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Key Elements That Are Important to The

Development and Survival of Music as an Industry,

The Causes For The Need in Changes, and
Current Responses to Changes Surrounding The Industry

Module Leader: Andrew East

Module title: Music Management
Module Code: MU302621E
Student Name: Geoffrey Pearce
Student Number: 21024694
Date submitted: 27 May 2011


1) Factors affecting the music industry

a. What condition is the music industry in?

b. Recession
c. Cultural shifts
d. A consumer driven market
e. A smoking bullet in the industrys foot?

2) Responses to change, and possible solutions for maintaining a healthy industry

a. Businesses
b. Government and law



Frances Moore, Chief Executive of the International Federation of the Phonographic

Industry (IFPI) opens the IFPIs 2011 digital music report with the strap line music at
the touch of a button (IFPI, 2011). Moore goes on to say that consumers now have
more choice than ever before, with over 400 legitimate digital music services to
choose from, the average consumer can easily be overwhelmed. But, to the music
industrys detriment, as well as the global economys, there is an overwhelming
amount of music piracy. Corporations and governments around the world have been
forced into responding to the music piracy plight. The IFPI Digital Music Report
(IFPI, 2011) highlights a statistic from a Harris Interactive survey; 52 per cent of
respondents . . . cited its free as the motive for illegal downloading substantially
more than those citing other reasons. For any enterprise attempting to sell music,
competing with free is by no means an easy feat. Nevertheless, music piracy is
perhaps only part of the overall cause to a change in the music industry. A global
recession, changes in culture and lifestyle, market saturation, and the online selling of
used physical media also possibly form part of the change. Perhaps music piracy is
given too much attention, instead of heavily investing time and money trying to
prevent piracy, more investment should be placed in how to adapt to evolving trends
outside the industry.

1. Factors affecting the music industry

1a. What condition is the music industry in?

One hard-hitting fact from the IFPI report is that the value of the recorded music
industry between 2004 and 2010 declined by 31 per cent (IFPI, 2011). The Economist
reported in April 2011 that since 1999 when the file-sharing website Napster
appeared, global sales of recorded music . . . collapsed from $27.3 billion to $15.9
billion (The Economist, 2011a) (US dollars). The above figures are very much out of
synchronisation with national and international inflation rates and consumer price
index (CPI) rates. Businesses that have been hit particularly hard by the downturn in
revenues are record labels and high-street music retail stores, studios and production
line companies. In the UK alone the likes of Woolworths, Zavvi (formerly Virgin
Megastore) and Borders (The Economist, 2011b) were perilously victim to changes in
the industry. The US saw the closure of 89 Tower Record stores at the end of 2006
(Sisario, B., 2008). The closing down of large businesses coupled with huge shortfalls
in revenue result in thousands of job losses, many of which may be specialist, those
specialists would have difficulty transferring to different sectors. Large businesses are
not the only ones suffering. Small independent music retailers are too, with many
closures across the UK over recent years. In 2006 there were approximately 900
stores, which by 2010 had declined to 269. However, there seems to be a turn around
in the decline of independent record stores. In April 2011 the figure rose to 281
(Cassidy, 2011).

So, it would be difficult to argue that dramatic changes arent occurring in the music
industry. Is the music industry collapsing? Perhaps not collapsing, but slowly
transforming its old business models that are lagging behind global economical,
technological and cultural changes. If new business models are adopted that fit
present and future technological and cultural trends, the industry should thrive. As
long as Marxs anarchist communist society of one without money doesnt transpire,
most artists will expect financial reward for their creative fruits of labour, which lies
at the heart of the industry.
1b. Recession

