Portfolios Journalism
Page updated March.30.2007
The Future of Music
Model Work, MBJ Vol. 1 Issue 1, March 2005 (~1,539 words)
Model Work features the best paper of a major assignment from an MB/M class for a particular semester. The candidates are chosen by the professor(s) of the course involved, and then the MBJ editorial board, along with Dr. Peter Alhadeff, chooses from blind submissions, the Model Work for a particular issue.
There are a lot of changes happening in the music industry right now, and many more still to come. Record sales are down, and new mediums for delivering music are gaining traction. The old model of the music business must undergo change if the industry is to survive in today’s society. Distribution is, and will continue to be affected by the shift in recent years towards retailers like Wal-Mart becoming more significant than record stores like Virgin. Also, the rise of new mediums for the music, such as digital files and high quality formats like DVD-A and SACD will help to further change the landscape of distribution. Though most of the music business seems doom and gloom, publishing has been prospering, and there are many creative ways to exploit copyright. The above issues will help update the music industry to keep up and adapt with the changes happening in society today.
Recently retailers like Wal-Mart are becoming more significant than traditional record stores. The music section of any given Wal-Mart isn’t nearly as comprehensive as a Virgin Megastore, since selling records is only one of many offerings of a Wal-Mart store. Therefore, Wal-Mart can only handle a very small number of records, and as a result, only the most commercial CD’s of major labels get pushed. What happens with stores like Wal-Mart and Best Buy is that indie releases have no chance of getting to the public, and neither do daring and experimental projects, even if they are from a major label. The climate of pop music suffers, as the same old Britney Spears and the Simpson girls keeps getting rehashed, album after album.
Hopefully, a remedy for the effects of Wal-Mart and Best Buy are right around the corner, in the form of new mediums for the music, such as digital files and high quality formats like DVD-A and SACD. Digital file sales, such as from the iTunes Music Store, have the potential to make a big impact on the record industry. It hasn’t yet become significant, but the amount of sales each year of digital music files has improved at a remarkable rate of 200+% for the past three years.1 With digital distribution, record labels have less costs involved; no manufacturing/duplication costs, no concern about getting returns from retailers, no chance of items breaking during shipment (i.e., the outdated ‘breakage’ clause), and no cost for free goods handed out in the name of promotion. Eventually, if digital sales make up the majority of overall sales, then all the clauses (such as breakage, free goods, manufacturing fee, and reserve against returns) in a typical record contract would (or at least should) go away. In such a case, any number of things can happen; either the record company makes a lot more money, and can afford to take risks on more artists (because the monetary risks aren’t as costly), or the artist makes more money, or the price of music can be lowered. In any case, at least one party will benefit greatly, which indirectly affects all parties positively, and can only help the music industry grow stronger.
Now, digital files (such as mp3s) are of inferior quality to that of CDs, which isn’t all that flattering a format to begin with. The quality of digital files will improve with time, but there will always be some sort of compression involved, thereby causing degradation in quality. Hopefully, that will get people to be more open to embracing the currently unsuccessful high definition formats such as DVD-Audio and Super Audio CD (SACD), as the difference in quality will be more noticeable. If surround sound ever gets widespread acceptance, it will also help make these high quality formats more desirable as well. If these high quality formats do eventually achieve success, then the music industry will get a very healthy economic boost, similar to the one the film industry experienced with the success of the DVD format. They will be able to charge more, and even as manufacturing costs go down with time (to that of CDs), the retail price would remain more or less constant, like the price of CDs has been over the years.
Despite the slump in record sales due to many factors including (but not limited to) illegal file sharing and the contrived and over-commercial nature of the majority of major label releases, curiously, publishing is the one area that hasn’t been on the decline; in fact, it has actually been booming in recent years.2 This interesting behaviour is the key to the future of music. Licensing for ring tones, video games, commercials, and movies already take place, and have been for some time, but especially with ringtones, commercials (any form of advertising campaigns), and video games, there is a lot of potential growth there. Ringtones is the most sensational of all right now, with sales of mobile phone ringtones rising by 40% in the past year to $3.5 billion, which is roughly equivalent to 10% of the total $32.2 billion that is the music market.3 With the mobile-phone technology improving, the music industry will benefit even more. What first started out as monophonic (then polyphonic) ringtones, which meant the publishers and songwriters got a share in licensing the composition, now mobile phones are able to play real audio as ringtones, which means an extra license for use of the audio masters, allowing the record labels to get a stake in the action as well.
But does it stop there, with the mobile phone? There are countless other opportunities to exploit copyright. Political campaigns are rapidly becoming more comprehensive in their advertisements, with the sheer number of adverts growing exponentially each year, and campaigns may eventually pick theme songs. One day, starting the engine to a new BMW may trigger an audio sound clip. The possibilities seem endless in this new landscape of copyright exploitation, a door swung wide open in large part due to ringtones.
