The CD has been approximately for over 20 years now and the medical specialty industry has not been so fast to keep reinventing itself and has f all(prenominal)en behind in the engineering science race.Whilst Physical sales are falling there has been an increase of rag sales at concerts and festivals and revenues have grown. In 2009 a report was released by the Performing Rights Society showing the retail value of recorded music fell 6% whilst live revenues grew 13%.3David K single-valued functionk describes this as a healthy thing for the industry as only 4 percent of records ever sold enough copies to break even.4The result in the increase of command for live music could be down to the record industries obsession with merchandise and huge profit margins and has gradually become detached from its artisans and consumers. Where as slackly live music promoters and agents have alship canal been closer to the artists and their audiences5The relationship between artist, consumer and label is changing due to technology and the internet and this has affected the way in which music can be distributed. The relationship between the artist and label can be difficult. Music labels sometimes edit the prowess or the title of a song, much to the frustration of the artist. The artists have turn to the Internet and the role of labels is becoming increasingly diminished, as artists are able to freely distribute their own material through file sharing, electronic network radio, and other peer to peer services, for little or no cost.6 big artists have ended their contracts. Radioheads problems with their label in 2007 ended with them releasing their phonograph album on their own and subsequently released as a pay what you fatality sales model as an online download.7The relationship has also tiltd between artists and consumers. through with(predicate) the internet fans are now a lot closer to the ducky artists. For example, Tom Delonge, an American Rock m usician created a website called Modlife.com which allows uses to connect to bands, artists and personalities victimization live video broadcasts, text messaging, video blogs, mobile updating and chirp feeds.8The digital transformation has had a huge impact in the way artist merchandise is sold. The internet can now be use to sell merchandise directly marketed towards the fans. Before the internet, trade was selling hats and shirts to a long queue of fans at a venue, but now products are directly related to current fashions and culture.For example Grindstore.com specifically directs is merchandise towards fans of waver music and states it is able to offer the most comprehensive range of mannish and female music merchandise from all over the world9Grindstore features fit out from bands such as Greenday, Metalica, Slipknot and Motorhead all in one place. Other homogeneous companies such as the American based Hottopic.com are a multi gazillion dollar company showing revenue over twelve months mop up July 31, 2009 was $768,200,000, a 4.52% increase from the previous year.10This just proves the power of music merchandising and direct marketing apply the internet.For the music industry it is a stiff task safeguarding existing lines of income and finding ways of developing wise ways of income. One solution to safeguarding the future of music industrys income is through a change in the way which music is licensed. One way might be through a small fee that allows users to freely download all music. This could be through a tax which is payable on media products such as mp3 players, Ipods etc or through a blanket licence correspondent to that of the British Broadcasting Cooperation which is charged to all United Kingdom households, companies and organisations using any type of equipment that can receive and play music. These possibilities could be created by the record companies or part government intervention. I think this pass on be one of the best ways to create a source of income as it is becoming increasingly harder to police the web for illegal downloads.another(prenominal) possibility in creating a new source of income is to become more than precise in which the PRS collects royalties through the advances of the internet by creating a framework. before long royalties collected from restaurants for example rely upon human estimations and averages and no consideration is do for the diversity of music played in different types of venues. The use of digital technology could help this to be more accurate.To conclude, I have discussed how the UK music industry has reacted to current changes in consumption and distribution with specific epitome to how the industry has reacted badly to the decline in CD sales but the consumption of live music has increased. I have shown how direct marketing and merchandising by companies like grindstore.com is creating big profits for the music industry through the use of the internet. Through the changing relationships between artist, label and consumer I have shown how music distribution is changing and how due websites such as modlife.com fans are ever closer to their artists.Finally I have present ways in which the music industry can safeguard their revenues such as a blanket licence or by creating new ways in which royalties are collected.