There is ample evidence that the music industry is in decline, with
sales of recorded music having dropped by 20% between 1999 and 2003,
with continued declines in 2004 and 2005. At least a portion of this
is attributable to piracy facilitated by peer-to-peer networks and CD
writing and burning technologies, but it is uncertain precisely how
much of the decline has these sources to blame. Other factors include
lower average CD prices, increased shelf space being devoted to DVDs
instead of CDs by retailers, and competition from video gaming.
Although new sources of revenue have emerged, including digital
downloads and ring tones, digital music amounts to only 6% of industry
sales. However, it is growing rapidly, increasing by 300% during the
first half of 2005.
New artists have benefited from the new technologies by being able to
get their music in front of consumers. Viral marketing of music
through peer-to-peer networks has been successful for some musicians
and small record labels. Some artists have successfully bypassed
record companies altogether to directly distribute their music (Chuck
D. being a well-known example), but most rely on record companies for
marketing and promotion in order to reach a broad audience. Radio
airplay is still tightly controlled by major record companies.
However, new technologies have the potential to allow artists to
bypass traditional marketing channels.
Some experts argue that the problem recording companies face is not
piracy so much as an inability to develop quality artists with staying
power. Mainstream media and retailers prefer generic,
noncontroversial acts. Being able to promote new, more innovative
bands using the Internet may contribute to greater creativity and
commercial availability of new music, attracting more consumers.
I have provided links to some good articles describing the problems
and opportunities the music industry faces as a result of the Internet
and other technologies.
"Music's brighter future" The Economist (October 28, 2004)
"Digital Music Sales Surge Amid Broader Decline" CDRinfo (October 4,
"IFPI Report Says 2004 Global Music Sales Best in Five Years" The
Canadian Independent Record Production Association (2005)
"Chuck D. Challenges RIAA and SF Attorneys over MP3" by Robin D.
Gross, Electronic Frontier Foundation (1999)
"Search terms: music sales declined; music sales decline