The State of Music Business

Posted by usacomputertec on Dec 6, 2007 3:20 PM EDT; By Marcos Marado
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Marcos Marado wrote this exclusive article. Is the situation really so dramatic as he explains? Leave your comments, this could be our first really important debate on

Marcos Marado wrote this exclusive article. Is the situation really so dramatic as he explains? Leave your comments, this could be our first really important debate on

The State of Music Business

I’m, first of all, a passionate for music. My passion for music before I can recall it, and grew with the fact that I had the luck to have older brother and sisters whose music collection was wide enough to feed my music interests. Also since a little kid I was interested in technology, and started programming at the age of four. Being nowadays a music lover and also a musician, and at the same time graduated and working as a Computer Science Engineer, I feel myself lucky to have some ground bases to analyse the state of music business.

The music business is in a chaotic state. The record industry is declining, and is throwing the guilt of it to what they like to call “piracy” - the unauthorised downloading of music. While they blame it, the truth is the fault is from the music industry itself. Doug Morris, Universal Music CEO, recently admitted he knows nothing about the music industry of nowadays. They decided to sue their customers by suing music fans that do unauthorised downloads instead of suing those who really make money out of copyrighted works, and restricting their clients’ rights with technologies like DRM.

It is surely true that it’s hard to find a completely fair way of compensating musicians while promoting the access to culture, but there are efforts to design market models that work - at least better than the actual one. The biggest problem is that the music industry - defined by the four major labels - doesn’t get it. The music market has changed, music, musicians and music lovers adapted themselves to new trends and technologies, but the music industry decided to ignore all the signs, refusing to see the big elephant in the room, and kept doing business in an obsolete way. The proof that they simply don’t understand what’s going on is right in front of everyone wanting to see it, when we get news that Elton John wants the Internet shut’ed down, or when countries try to impose Internet Services Providers to “filter illegal downloads“, even if that’s technicly impossible to do (illegal stuff surely don’t have an evil bit), and the music industry does political pressure that even makes countries change their laws. They spend tons of money implementing DRM systems, and others sell the rights that were restricted to listeners back, making money from what they first took, even if it’s known that DRM systems cause sales losses, music artists and fans are against such systems and new businesses are arising just by the fact that they don’t adopt DRM technologies, radio stations create petitions against DRM. Now, it’s too late for them - but what’s going to happen to the music market?

Well, we’re also seeing a lot of emergent business models. First of all, we have to realize that while CD sales are decreasing, music consumption is rising twice as fast. Also, if you open your eyes and start considering the music business as everything around music and not just music sales, then you’ll see that, for instance, in North America, the music business will total $26.5 billion in 2011, growing at an average annual rate of 2.8% from $23.1 billion in 2006. Recorded music revenues will still declining as declining CD sales cancel out the sharp gains in digital sales. Music publishing and live music will grow. Norway has a party that wants to free file sharing and sampling, shorten the commercial copyright and ban DRM. The number of web services for bands is wildly growing. Artists have now the means of making money while giving music for free, for instance. Musicians are finding new ways of doing their work by themselves, even if sometimes things aren’t simple. While there’s no formula on how to create the perfect record label, there are some labels and distributors that understand nowadays music market and know how to do business in it.

The future is smiling at us - we just have to let obsolete formulas and vices die.

Of course, new issues to be solved will appear. New fights have to be fought and won, or we’ll end like citizens of a dystopian world.

But soon enough it is going to be a great time to live - as a musician, a music lover or even a technologist.

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