The Digital Millennium Chapter Two

How has digital technology affected the music industry? Start Thinking . . . How has digital technology affected the music industry? Would you say this change has been for the better or for the worse? Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

Chapter Goals Learn about the technological paradigm shift into the digital world and the way it has altered how music is created, distributed, and consumed. Understand the legal battleground issues in the age of digital music. Gain awareness of how the business has changed for record companies and the implications of this new environment for recording artists. Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

The Double-Edged Sword Benefits of digital recording and distribution to musicians to producers to record labels Disadvantages infinite copying Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

CD piracy only one problem Internet Synergy CD piracy only one problem Internet offered unregulated and accessible distribution channel Digital download and streaming revenue increased Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

Labels Sow Seeds of Self-Destruction Legislation Audio Home Recording Act of 1992 Digital Millennium Copyright Act of 1998 Litigation by RIAA Consumers Internet Service Providers Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

Smaller, Cheaper, Faster, Better (?) Heart of digital revolution = process of making music Implications: Reduced need for conventional recording studios Reduced need for large corporation funding Reduced need for large corporation infrastructure Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

The Economics of Digital Distribution Previously record labels = banks artists = sharecroppers investment in successful recordings = profit Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

The New Economic Order Digital technology + Internet = independent artists earning money investment in personal recording equipment and software promotion through Internet-based services Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

The New Economic Order Disadvantages Loss of industry gatekeepers Loss of well-trained “ears” Decline of radio as tastemaker Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

The New Economic Order iTunes Arrives Computer company brings new business model for music industry Give and take: Labels get royalties Apple removes DRM code Single songs become primary product (not albums) Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

The New Economic Order Streaming Proliferation of mobile device distribution strategies Streaming music sees rising share Lean-back media Radio, Pandora Lean-in media Paid Interactive Digital lockers Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

“Lean-Back Listener” Digital music is demonstrating solid growth in emerging markets in particular driven by steep growth in smartphone penetration, the expansion of both local and international digital music services, and the choice of free, 'freemium' and paid services. But having broken into the mainstream, digital music providers will need to review the way it is productized and targeted if it is to maintain the rate of service adoption. 'Lean-back listeners' with mainstream musical tastes and passive listening habits will need to be spoon-fed with compelling easy-to-eat digital music packages or 'magazines' free or at affordable price points to continue digital music's growth trajectory.. Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

“ Lean-in Listener” If you were you the kind of kid who sat in front of a radio, tape deck or Victrola and devoured every sound and word of an album, you're what Pandora CEO Tim Westergren calls a "lean-in" listener. You love music, you want to engage with the music you hear and he's made an iPad app just for you.   Pandora for the iPad is an immersive experience for those who think music should be more than just what you hear — that music and information about music should be read, seen and even touched. Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

The New Economic Order Consolidation Mergers and acquisitions Old school companies = exploiters of catalogs The concert side Greater efficiency Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

The New Economic Order Where the Money Is Today The concert business Synchronous rights Electronic dance music Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

How will the music industry evolve: The Digital Future How will the music industry evolve: Will it disappear? Will it reapply itself? Jockeying for power and money between music service platforms labels artists songwriters publishers Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

The Digital Future Streaming Versus Downloads “Cloud” computing eclipsing downloads New attitudes: Music must be freely accessible Music must be free of cost Entrepreneurial spirit revived Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

For Further Thought . . . What other potential implications can you see digital technology bringing to the music industry? What is your view on civil litigation? Whose responsibility is it to ensure legal downloading and file sharing: record labels, ISPs, or the consumer? How has social networking affected the distribution of music? Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners