Part 1: Setting The Stage

Chapter 2

Start Thinking. . . 1. How has digital technology affected the

music industry?2. Would you say this change has been for the

better or for the worse?

Chapter GoalsLearn 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.

The Double-Edged SwordBenefits of digital recording and distribution

to musiciansto producersto record labels

Disadvantagesinfinite copying

Internet SynergyCD piracy only one problemInternet offered unregulated and accessible

distribution channelMPEG and P2P protocols

Labels Lay Seeds of Self-DestructionLegislation

Audio Home Recording Act of 1992Digital Millennium Copyright Act of 1998

Litigation by RIAAconsumersInternet Service Providers

Smaller, Cheaper, Faster, Better (?)Heart of digital revolution = process of

making musicImplications:

reduced need for conventional recording studios

reduced need for large corporation fundingreduced need for large corporation

infrastructure

The Economics of Digital DistributionPreviously:

record labels = banksartists = sharecroppersinvestment in successful recordings = profit

The New Economic OrderDigital technology + Internet = independent

artists earning moneyinvestment in personal recording equipment

and softwarepromotion through

Internet-based services

The New Economic OrderDisadvantages

loss of industry gatekeepersloss of well-trained “ears”

The New Economic Order iTunes Arrives

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)

The New Economic Order Mobile: On the GoProliferation of mobile phone distribution

channelsStreaming music

sees rising share

The Digital FutureHow will the music industry evolve:

will it disappear?will it reapply itself?

The Digital FutureConsolidationMergers and acquisitionsOld-school companies = exploiters of

catalogsDigital companies = engine for new creative

directions

The Digital FuturePrice Versus ValueDigitization means

more musicmore accessiblemore affordable

BUT popularity still adds premium value

The Digital FutureStreaming Versus Downloads“Cloud” computing may overtake downloadsNew attitude:

music must be freely accessiblemusic must be free of cost

Entrepreneurial spirit revived

For Further Thought. . . 1. What other potential implications can you

see digital technology bringing to the music industry?

2. What is your view on civil litigation? Whose responsibility is it to ensure legal downloading and file-sharing: record labels, ISPs, or the consumer?

3. How has social networking impacted on the distribution of music?