1. Music Business Handbook and Career Guide
Part 1: Setting the Stage

2. The Digital Millennium
Chapter 2

3. 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 10th Ed. (c) Sherwood Publishing Partners

4. Chapter Goals
Learn of 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 10th Ed. (c) Sherwood Publishing Partners

5. 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 10th Ed. (c) Sherwood Publishing Partners

6. Internet Synergy CD piracy only one problem
Internet offered unregulated and accessible distribution channel
P2P protocols
Music Business Handbook and Career Guide 10th Ed. (c) Sherwood Publishing Partners

7. Labels Sow Seeds of Self-Destruction
Legislation
Audio Home Recording Act of 1992
Digital Millennium Copyright Act of 1998
Litigation by RIAA (Record Industry Assoc. of America)
Consumers (could be fined for file sharing)
Internet Service Providers
Audio Home Recording Act of 1992: Basically: provided permission for use of digital recording devices (prior to late 1980’s, all digital formats were ‘read only’).
The Digital Millennium Copyright Act of 1998 (DMCA) is a United States copyright law that implements two 1996 treaties of the World Intellectual Property Organization (WIPO). It criminalizes production and dissemination of technology, devices, or services intended to circumvent measures (commonly known as digital rights management or DRM) that control access to copyrighted works. In addition, the DMCA heightens the penalties for copyright infringement on the Internet. Passed on October 12, 1998, by a unanimous vote in the United States Senate and signed into law by President Bill Clinton on October 28, 1998, the DMCA amended Title 17 of the United States Code to extend the reach of copyright, while limiting the liability of the providers of on-line services for copyright infringement by their users.
Music Business Handbook and Career Guide 10th Ed. (c) Sherwood Publishing Partners

8. 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 10th Ed. (c) Sherwood Publishing Partners

9. The Economics of Digital Distribution
Previously:
record labels = banks
investment in successful recordings = profit
Music Business Handbook and Career Guide 10th Ed. (c) Sherwood Publishing Partners

10. 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 10th Ed. (c) Sherwood Publishing Partners

11. The New Economic Order Disadvantages loss of industry gatekeepers
loss of well-trained “ears” (very important)
decline of radio as tastemaker
Industry gatekeepers (label heads, radio station managers, etc) had previously been the ‘tastemakers’. They decided what would dominate the airwaves. Today, the audience is the ‘tastemaker’ as they choose from a wider variety of music than ever before (due to technological advances).
Music Business Handbook and Career Guide 10th Ed. (c) Sherwood Publishing Partners

12. The New Economic Order iTunes Arrives
Music Business Handbook and Career Guide 10th Ed. (c) Sherwood Publishing Partners

13. 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)
Labels and Artists fought iTunes for years…knowing it meant the death of the album and serious declines in the profits of music sales.
Jen: give a little history about iTunes proprietary beginnings.
Music Business Handbook and Career Guide 10th Ed. (c) Sherwood Publishing Partners

14. The New Economic Order Mobile: On the Go
Proliferation of mobile phone distribution strategies
Streaming music sees rising share
Streaming music brings little revenue to artists. Paid on a monthly subscription fee, royalties are not based on song plays but rather on how well the service performs financially during a given period.
Music Business Handbook and Career Guide 10th Ed. (c) Sherwood Publishing Partners

15. The Digital Future How will the music industry evolve:
will it disappear?
will it reapply itself?
Music Business Handbook and Career Guide 10th Ed. (c) Sherwood Publishing Partners

16. The Digital Future Consolidation
Mergers and acquisitions (down to 3 Majors)
Old school companies = exploiters of catalogs
Digital companies = engine for new creative directions
Catalog: In the music industry, a collection of musical compositions is cataloged into a music catalog. The owner owns the copyrights of the cataloged compositions
Music Business Handbook and Career Guide 10th Ed. (c) Sherwood Publishing Partners

17. The Digital Future Price Versus Value
Digitization means
more music
more accessible
more affordable
BUT popularity still adds premium value
It also means: MORE COMPETITION and a change in profit models.
Music Business Handbook and Career Guide 10th Ed. (c) Sherwood Publishing Partners

18. The Digital Future Streaming Versus Downloads
“Cloud” computing may overtake downloads
New attitude:
music must be freely accessible
music must be free of cost
Entrepreneurial spirit revived
Music Business Handbook and Career Guide 10th Ed. (c) Sherwood Publishing Partners

19. 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 impacted on the distribution of music?
Music Business Handbook and Career Guide 10th Ed. (c) Sherwood Publishing Partners