Early 2007 saw the start to the global credit crunch. 2009 saw the peak of the last
official UK economic recession, one of only a few years from 1970 when domestic
household expenditure did not increase year on year. The number of total insolvencies
in the UK in 2009 and 2010 jumped to record highs reaching tens of thousands
(Anyaegbu, G. and Barnes, L., 2010). Nearly all industries in the private sector are
negatively affected by a recession, as well the public sector. So, a recession is
unavoidable and affects most, but the extent to which this has affected the music
industry perhaps accounts for only a small part. According to the media analyst
Richard Greenfield of Pail Research in New York, CDs have held up a lot better than
I had expected this year [2008], in a bad economy people retreat to cheaper forms of
entertainment (Sisario, B., 2008). At a time when huge corporations like Merrill
Lynch were subsiding, an article in the New York Times by Ben Sisario highlights a
joke that was going round Columbia records in 2008, at least were in the music
business, the general manager of Columbia Mark Di Dia informs Sisario. Ironic,
when considering record labels overall revenues have been unstoppably declining
since 2000. However, 2010 saw a continued decrease in UK sales across the
Entertainment market; a -2.9 per cent change in video sales between 2008 and 2010,
-3.7 per cent change in videogame sales, and music topping the list with a change of
-8.6 per cent (Redmond, S., 2011). The figures taken from the Entertainment Retailers
Associations Overview UK Entertainment Market report highlights that music has
been hit hardest by changes. Interestingly, the report concludes defining the market,
only highlighting the changes in technology; a common theme across many reports
and articles that reflect on changes in the music industry.

An article in MusicWeek (Clarke, S. Barrett, C. Ashton, R. and Cardew, B., 2008)

approaches the subject of recession and the impact on the music industry by focusing
on four different areas in the industry; musical output, the retail perspective, on
the production line, and the view from the live market. According to the article
musical output entails an increase in pop, overtaking alternative genres, based on
chart success in the early 1990s, and a sentiment carried by key figures quoted in the
article is that people need cheering up. Music in comparison to clothing and
holidays (considered luxury items) is cheap, especially with it being readily available
in supermarkets and digitally. This affects the mindsets of A&R personnel; in that
they will be seeking to suit the markets desires, this potentially undiversifies the
market. From the retails perspective, high-street stores like Woolworths and Zavvi
evaporated, but this was owing to a downward trend in sales with entertainment stores
generally. Digital sales grew enormously, making up 8.2 per cent of total album sales
during 2009, and online retailers like Amazon and Play.com have performed very
well. With the constant downward trend of physical sales, arguably, the sector hit
hardest is the production line. Like Royal Mail, there are very limited directions they
can take to maintain steady rates of income. Royal Mail were not and are not in a
position to become email providers, and production companies are not in a position to
manufacture zeros and ones. However, there is still a demand for items to be sent
using Royal Mail, and there is still a healthy demand for physical copies of CDs and
DVDs, there are still benefits that come with a physical copy that one does not get
with an online version. Confidence was and is strong among many in the industry:

So far the figures going through are less year-on-year but that has been a
gradual decline, there is no indication that people have stopped buying
products as a result of being worried about money.
EDC Blackburn director Andrew Lloyd-Jones says that, historically, home-
entertainment categories such as DVD and CDs have proved resilient during financial
storms as staying in becomes the new going out. (Clarke, S. Barrett, C. Ashton, R.
and Cardew, B., 2008).

For larger companies like Sony DADC UK Ltd, they have a more secure future as
they cover film, and with the rise of Blu-ray sales with increases of 400 per cent year
on year. Smaller and medium sized companies will be more at risk.

A&R personnel in large companies have the very risky business of scouting new
artists; this perhaps changes the mindset of somebody from A&R. If they are not
finding artists that earn large amounts of money quickly, they could be perceived as
unsuccessful. The knock on effect of this is a lack of artist development.

1c. Cultural shifts

Live music has seen a significant rise in sales. More and more music festivals appear
year on year, and with them festival tourism. Music tourists (the term encompasses
overseas and domestic) spend 1.4 billion during the course of their trip (UK Music,
2011). According to the DCMSs latest report on music tourism, this is having a
significant positive impact on the UKs economy, creating many new jobs in the
process. The UK is seen internationally as an interesting and exciting place for
contemporary culture such as music, films, art and literature, ranking fourth in the
world (UK Music, 2011). The in depth report reveals attitudes in music consumers, as
well as those who wouldnt necessarily be considered as devout music consumers.
One quote in particular underlines a common attitude towards music festivals:

I dont go on holiday because I cant afford it but I try to save all my money to go to
Download Festival every year. I met my current girlfriend there two years ago. Its an
amazing festival and about a million times more interesting than a week in Spain
(UK Music, 2011).

