Digital Music May Or May Not Save The Music Industry.
According to the IFPI Digital Music Report from 2011, the music industry is a 15.8 billion dollar industry. In 2010, legal digital music downloads generated $4.6 billion. That number, which represents 29% of the music industry, has a vast number of analysts reaching very different conclusions. The report, which notes that the music industry suffered a 31% loss between 2004 and 2010, is enough to give audiophiles pause.
Digital music in the form of digital downloads – audio files traditionally found online – have been on the market for over fifteen years. However, the music industry started more carefully tracking the market share of digital downloads in 2004, following the collapse of Napster. The influence of digital music in the marketplace has only increased; since 2004 the value of the digital music market increased 1000%!
Even with the convenient access to music that digital music affords its listeners and the lower production cost digital music offers producers, the music industry has seen widespread revenue losses. Most in the music industry want to attribute the loss of revenue to pirated digital downloads. Trends of pirating of digital music vary with every country, but some areas with less stringent intellectual property protections contribute more to the loss of revenue from pirating. In the UK, 76% of music obtained online in 2010 was obtained illegally. Industry experts estimate that digital music sales would be 131% greater if all piracy ended.
But the industry analysts may be making too many stretches in blaming digital music piracy for the industry’s woes. The Digital Music Report attributes the 12% drop in global Top 50 concert revenues to pirating. That connection may be a false one. There is no evidence to suggest that those who pirate music either were attending concerts before they became music pirates or are less inclined to attend concerts once they begin pirating. A much more likely factor contributing to lower concert attendance is the global financial crisis which has left many without the disposable income to spend on attending concerts.
Moreover, the report acknowledges that at 30% of their revenues, the music industry invests more heavily than any other entertainment sector in marketing and A&R (artists and repertoire, which is essentially talent scouting and artist development). The report and analysts are quick to blame music piracy as the overwhelming cause of 31% drop in the value of the music industry since 2004. Again, this is a simplistic view. In that same time frame, pop music has all but died, replaced by rap, hip-hop and R&B on most Top 40 stations. It is just as likely that the A&R sector of the music industry radically misjudged what music customers would pay for as it is that the piracy of digital music has precipitated the loss of revenues.
New services like Google Music continue to bolster the legal propagation of digital music downloads; there is no corresponding A&R avenue to so vigorously promote new, quality artists.
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