The iconic Jamaican artist Bob Marley once said, “One good thing about music is that when it hits you, you feel no pain” (Marley). Unfortunately, it is the music industry that is certainly feeling a great deal of pain at the moment. Over the past decade, the music industry has been victim to an increasingly negative trend in its value. According to the RIAA (Recording Industry Association of America), album sales in 2002 amounted to a total of 681 million units sold worldwide that year. In 2010, just 326.2 million albums were sold, making that year’s total less than half of what it was just eight years prior (Osorio). Music corporations have been directing the blame solely towards the rise of internet piracy. The RIAA initially launched into a heavy antipiracy campaign in response, coming down hard on music listeners whom they accused of pirating music. Patricia Santangelo was one of thousands of people sued by the RIAA in 2005, and she eventually had to settle the lawsuit by paying $7,000 for downloading just six songs (“Music Companies Agree to Settle Piracy Suit”). While file-sharing may have played a part in the industry’s current predicament, there have been other notable changes in the entertainment world in the past 11 years, and a number of them have impacted the music industry as well. Evidence supports the fact that innovations in digital music, the gaming industry, online marketing, and recording software have changed the model and value of the music business.
The first culprit would be the medium that is directly competing with physical album sales; digital music. The creation of iTunes has had one of the biggest effects on the music industry in its entire history. A shift in the primary music format is nothing new. Just as the LP/EP was replaced by the cassette, which was then dominated by the CD, the CD is gradually losing its place in the digital age. Data detailing the percentage of music industry revenue by format (again, from RIAA revenue figures) shows that the CD first became worth more than 75% of the industry’s total revenue in 1995. By 2000, CD’s had become worth more than 90% of the industry’s total revenue, hitting a high of 95.5% in 2002. However, by 2010 the CD was worth 49.1% of the industry’s total revenue, with downloaded and streamed digital content amassing 50.4% of the total revenue (Resnikoff). These trends have revealed one of the music industry’s biggest drawbacks: many consumers never truly wanted to buy a full album. It was once common practice to invest in an artist’s complete project just to have access to one or two hit singles merely because there was no other viable alternative. Nowadays, we can purchase singles for less than a dollar each. Since Nielsen Soundscan (the official source of sales records in the industry and for the Billboard music charts) began keeping track of digital single sales in 2003, the amount of legally downloaded music has grown drastically, from 141 million tracks in 2004, to 1.17 billion in 2010 (Brown). Compare this to the continual decline in album sales during the same time period; though the growth in digital units sold far outstrips the drop in album sales, digital sales have failed to make up for the slack left by their physical counterpart. As a single is sold for just 99 cents, one digital track sold is hardly equal to a lost album sale, which is usually no less than about $10. In addition to this price deficit, consider the fact that it is impossible to break a digital download. Likewise, in the event that one loses their digital music due to a computer crash, services like iTunes will actually allow its customers to freely re-download anything that they’ve purchased since a record of everything they’ve bought is kept on an electronic database. As a result, digital music has lowered the number of repeat purchases that consumers make and allowed the business of “used music” (consumer sells old CD directly to another consumer) to grow, both of which take another portion of money out of the industry’s pocket. Thus you have the current panic of the industry. The change in preferred format from CD to digital has helped to diminish the music industry’s value, but it isn’t the only factor to consider.