The total spend on music tourism in the UK is 1.4 billion. This includes domestic
and overseas music tourists attending concerts and music festivals (UK Music, 2011).
Comparing this with data taken from the Overview UK Entertainment Market
publication, which reports music record sales of 1.2 billion, live music has overtaken
the record revenue stream.

As the number of people who go to gigs and festivals increases, so to does the number
of people who were unlikely to attend become exposed to more, new music and its
culture, and consequently are more likely to have a keener interest in music, and will
become more likely to purchase physical or digital music. Music venues and festivals
therefore now have a responsibility to educate and promote recorded music and
advocate ways in which it can be bought.

Is musics purpose in society changing? Certainly the type of music one listens to
continues to be subject to stereotyping, and categorising, owing to listening habits
being published, which Last.fm does.

people are willing to put a lot of effort into maintaining a desirable public image of
their music consumption. When information about music listening is published
automatically, youth and young adults subtly manipulate the way they present
themselves . . . (School of Information, 2011).

Online social networking sites might be offering live music events much more
exposure, especially when one considers the large numbers of people who publish
their day-to-day goings on. Websites like Facebook and Twitter may well be
inadvertently greatly assisting the live music industry. On the other hand, the number
of links in news-feeds to unlicensed recordings and music videos might well be
having a detrimental effect on the record industry. This perhaps contributes further to
the shift on the scales between live and recorded music.

Are we over exposed to music? Musics purpose in the last century has changed
dramatically. McCormicks article Is there too much music? reflects on the general
publics overall exposure to music. The statistics that McCormick highlights are
particularly significant, suggesting that American teenagers . . . consumed and shared
19 per cent less music in 2008 than they did a year ago. This figure includes illegal
downloads. So, not only are sales down, but the physical and illegal online sharing of
music has declined. Are we reaching a point where present new music is becoming
harder to have as a significant impact as say The Beatles did with their take on Rock
and Roll? Are the limits of what popular music can achieve as sounding modern
being reached? The effects are not as immediate or as costly as other changes in the
industry but are more permanent than other effects on the industry mentioned in this

1d. A consumer driven market

When supermarkets like Tesco in the UK and Wall-Mart in the US began retailing
CDs, this took quite a toll on high-street record stores like HMV. Supermarkets tend
to stock mainly chart music, and also drive down prices heavily. Though not a wholly
new concept, a recent trend with Tesco is being an exclusive retailer of an album. One
of its latest was a Simply Red album that sold almost 35,000 copies in its first two
weeks (MusicWeek, 2011). Low prices and convenience contributed to the large
growth of music being sold in supermarkets. In 2008 Tesco were soaking up 13 per
cent of all album sales, whilst dominating chart sales; taking up approximately 40 per
cent of the market (Rees, J., 2008). Supermarkets like Tesco could be considered
large contributors to the demise of retail stores like Zavvi, smaller independent stores,
and smaller record labels. Stores like Zavvi and smaller independents offered smaller
bands direct exposure and diversified the physical sales market too.

Online retail stores like Amazon have had a major impact on all high street music
stores and supermarkets. Amazon opened up the market to used CDs at very low
prices. Amazon too, is now offering online mp3s at damagingly low prices,
competing heavily with iTunes. In April 2007 Amazon offered mainstream tracks for
as little as 29p, competing with iTunes average cost of 79p. The price war between
these online giants is brilliant news for consumers, but not so good news for artists
and labels (Khan, U., 2009).

