The Music Industry Analysis

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People have been using the internet for communication, research, marketing, and entertainment since it became a part of daily use for most of the world. It is undeniable that the internet has improved life, but at the same time, it has spawned many sales issues for the entertainment markets, specifically the music industry. The record industry “accounts for a small, but valuable percentage of the U.S. Gross Domestic Product and plays a large role in fulfilling the entertainment needs of individuals” (Bender 1). According to the U.S. Census Bureau statistics, the average American spends about $50.17 annually on music and listens to around three hours of it (Bender 1). Even though a few artists are still selling numerous amounts of records, …show more content…
The beginning of the downfall in the music business’s profits started back in 1998 when Shawn Fanning created the first widely-used peer-to-peer downloading service, Napster (Bender 1). While other programs existed, Fanning’s program was more intuitive and, as a result, became mainstream (Bender 1). During this time, the MP3 file format wasn’t well known, however with the rise of Napster, that soon changed. The MP3 became one of the most used music files, and made it even more easy to share music digitally. People no longer had to buy a disc and burn an extra copy of an album for someone, instead, they simply had to rip the album to their computer and upload the MP3 files online. With all these factors at play, digital piracy blew up and went on to become a major issue. The International Phonographic Industry reported that global sales of music fell at the beginning of the century, (Bender 1) and it just so happens that Napster began to rise to prominence at this time as well. Piracy is still a major player in the game today, and little to no efforts to squash it have been made. Search engines like Google make it incredibly simple to access pirated material through the likes of torrents and cloud file hosting services. In fact, suggestions in the search-bar will show with words like “torrent” or“free download” to aid in the user’s search (Bender …show more content…
Before branching out into bigger and more controllable features, streaming started small. With the creation of sites like Pandora, internet radio became the newest and latest music source. Unlike normal radio, though, internet radio payed much less in royalties in comparison to your typical radio station. For example, songwriter Desmond Child was paid only $110 after receiving more than six million plays on Pandora for his song, ‘Livin’ On A Prayer’. Moreover, Ellen Shipley gained more than three million plays for ‘Heaven Is A Place On Earth,” and was given $39 for royalties (Resnikoff 1). What’s more shocking is that Pandora is asking Congress to lower its royalties it must pay even still (Resnikoff 1). Now, fast forward another few years and Spotify, a new streaming service, had arrived that would allow users to play nearly any song they wanted for free. The two services do have their differences, but they’re very much alike in the fact that they pay little in royalties. Spotify, on average, pays anywhere from $0.006 to $0.0084 per stream (Wells 1). What’s even worse, though, is independent record labels pay are less than the average royalty pay. Some labels have even alluded to different ranks of pay, but it is hard to say so for sure since these labels do not have a solid idea on how Spotify organizes its pay.

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