Continuing down the thought of copyright exploitation, there could be changes in the way record labels choose artists to sign. It’s no secret that the image and appearance of an artist is extremely important (exactly how important depends on the genre, of course). So when a label contemplates signing an artist, they take into consideration how handsome/pretty the artist is. Well, with the flourishing of the publishing sector of the music industry, with the growth of the number of different ways to exploit copyright, it seems the record label will consider how well an artist’s image can fit with existing companies and products out there in the marketplace; the ‘bundle-ability’ of an artist.
No longer would it be good enough for an artist to be sexy; it’ll come down to who has an image that can best complement Pepsi (such as when Britney Spears had her huge deal with them). Endorsement deals will become more comprehensive too; instead of the artist just appearing in a commercial drinking Pepsi, a deal might be made where you get free Britney Spears songs if you collect a certain number of Pepsi cans. This phenomenon is already occurring with Apple recently unveiling the special U2 edition of the iPod, which comes with U2 merchandise and discounts to buying “The Complete U2.”4 Up until now, endorsement deals have happened without the record label being directly involved, but with the big money potentials in the exploitation of copyright, and with new and creative ways to include music sales in a bundle package as well, it’s a sure bet the labels aren’t going to sit back on the issue anymore. It’ll affect which artists they sign, as they’ll not only go for the sexy looking one, but also one who has an image that can complement a product or company best.
So the future direction of the music industry, or at least the positive potential of the industry, lies in further developing the different sectors of the business that are doing well right now, such as publishing and general copyright exploitation, and hoping that the new formats for the music, especially digital files, keeps gaining popularity among consumers. However, in order to reverse the downward trend in sales, and the popularity of illegal file sharing, there’s an important thing the record industry must do.
Why is it that people who use Kazaa think it’s their right to get the music for free? Well, how many people know how much it cost to make Madonna’s latest record? Can anyone even ballpark it? Chances are, no. But how much did the movie ‘Titanic’ cost? Even if one didn’t know the actual answer ($200 million5), most people will know that in general, it cost several million dollars. How much does an A-list actor like Arnold Schwarzenegger make per movie? A lot of the general public will know that the answer is roughly $20 million. Now, why is it that the public knows so well the different monetary figures associated with a Hollywood blockbuster, but has no clue how much a major label album release costs? The film industry made a huge effort over the years to ‘educate’ the public as to exactly how valuable their movie experience is.
The music industry went down a different path. They purposely didn’t try to make such figures too public and instead tried to create an ethereal image that music just magically gets produced. The problem that occurs with this latter approach is that the consumer doesn’t know the true value of a music product, and in turn, will feel like they are entitled to it for free. And while the improvements of digital distribution and creative copyright exploitation will help the music industry, for them to truly see positive changes in the sales sector, they will need to make an effort, just as the film industry has been doing for years, to educate the public as to exactly how valuable a music product is.
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1 Based on the stats in the RIAA’s 2003 Consumer Profile
2 Avalon, Moses. Confessions of a Record Producer Workshop (10/04 NYU Seminar Ed., Los Angeles, CA, 2004).
3 Reuters, “Ring Tones Bringing in Big Bucks.” Wired News (http://www.wired.com/news/
business/0,1367,61903,00.html?tw=wn_story_related), Jan. 13, 2004.
4 Info on the U2 edition iPod bundle from http://www.apple.com/ipod/u2/.
5 “Titanic Cost of Making Movies.” BBC News (http://news.bbc.co.uk/1/hi/world/40636.stm), Dec. 18, 1997.
To view this article in the MBJ itself, please visit the Music Business Journal web site, where a PDF of the issues are available for download.
Journalism Outline
The Music Business Journal of Berklee College of Music
· "Editor's Note"
Editorial, MBJ Vol. 2 Issue 1, March 2006
· "NAMM: Kyung Min"
Business article, MBJ Vol. 2 Issue 1, March 2006
· "Paul Goldman: A True Creative, even in Business"
Cover article, MBJ Vol. 1 Issue 7, December 2005
· "The Next Generation Recording Studio: Tainted Blue Productions"
Business article, MBJ Vol. 1 Issue 6, November 2005
· "SSL Rejuvenated: Staying on Top of the Game"
Business article, MBJ Vol. 1 Issue 6, November 2005
· "Marketing Design Group: A New Student Club of the MB/M Dept."
Business article, MBJ Vol. 1 Issue 6, November 2005
· "Mobile Talk: Interview with Tim Nilson,
VP of Global Mobile Technology, Sony/BMG"
Business article, MBJ Vol. 1 Issue 4, August 2005
· "Editor's Note"
Editorial, MBJ Vol. 1 Issue 3, May 2005
· "Editor's Note"
Editorial, MBJ Vol. 1 Issue 1, March 2005
· "The Future of Music"
Model Work, MBJ Vol. 1 Issue 1, March 2005
· "Press Kit: FLUTTR Effect"
Review, MBJ Vol. 1 Issue 1, March 2005
Recent News
8.2.08 - The website for A Green Church, a company dedicated to environmental practices and products for churches, was designed by Mr. Min and implemented by Mr. Min and Rob Sanchez for Elative Marketing.
8.1.08 - Mr. Min transitions from being Content Manager of Web Marketing at Digidesign to working full time as Creative Director for Elative Marketing and Director of Marketing for Addo Label.