Will albums disappear? Now that consumers can purchase single tracks, this has taken
a toll on album sales. Before music became digitally available, only select singles
were released, often accompanied by b-side tracks. At present, consumers can
download (legally or illegally) any track of their choice. Some subscription services,
the likes of digital giant iTunes and eMusic, offer some tracks on an album only
purchase basis. On iTunes, the majority of the album only tracks appear to be bonus
booklets, or bonus tracks. The keyword bonus appearing most often. On the other
hand eMusic album only tracks are often more than one from the album and are
integral album pieces. This is perhaps a more risky strategy, as it could discourage
some consumers. Various ploys are being used; artists from Bob Dylan to Jay-Z are
engaging fans through premium album sales that include additional content such as
exclusive behind-the-scenes footage and games (IFPI, 2011). As of January 2011,
digital album sales made up one eighth of all album sales, a rise of 56 per cent, but
total album sales had in 2009 decreased by 3.5 per cent (BBC News, 2010). In 2007
an article by The New York Times discusses the albums potential demise. It
highlights the shifts in record deals, that artists are being signed up for one or two
tracks, which is not a new model, but traditionally they served as ephemeral or
novelty hits (Leeds, J., 2007). Figures for the digital album sales continue to grow
and outweigh the overall album decline by a huge margin. The genre of music and the
artists type of fan-base appear to make a difference. According to Leeds (2007);

fans of jazz, classical, opera and certain rock (bands like Radiohead and Tool) will
demand album-length listening experiences for many years to come. But for other
genres including some strains of pop music, rap, R&B and much of country
where sales success is seen as closely tied to radio air play of singles, the album may
be entering its twilight.

Figures from the BPIs report reflect a continuing demand for digital albums. These
buying trends are the result of consumers driving the market. The overbearing amount
of piracy has also been a message that consumers are using the internet to access and
obtain their goods.

Chart 1 (BPI, 2010)

The X factor television show is an industry model that is very successful, which
occasionally offers lasting artists. The show illustrates quite publicly the way in which
many large labels function. The judges are akin to A&R, who then survey the public
to determine who should go on to win. One could argue that X Factor is offering the
masses a bespoke pop star. On the other hand, it ingeniously and openly exploits
public opinion. The X Factor exposes a wide range of old and new music to audiences
of up to 16.6 million. A cynical quote from a Guardian article regarding X Factors
audience neatly summarises; [it is for] people who aren't passionate about music.
And there's always been a huge market for people who weren't passionate about
music (Addley, P. 2009). The extent to which the X Factor is negatively affecting the
music industrys economy is dubious, it most likely plays a positive role, by offering
lasting artists like Leona Lewis, and promoting songs through performance.

1e. Technology - the digital age

Changes in technology have always had significant impacts on the music industry.
When recorded music arrived with the invention of the phonograph in 1877, sheet
music publishers were hit devastatingly. Now, the present threat to the entire music
industry is the internet, and its offering of illegal music; piracy. Music piracy existed
before the internet, CD copying devices were already contributing to the declining
sales figures. In 2003, the worldwide pirate music industry was valued at an estimated
$4.3 billion (US), making up more than 10 per cent of the entire industry. According
the IFPIs Digital Music Report 2011 music piracy will contribute towards 1.2 million
job losses in the music industry by 2015. If one were to imagine an industry without
online piracy, but an industry with a healthy digital market, there would still most
likely be significant job losses in the industry. Peer to peer sharing was the first major
culprit, launched in 1999 Napster was the initial file sharing website. Napster claimed
it was not breaching any copyright laws because it was not hosting any files, it was
merely a file directory. By July 2001 it had shutdown owing to legal pressures in the
US. Incredibly, after one year on from its launch it had 20 million users. At the time
of Napster having 20 million users, the music industry had no infrastructure for
supplying music digitally. Even by 2004 the industry had taken up 2 per cent of sales;
$400 million US dollars (Cammaerts, B. and Meng, B, 2011). Demand for digital was
incredibly strong, yet there was not the means for users to legally download music.
The advantage to pirate downloads over CD pirate copies is that they are free,
available at any moment, obtainable in seconds, they can be heard for trial and simply
deleted if unwanted, individual tracks are available rather than entire albums. As
internet speeds increase, uncompressed sound formats are now emerging too, a format
that gave CDs an upper hand. The benefits of digital seem to outweigh those for the
CD. There are benefits that come with CDs; artists information, full credits for the
production team, full information of companies involved in the making of the
product, artwork, a physical souvenir. However, if one wanted this information they
could undoubtedly find on the internet in moments.

