It’s now more than 25 years since those first little shiny discs rolled off the presses and into our lives. That’s quite a long time really, and they do still dominate how we buy music, movies and games.
In terms of artists earning royalties for sales of their music via physical carriers, such as CD’s, tapes and vinyl, the business model is pretty simple in theory. The record companies produce copies of the artist’s recordings, distribute them to a retailer, who sells them on to the record-buying public. Your favourite band or singer thus receives a royalty payment for each unit that has been sold. Easy.
The internet has also been around for quite a few years now, and has ingrained itself more and more into people’s lives – I mean, when did you last spend a day when you didn’t log on to the net for some reason? Can’t remember ?– neither can I.
So we should maybe be surprised that after all this time, the Music Industry is still not really completely comfortable with how things should work in the online world.
Initial fears were unfounded when the initial impact of the net was with suppliers such as Amazon, that simply used the web as a tool for taking orders and selling physical product, which was shipped to consumers via the mail. Suddenly, record buyers could sit at home and browse through thousands of available albums, and search for rare and obscure releases, without having to leave the sofa. So for artists and record companies, the status quo remained, as physical sales still dominated.
Mp3 players were introduced and started to become more popular as people put music on their computers and then took the music out with them. This has since expanded into mobile phones and other devices.
The little white thingy known as an IPOD revolutionised the MP3 player market, and in doing so forced users into having iTunes accounts. This was good for record companies and artists as iTunes became the dominant deliverer of legal downloads, which could all be recorded and reported, hence preserving the ability to collect and pay royalties.
But now it seems that the record industry is more worried and concerned than ever, about how to preserve those income streams that are essential to it’s survival and the development of new talent.
The biggest problem of course is illegal downloading. Of course, those of us of a certain age remember swapping tapes of music in the playground at school, and the revolutionary introduction of the tape-to-tape cassette recorder. But, you still had to have a mate that owned the right album and was willing to tape it for you. These days, your “mates” are virtual and could be anywhere in the world. Plus it’s so easy to kick off a download on your computer, leave it to download, then burn a CD or stick it into iTunes.
Taping music in the 80’s was only because I didn’t have any money to buy records. As soon as I had a part time job and a few quid in my pocket I bought all the records I wanted and never taped anything again. Nowadays the evidence is illegal downloading is not a practice limited to teenagers in school playgrounds.
If kids that use peer-to-peer software to download music now, eventually migrate to a paid service such as iTunes then that’s great. But in a sense, why would they? Because music has always been broadcast for “free” on the radio and television, many perceive that music is and should be free to obtain. The difference is that you don’t have a song on the radio to keep on your computer to listen to wherever you like, and put it on a disc or mp3 player.
Certain sites offering free streaming have been introduced, which give access to a mind-boggling number of recordings, that can be listened to for free and as often as you like. This is fine in a way that it will only be used at the moment for people sitting by their computers. What happens when we can get quality internet access to mobile phones and car radio’s, which would allow us to listen to that music for free, as long as there was an internet connection ?
Of concern for the music industry of course, is how is anybody being paid or making any money from unlimited streaming ? Spotify has free accounts and also a premium service, but takeup of the paid-for services is apparently slow. Plus, once the public mindset is that they can listen to anything for free, it is difficult to then convince them to pay for something. Does unlimited streaming allow people to “try before you buy” which then leads to them buying a download or physical product ? That remains to be seen and would probably be difficult to quantify.
Now Universal Music and Virgin Media are to offer an “unlimited download” service as part of the subscription fees that Virgin Media customers pay for their TV and internet services. This of course means that there will be income that can be distributed to record companies and apportioned and paid to their artists. What doesn’t seem to be in doubt is that the amount of money that will shared out will not work out as very much on a per-album or track by track basis.
They are planning to tie it in with extra security measures which will prevent file-sharing on the Virgin internet service. I guess at least those customers with Virgin Media will get into the habit of downloading the free music legitimately, and out of the habit of file-sharing.
At least with online streaming, that may lead to physical sales of product, and also to some download sales. But, if you can get an album download for free, do you then go and buy the CD? I don’t know.
One interesting point that I did hear recently was regarding seasonal CD sales, specifically as gifts. You can’t really wrap up a download and give it to a friend or relative, although I guess you could get iTunes vouchers, but it’s not quite the same. My feeling is that there are many years left of physical sales of CD’s, particularly strong for those albums that might appeal on mothers or fathers day, and those that make un-controversial Christmas gifts for relatives.
So the market is certainly changing, and in the online world I still don’t see that the perfect solution has been found, and one of the problems is that the damn internet keeps evolving itself. We will see income and royalties to artists for physical sales for a long time into the future. As to how the online income will be collected and shared, well that remains to be seen. I sense some diversity for artists and companies to attract the “Live” dollar, hence the fact that 2009 sees the world and it’s aunt playing festivals around the globe. This is all very well for Bruce Springsteen, but a much less sustainable model for those artists still trying to build an audience or profile.