Monday, October 22, 2012

Economic Conditions: Record Labels

"What is the primary revenue stream for music labels?"

Well, in general, the biggest revenue stream for music labels today is online streaming, specifically iTunes. A close second is Spotify. That's simply where the source of where most people today are obtaining their music. It's easy and in some cases it's cheaper than buying a whole 12 song album when you only want the 2 singles you heard on the radio. But with that ease, there comes an easy threat to that revenue.

"How is that revenue stream being threatened?"

With the rise of technology, the more concerns media businesses have and in the case of the music industry, it's rather daunting. The giant that the music industry faces is peer-to-peer sharing, where someone uploads a file of an album, and just like that limitless copies are spread throughout the inter web. It is virtually impossible to stop the pirating of music on the internet, but the industry is doing its best to adapt.

"What are some ways the industry is trying to adapt to those economic threats?"

Cary Sherman of the Recording Industry of America (RIAA) is doing his best to sue everyone. And I mean everyone is on his radar. First, he's going after those who are uploading the content, that's his primary objective, but he's not above suing those who download as well. However, some artists embrace file sharing and use it as a means to promote their work by offering a sample song or two. And these companies that allow legal sharing have ways of tracking who's downloading the content to get a sense of the value of online streaming. Another way the industry is fighting back is the merger of Universal and EMI to take control over 40% of the market, thus being able to more or less dictate how music is shared. This is especially worrisome for artists who are just starting out. So, at the same time, this merger is a combatant against the threat of revenue for the music industry, but it's also a threat to the legal sharing of online music.

"How are these economic shifts leading to shifts in content within the music industry?"

As I mentioned, streaming is the primary source of revenue for the music industry and the industry knows this. Also, as I mentioned, the big issue with this is illegal file sharing amongst users, and the industry knows this as well. So, as I eluded to in the last paragraph, some artists are embracing this. The industry and artists alike know that not everyone wants to purchase an entire album, so they allow purchasing of individual songs. It's quick, it's easy, and relatively cheap. Sites like iTunes, Pandora, and the like can tailor music possibilities to fit your tastes. It's easier to review songs before you buy them to better know what you're getting. So, with today's technology, all sorts of music is available at the push (or click) of a button.

If I were an executive within the music industry...

To adapt, I think the only way is to really embrace file sharing. To know and understand that it's going to happen whether I want it to or not. So, perhaps do a promotional to gain the interest of fans: for a record label, have a deal to where the purchase of an album on your label gives the buyer a code to download a song from another band on the label for free. As some artists do, offer singles for free, but require them to "pay" for it with a tweet or Facebook status to get the word out. As a gamer, if I'm hesitant to buy a new game, whatever perks the developer is offering with the purchase is what will tip me one way or the other. So, I think what people need to buy an entire album is incentive, whether that be a temporary low price, free merchandise with a purchase, song downloads with the purchase of a ticket to a concert, or anything that will push those who are on the fence about buying from that label. I believe a true artist wants their work to be heard, seen, experienced, etc. (and being compensated as well), so in whatever way that can be accomplished would be the best way to adapt.

Sources: Business InsiderMedia ShiftHuffington Post, ABC 20/20

No comments:

Post a Comment