The music industry was not at all prepared for digital. In 2004 there were fewer than
sixty licensed music services in offering a meagre one million tracks. 2010 offered
more than 400 music licensed music services and thirteen million tracks (IFPI, 2011),
but contrasting these figures to the estimated five billion (IBISWorld, 2008) tracks
that were available in 2006 through unlicensed digital peer to peer downloads, the
online music industry is still massively overwhelmed by the unlicensed world.

Statistics and charts from The Recording Industry in Japan 2009 report (Japan being
the second largest consumer of music in the world) highlight a most pertinent chart
that displays the number of newly released audio recordings by their format. What the
chart appears to underline is that new formats take approximately ten years to match
or overtake their predecessor. When the formats (illustrated in the chart) were
released, the industry were generally logistically and legally prepared for them. The
unlicensed digital market had opened before the industry had attempted to open it.
Chart 2, (Recording Industry Association of Japan, 2009)

Even legitimate websites like MySpace where bands can create their own site; stream
for free. YouTube offers the largest supply of online music videos, and labels and
artists can benefit from the advertising revenues. However, the models between
YouTube and artists are still developing.

Record labels infrastructures were built around physical media, and used the likes of
Sony to supply the playback devices. Apple and other music services are now music
medium, and internet service providers the distributors. As a result of power shifts,
prices have plummeted too, when traditionally labels at the upper hand in controlling
CD prices. Physical playback devices like mp3 players and mobile phones take up a
large majority of the new digital market, but the item being played back is not

1f. A smoking bullet in the industrys foot?

Record labels have been slow to respond technological changes, there seemed to be
over confidence in CDs, and when the likes of Napster were providing billions of
tracks as free downloads, the immediate response was to attack, rather than out-do.
Peer to peer sharing continues to grow and particularly hard to prevent, even when
governments place legislation to make it illegal. A key problem with piracy is
policing it.

The way in which artists are brought into the industry has changed a great deal.
Larger labels tend not to nurture them, this resulting in a more short-term fan base, as
well as stifling any progression in music generally. A perfect example of a group that
were nurtured is the success of Elbow. Their first album released in 2001 Asleep in
the Back sold over half a million, five years later their third album Leaders of the Free
World also sold over half a million, then in 2008 their fourth The Seldom Seen Kid
sold over two million, all in the UK. Signed to V2 Records, Fiction Records and
Polydor, all subsidiaries of Universal Music Group, who took the music publisher of
the year award, displacing EMI, who had won every year since 1995.
2) Responses to changes and possible solutions for maintaining a healthy

2a. Corporate and business solutions

New business models are required throughout the industry, especially from record
labels, in order to free up the market. Labels were once the dominators of pricing
and distribution, and would receive the large proportion of music sales, one new
business model is a share of income through access to services (Harrison, 2008).

Record companies have been slow in making their entire catalogue available, most
now do this on multi national levels with companies like Amazon.com, but must
continue to do so.

There are some serious territorial issues with the online market at present. There are
various restrictions, (iTunes especially) which mean that music can only be bought
from their country of residence or differences in prices occur. A listener in the US
could purchase a physical copy of an artists work from the UK Amazon store, but not
a digital version for a lot less on the UK iTunes store.

Vital to the industry is collaboration and consolidation between companies. Apple

recently made agreements with EMI and Warner Music for their planned streaming
service, which is considered by many to be the future of online music, seeing how
Spotify have grown so rapidly, who are now Europes second largest legal provider of
music, behind iTunes. The recent Apple deal for streaming EMI and Warner Music
content was a battle between Google and Amazon, both were hoping to get the four
major labels to make an agreement with them. The move is towards a music cloud
environment, which is where game and software distributors are targeting consumers.
For labels and digital providers cloud services are the most effective way of
monitoring activity, as music is played from and exists on a handful of servers,
rather than as digital media on millions of devices across the world, that are at risk of
being distributed outside of a legitimate market. So cloud music business models
would appear to be ideal for artists, labels, and online distributors. The key element to
cloud services is control, distributors have more control over where the music exists,
and they therefore have more control as to how the music is paid for.

