Music Industry Essay

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The music business entered a dramatic change in the 21st century. These changes appear in the way of how people access and consume music. According to Hull, Hutchison and Strasser (2011) the music business has developed throughout three stages. While moving from the agricultural age, where the music business made its revenues through live performances, troubadours and patronage, the industrial age introduced new innovations that were assumed to be associated with long-term economic growth. Commencing the year 1950 sound recordings experienced a drastic raise in sales by an average of 20% a year (Krasilovsky and Shemel, 2007). While the music industry was dominated by six major record lables (Time Warner, Disney, Vivendi Universal, Viacom, Bertelsmann, and News Corp.) (Hull, Hutchison and Strasser, 2011), further growth in the industry has been recorded in the 1970’s, where record sales “rose from less than $2 billion at the beginning of the decade to over $4 billion in 1978”, which took a sharp turn entering the Depression around the middle of the 20th century (Krasilovsky and Shemel, 2007:5). With the invention of the Compact Disc (CD) in 1984 the music industry was able to increase their record revenues again surpassing $4 billion. According to the Recording Industry Association of America (RIAA), profits in 1988 increased up to $6.25 billion (Krasilovsky and Shemel, 2007). On one hand CD’s have proved to be very successful invention as it indicated that consumers are willing to pay for increased quality of goods and services. However on the other hand it had introduced issues relating piracy. Illegal reproduction of analog phonograph records was a relative harmless issue at this time, as the quality of sound would reduce by ea... ... middle of paper ... ... well as a time trend dummy, which equals 1. The theorists found evidence to support their aforementioned study claiming “the structural change in the demand for recorded music” (Stevans and Session, 2004:316). The time series model shows a decrease from 2.25% to 0.77% in regards to the growth rate on how the buyer consumes recorded music presumably taking the increase of distribution means and all other factors in consideration. With this model Stevans and Session proved the link between music downloads and the decreasing demand for CD sales after 2000 and they also predict that copyright laws potentially has an impact on reducing price elasticity of demand, which forces digital distributors to lower prices. Consumers would then be able to benefit “not only from price stability, but also an enhanced market for all music formats” (Stevans and Session, 2004: 322).

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