Monday, May 12, 2008

Digital Distribution of Music.

In the World of Ones and Zero



The digital distribution of music...what we like to call the easy “DIY approach” to listening to and marketing music online. “Do it yourself (DIY) is a form of collaboration environment allowing individuals to publish and share their contributions of information and knowledge” (Saunders, 2007).


Compared to several years ago, the number of places to buy music online has skyrocketed into the thousands. I now ask the question, will the major record labels disappear like the dinosaurs to which they’ve often been compared? I think not. I must admit though, it’s now clear that the independent music distributors emerging in the business, such as Nine Inch Nails and Radiohead, are going to be a far bigger piece of the picture than ever before. These artists have taken upon the “DIY” approach in distributing their music by their own means over the internet, ditching their record labels to showcase their own talent. Is this the new trend that will see the fall of the dinosaurs or is the old school ways of distributing CDs through record labels still in the norm for consumers?


An enormous crop of mushrooms springing up overnight has been the common story since the emergence of the Web. The massive and rapid growth of online music distribution outlets is pretty amazing. Now I can’t really preach to you all here and say that I have never illegally downloaded a song off the internet. Because I have, countless amounts of times I might add. The accessibility of it is really just too tempting.

Nevertheless, with all this put aside, online distribution is fast becoming the most effective way of listening and marketing music. "We are today barely seeing the first glimmerings of what a fully networked public culture might look like" (Russell et al, 2006). Undoubtedly, a growing number of artists are seeking new ways to control the marketing and distribution of their output to counter music piracy on the internet. Of course, this does really depend on the popularity of the band, and whether the distribution method will work for them in particular. Coldplay set the precedent for other commercially successful bands by ditching their record label and releasing their new single on the internet, free of charge.

"The battle between the recording industry and file-sharing music fans is perhaps the most high profile example of shifts in the production and consumption of cultural products, and it illustrates some of the underlying issues associated with these changes " (Russell et al, 2006). “Radiohead and Reznor’s Nine Inch Nails have seemingly been trying to one-up each other when it comes to using the Internet in innovative ways. Radiohead released its latest album, In Rainbows, on its Web site and invited fans to download it for whatever price they felt was fair. Nine Inch Nails then released multiple versions of its album, Ghosts, on its Web site, with prices ranging from free to $300. Not to be outdone, Radiohead invited fans to remix one of its songs and upload their versions to the band’s site” (Worthen, 2008).


I’m not sure if online distribution of music will become the ‘next big thing’ for all artists, as I believe the tangible aspects of the CD are still much appreciated by some. I can also say, without hopefully sounding too hypocritical, that I do prefer listening to the “authentic CDs” of my favourite artists and bands, rahter than the dodgy online versions. Bands such as Radiohead and Nine Inch Nails are really rebelling against the industry, and it’s hard to imagine a lot of other “more mainstream” artists seemingly deciding it’s time to give their record label the big BOOT.

Record companies should focus on understanding the Net better and on harnessing its potential. For starters, less rigid rules would help propel the record companies into the online music business” (Brull, 1999). Nevertheless, I believe physical discs are going to be around for a long, long time for several reasons. The most obvious reason is that people are use to them, and have invested lots of money in gadgets for playing, recording and storing them.

So in my opinion, when the planet is bathed in a thick layer of ones and zeros, online music distribution will be gargantuan. Right now though, it’s merely a trend that is and will be quite successful for a minority of artists and consumers who prefer this way of life. But it is not for all!

References

Brull, S. (1999). “Are music companies blinded by fright?” Business Week Online. June28. 1999 Issue.
http://www.businessweek.com/1999/99_26/b3635140.htm (accessed 11 May, 2008).

Russell, A et al. (2006). Culture: Networked Public Culture. http://networkedpublics.org/book/culture (accessed 12 May, 2008).

Saunders, B. (2008). KCB201 Week 7 Lecture. Queensland University of Technology

Worthen, B. (2008). The Wall Street Journal. http://blogs.wsj.com/biztech/2008/04/29/coldplay-metallica-motley-crue-embrace-the-web/ (accessed 11 May, 2008).