There are various online models in the market at present, and the BPIs digital music
nation report 2010 reveals seven legal online formats most popular with consumers.
The largest legal service provider of music content is YouTube. However, the revenue
streams from video sites do not seem to tally with the number of views videos
receive. The online music video sector relies solely on advertising for income, for
which videos on YouTube goes largely to YouTube. New video providers like Muzu
and Vevo however, pass on a much larger share of the revenue to the content owner,
which is encouraging for artists, and will help finance new and developing acts.
Interestingly, Vevo are backed by Sony, Universal Music and Google, but claim to be
independent from their backers. Nevertheless, two of the major labels have recognised
the potential in the online video sector, which is positive action for labels and artists
(MusicWeek, 2011b). The advantage to Vevo over YouTube is that the content is not
user generated; it is therefore on the whole of a much higher quality. Industry experts
have said that subscription services to video is not viable owing to its prolific
abundance, but MTV have opened up a video subscription service, which if very
successful would offer a good revenue stream for labels and artists. YouTubes latest
attempt to filter content and prevent unlicensed content from growing is by imposing
educational videos to users who breach copyright. They will be enforcing this with a
three-strike policy, which if a user realises; they will be banned from YouTube. By
ensuring users offer better content, users stand a chance of making more money, its a
win-win situation, and according to Google (owners of YouTube) it delivers 2bn
streams a day on YouTube and that revenue paid out to its 20,000 content partners is
doubling year-on-year (Forde, E, 2011). Another growing stream is online streaming
of live performances, vitally important considering how live performance now
financially outweighs records.

Second on the list of legal online music consumption is download services. The main
player being Apples iTunes. In April 2009 Apple modified its pricing structure,
offering varying prices (typically 77p for major new releases), rather than a fixed rate
of 59p. As pointed out by Forde (2011) the RIAA reports that single track download
sales grew by 2% in volume to 1.16bn units and 12% in value to $1.36bn (0.82bn)
last year. So perhaps the new model is working for iTunes. A fundamental element to
the iTunes service is that it crosses many platforms, including mobile phones and
simplifies the process of purchasing digital music; a vital aspect to defeating piracy.
Perhaps the only concern wit download services is that it makes it much easier for
consumers to share the content, whether online or offline.

Radio station websites are third on the list of legal online music consumption. One of
the latest models features in recent news was the launch of amazingtunes.com. They
intend to pay artists 100 percent of the revenue. The company Amazing have set up
provision for artists to promote themselves online. But many online radio companies
are realising that the revenues could be improved with incorporating download
services, which is what Kiss 100 began in 2007. Online radio stations are great place
for artists to promote themselves, it seems only natural then that users should be able
to purchase the music form the station if the technology exists, which it does.

Music via social networks makes up 27 per cent of user frequency trends. MySpace
once dominated this field, but at the beginning of 2011 had cut 47 per cent of its
workforce. Facebook and Twitter now dominate the social networking world, but
unfortunately, neither have a strong music framework. The social network giant
Facebook (with approx 600 million users) is attempting to find ways of developing
the way music is modelled. They now offer a Music On Facebook service that enables
artists ways of marketing tour dates and uploading music, however, the take up seems
to be miniscule. At present there are talks between Facebook and Spotify. This could
potentially have a significant affect on the music industry, as Spotify has
approximately 1 million paying customers and ten million users in total. Spotify alone
is the fifth most used medium of legal music services in the BPIs report (BPI, 2010).

Still the largest format of piracy is peer to peer downloading. This format is the safest
option for illegal downloaders as it spreads legal responsibility amongst millions. It is
surprising then that nobody has set up a legal way of enabling this medium. The
problem lies with licensing regulations. On the whole individuals are not licensed to
share music files. Perhaps if licensing regulations were freed up to enable a third party
application to act as a distributor and medium for legal file sharing this would open up
a large new revenue stream.

