Recording Industry's Decline and Future
The Deterioration of the Recording Industry
The recording industry's rapidly deteriorating state is a floundering contrast to it's once successful franchise before 2001. What had changed to induce such a dismal decline? Analysts say it isn't the lack of new talent, nor lack of interest in new music.This underlying factor which not only has revolutionized the way digital content has been proliferated, but forced the mighty recording industry to its knees is the seemingly invincible peer to peer network. Napster, Kazaa, and Limewire are just some of the many peer to peer programs which have created a gaping black hole in the music industry, with staggering declines in sales since 2001. Factors such as the inability of decisive action from record labels in the beginning of the p2p frenzy, unsuccessful ventures into other mediums not yielding surplus, and the pervasive belief in young people that music does not have to be paid for are major components of this dilemma.
Rise of P2P Networks
The peer to peer behemoth's beginning began with Napster. Created by college student Shawn Fanning as an easy method for people to share music and digital content directly over the internet, he had never expected it to become an iconic benchmark in the entertainment and computer fields. Napster's exponential growth became a major concern for the recording industry late 2000 when a massive user base of 38 million people were illegally sharing music and digital content. The music industry's inability to decisively make decisions, and refusal to compromise with the peer to peer user base at that time effectively sealed its fate. The music industry, more concerned with staunching the peer to peer sharing than utilizing it's popularity let a huge opportunity elude their grasp. With a massive userbase of almost 40 million active users, a more innovative and lucrative solution of working with Napster as a pay by month service was not considered. Rather the music industry decided to sue thousands of Napster users, and Napster itself. With Napster disintegrating, its userbase sought other decentralized file sharing programs such as Kazaa, and Limewire. By trying to stop the internet based file sharing movement, the recording industry worsened the situation by breaking apart the singular and immensely popular "radio station" of the internet, and forcing its users to find other services. What the recording industry should have done was compromised with Napster, turning it into a pay by month service. Polls during that time state that %68 of users were willing to pay up to $14.99 a month for Napster service. That would mean about 25 million paying users accrueing sales of $375 million per month. Not only would the profits have been amazing, but it offered the revitalization the waning recording industry desperately needs today.
Failure to Profit
Woes of the recording industry today can traced from the cataclysmic Napster period, but failed campaigns in alternative mediums can also be at fault. The recording industry let Napster's billions escape it's grasp, and they have been trying to scrounge up solutions to support the deterioration ever since. After the Napster fiasco, various online music stores serving a specific music label sprang up. These online stores such as Sony's PressPlay miserably failed. The expensive songs, limited compatibility with mp3 players, and the inability to burn music were the major turnoffs discouraging online consumers. It was only in the spring of 2003 did the first viable online music store Itunes surface. Various other campaigns such as ringtones, brand licensing to tv and videogames prove ineffective with a dismal decrease of %9.5 in sales in 2007. With statistics foretelling the doom of the recording industry, the possibility of the demise of all major labels is plausible. For example, the number of major labels dropped from 5 to 4 in 2004 when Sony Music Entertainment, and BMG entertainment decided to merge. There have been rumors that EMI and Warner are considering merging as well.
Need for Dynamic Profitable Campaign
The interesting factor to note in the music industry's decline is that while sales are at all time lows, interest in new artists and music are higher than ever. According to the research organization NPD, listenership in CD, video games, satellite radio, terrestrial radio, video games, and online sources has increased since 2002. The problem lies in converting this interest into profit for the recording industry. In the 7 year span since Napster, a whole generation of youth has grown accustomed to downloading music freely from p2p networks. Emotional value is still there for listeners, but economic value has greatly decreased. Instead of buying a whole cd with only a few songs one likes, or dealing with Itunes DRM restrictions, youth can quickly download a popular song off the p2p network with no hassle. The profitability is there, but the current archaic model for selling music is proving draining.
The monolithic peer to peer network, foiled alternative campaigns to reap profit, and a declining economic value held over music prove to be an obstacle the recording industry may not be able to overcome. Mistakes, and indecisive decisions circa 2001 during the Napster era prove to have dealt irrevocable damages. With statistics such as the highest selling album of 2000 being 9.9 million, and in 2006 a mere 3.9 million, the urgency for a plausible solution is higher than ever. Whether it be a new model to sell music, a new innovation to staunch p2p networks, or better ways to market music, the waning recording industry still awaits its salvation.
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