Almost a full decade before the introduction of digital music, another revolution in the entertainment industry was under way. Video games became a lucrative business around the late 80’s and early 90’s, beginning with the release of the Nintendo Entertainment System (NES) in 1985. A number of franchises that are now recognized around the world were introduced to the market, including Super Mario Bros., The Legend of Zelda, Final Fantasy, Sonic the Hedgehog, and many other titles. Shortly following the release of the Nintendo 64 in 1996 and the phenomenal worldwide success of industry-defining games like Super Mario 64 and The Legend of Zelda: Ocarina of Time, video games had become a very competent competitor in the realm of home entertainment. By 2001, video game console sales figures had a large share in the entertainment realm. Joe Santulli, the creator of the well-known video game magazine Digital Press and a highly respected expert in the field, commented last year that “the videogame industry is double the size of the music industry”, and he wasn’t wrong to say so (Santulli). Near the end of 2010, the game Call of Duty: Black Ops had the biggest launch in all of entertainment history when it sold 5.6 million units in the United States and United Kingdom in the first 24 hours of its release, giving it an impressive sales figure of $360 million dollars after just one day (Sharkey). In the last generation of gaming, games were sold for about $49.99, but the average game today is sold for $59.99, and there are a vast number of other blockbuster hits in the medium that sell well over a million units in about as much time as Call of Duty: Black Ops; Super Mario, Grand Theft Auto, Final Fantasy, Halo, the Madden NFL football games, and Pokémon are just a few of the hit series that continually push phenomenal numbers worldwide, despite the ever-increasing price in game software. Now consider that consumers don’t have an endless amount of money to spend on entertainment products and the problem for the music industry becomes clear; entertainment money that once went almost exclusively to music and the occasional movie is now being used largely on video games. The youth that once got together to listen to music are now gathering to play games such as Call of Duty and Guitar Hero. According to VGChartz, a well-respected video game sales-tracking website, 86 game titles sold a million or more units in 2010 (Global Yearly Chart). Nielsen Soundscan year-end data showed that only 13 albums managed to sell at least a million units during that same year (Christman). If that isn’t bad enough, the best-selling album of 2010 (Eminem’s Recovery) sold 3.4 million units; the best-selling game pushed over 22.4 million. Albums are sold for about $10, while games are sold for about $60, but game sales far outstrip album sales. The rise of video games near the beginning of the century has certainly changed the face of the entertainment industry as it would seem consumers currently greatly prefer buying games over music.
It’s become apparent that to the casual listener, the value of music has been diminished in light of the digital age and the rising popularity of video games. However, even those who are most passionate about music, the artists themselves, have had a drastically altered view of the role of the industry in light of recent technological advancements. The expansion of the web has pushed artists to a new level of promoting and putting out their music. One has only to look at the exponential growth of social networking sites such as Facebook and Twitter to get an idea of how much more connected people have become in the digital age. According to Facebook themselves, they “had 845 million monthly active users at the end of December 2011”, which is an increase from the 608 million users they had exactly one year prior to that (Facebook). With virtually everybody having some kind of presence online nowadays, it has become possible for music fans to have a direct relationship of sorts with their favorite artists, who wisely utilize networks like Facebook and Twitter to promote themselves, cheap and easy. Even piracy, which the music industry at large has labeled as the root of its troubles, has its place in tapping a new audience. It is said that once one downloads an unknown song, they become more likely to make further purchases from that artist in the future as “lowering the cost of sampling music will propel more consumers to purchase music online” (Gopal & Bhattacharjee). This newfound technological savvy of artists has also manifested in whole recording studios becoming available on computers and laptops so that artists can now afford to purchase their own recording software to do their own recording and production. These developments have completely shaken the old relationship between the artist and the label; it was once the job of the label to finance the expensive production and recording sessions of an artist in a professional studio, and then to promote and distribute that music. The costs of these services were steep, and many artists never saw a dime from their first couple of projects because their label had to recoup the money they spent on them. Now that artists can take it upon themselves to do the producing, recording, and promoting that they once depended on labels to do, the music industry has lost a large portion of the revenue it used to make from selling an artist.
Over the past decade, the music industry has made music piracy the scapegoat for its drops in revenue, but this argument doesn’t hold if one surveys the changes that have been made throughout the entire entertainment industry. The innovations in digital music, the gaming industry, online marketing, and recording software have drastically changed how people view and value entertainment. The true reason for the industry’s decline is that, for decades, its revenue has been tremendously inflated as a result of people having limited choices in how they enjoyed and created music. The technological advances we’ve made in the past decade have offered us preferable alternatives and left the previous business model of the music industry woefully obsolete. If those in the industry don’t wish to be completely left behind, they need to accept that the old way of selling music is no longer viable, and they need to find a way to combine music with our new technology in such a way that they benefit one another instead of working against each other.