For record labels to continue to exist they need to cut back heavily on costs. Many
labels still have extremely high paid executives who receive large bonuses depending
on performance. As Harrison observes major record labels remain monolithic
structures with physical offices in all major capitals with big corner offices. Making
moves with iTunes for streaming revenues is a strong affiliation.

A popular business model in the industry is the 360 model, whereby a company
covers all aspects of an artists career; live, merchandise, recordings and publishing
rights. Record labels benefit from the growing revenues made in the live sector, which
in turn should lead to artist development. Madonna recently signed a 360 deal to her
live promoter Live Nation, who will now be publishing and releasing her work.

New technology has enabled new deals like the productions deal that Harrison
(2008) discusses. Smaller homebuilt studios and their owners, record producers or
managers for example sign artists in the dawn of their career, in the hope they will
avoid any bidding wars from larger labels. The production company produce a
handful of tracks in the hope of attracting a larger company whom if keen will either
purchase the contract or licensing rights (Harrison, 2008). Harrison observes that
artists who are then handed to larger companies often lose out significantly in

Smaller independent labels appear to be testing out and adopting new models, as
Cammaerts and Meng (2011) point out some labels are publishing music exclusively
online under creative commons licenses and accepting donations. Cammaerts and
Meng go o to say that whilst small labels are experimenting, their share might be
small, but lare labels are closely connected as use smaller labels as the breeding
ground for new ideas.

Internet service providers (especially in places where legislation is in place) have an

important role in contributing to copyright enforcement. In some countries, they are
entitled to message their customers who are breaching copyright, informing them of
their illegal actions. ISPs now also play a vital role in the future of music distribution.
Opportunities are opening for ISPs and labels to work collaboratively to offer
consumers music at competitive rates.

2b. Government responsibilities and actions for change

Politicians and government policies now have a responsibility to support the music
industry. Their role in preventing piracy is significant, by updating laws that make
unlicensed file sharing illegal, and by working with internet service providers
offering efficient methods of policing music piracy. The Swedish government
introduced new legislation, making it possible for copyright holders to obtain
information from ISPs about copyright infringers. The new legislation had an
immediate affect, internet traffic had dropped by about 40 per cent. Spotify was the
fruit of the new legislation. Piracy levels are apparently increasing again though, due
to a lack of enforcement. Nonetheless, many positive aspects can be attributed to the
governments action.

The EC recently made a bid to improve multi-territorial copyright licensing:

In view of the digital Single Market streamlining copyright licensing and revenue
distribution is one of the most important challenges that must be addressed. In the
second half of this year, the Commission will submit a proposal to create a legal
framework for the efficient multi-territorial collective management of copyright, in
particular in the music sector (Ashton, R. 2011).
The ECs recent blueprint for Intellectual Property will make it easier to access
online music (Ashton, R. 2011). Positive action like this should benefit the music
industry a great deal.

Education is of paramount importance too. Children now are growing up in a digital

age where they are exposed to a much under policed digital market. Their exposure to
technology at an early age too means that they are evolving more to mobile phone and
computer technology. Perhaps somewhere in the school syllabus, legitimate services
should be advocated.


Live music now appears to play a vital role in the survival on the music industry, so
should be managed delicately. Recent soars in ticket prices bring extra revenue, but
can also deter new customers. Unfortunately, labels seem to be thinking more about
the short-term money making models rather than investing in long-term artistic
strategies. As a result of taking less risks, the market will become homogenised under
domination from mainstream acts. A quote from an article by Wray and Allen
underlines EMIs attitude in 2009:

a spokesman for [EMI] pointed out that the current business model at EMI was
unsustainable. He noted that 85% of what is put out does not make any money while
30% of artists who get advances never produce an album (Wray, R. and Allen, K.,

Perhaps EMI should see this as a need to increase their A&R department, or to find
alternative A&R strategies.

Probably the most important element of all for major labels is to integrate themselves
with the changes in technology and the internet as much as possible, by offering
simple licensing solutions to distributors by approaching negotiations with on even
ground. The importance in the survival of record labels is that they have traditionally
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