2 comments:

ntl.mtchll said...

Megan,
I thoroughly enjoyed reading your blog about the music industry, and how it has been affected by online file-sharing. Yesterday, SonyBMG released its predicted net income for the 2007 fiscal year. Although the major media conglomerate managed to gain $3.7billion, digital sales saw SonyBMG down 4 per cent, failing to offset the decline in the CD market (Blair, G).

Over the past year, Sony BMG, as one of the largest ‘dinosaurs’ remaining, has undergone radical changes to avoid extinction. In January 2008, Sony BMG announced they were going to drop digital rights management (DRM) and compete against Apple for valuable downloadable revenues (Holahan, 2008). Sony BMG is the last of the four major record labels to do so (the others being Warner Music Group, EMI and Vivendi). DRM software was an attempt to stop illegal peer-to-peer sharing of music, though the principal analyst of a technology research company, Enderle (cited in Holahan, 2008) claims, “it (DRM) was hurting folks who were trying to follow the rules more than the folks who were pirating the music.”

On April 3, 2008, Sony BMG along with Warner Music and Universal Music signed a joint venture with MySpace Music. “We think of ourselves as undergoing a very fundamental transformation from being a CD company to a multirevenue stream, multibusiness company," says Thomas Hesse, president of Sony BMG's global digital business (Holahan, 2008).

With CD sales decreasing, major record companies are attempting to make money online through advertising, promotion and selling items such as concert tickets and T-shirts (Holahan, 2008). It is evident both from your blog and the actions of SonyBMG that, although the traditional music industry is far from dead, drastic measures are being taken to ensure the music lives forever... in the pockets of record companies.

References

Blair, G. 2008. Sony sees net income up 192%. May 14. THR.com. http://www.hollywoodreporter.com/hr/content_display/world/news/e3i9808673cbfb6ec1f5fd9eb117a2a0837 (Accessed May 15, 2008).

Holahan, C. 2008. Sony BMG Plans to Drop DRM. January 4. Business Week. http://www.businessweek.com/technology/content/jan2008/tc2008013_398775.htm (Accessed May 15, 2008)

Holahan, C. 2008. The Record Labels’ Digital Future. April 4. Business Week. http://www.businessweek.com/technology/content/apr2008/tc2008043_871448.htm?campaign_id=technology_AK (Accessed May 15, 2008).

Pat inSilico said...

An interesting post about a topic which I have been researching for quite some time now. Being a musician myself it has been important to keep up with the latest news on music distribution and the impact that piracy is having. At the moment, the music industry is in a transitionary period, from being dominated by major labels selling physical forms of music (CD's), to a period where digital music distribution and alternative revenue streams will rule. Whether or not the consumer pays for the music directly, or it is ad-supported, or completely free (such as in the case of In Rainbows) is still up for debate, but I think it will be a mix of these. Ultimately it is the consumer that shape this transition, they will dictate what they want and the market must respond to this. Of particular interest is Gerd Leonhard's concept of Music 2.0. Leonhard predicts that consumers want music to 'Feel like Free'; i.e. they want to be able to obtain it for what seems like zero cost, but there will a kind of 'hidden cost' and value is derived from this through advertising revenue or something similar. I think this model has a high chance of success because consumers are used to getting free music through piracy. Leonhard also makes a point that having distribution 'is no longer a big deal. But being good at getting, retaining, and converting attention is.' It's about the conversations, relationships and interactions that occur around the content, not just about the content itself. If you can drive attention to the content, build hype, build a fan/user base, then you can utilise and 'exploit' this attention to your own advantage. Nielsen Soundscan found that "if 40 or more legitimate (written by normal people and not by marketers) blog posts were made before an album's release, sales ended up being three times the average." according to the ars technica blog Another alternative example would be to create a viral marketing campaign about your latest concert tour through your fans' network of friends. This shifts the music (content) from being a product itself to being a marketing tool to draw attention to the real product - whether they be concert tickets, merchandise or other revenue streams. An interesting development is of musicians releasing their own music independently. A new website has sprung up around this idea called U-sync, where musicians become their own record labels. ♠