New Trends In The Music Industry

kensei-news: Here's an interesting report about the decline of record sales revenues that many would like to blame on P2P. Are the RIAA's lawsuits really working to discourage file sharing? The truth is that only a very small percentage of the total number of copyright violators can be sued, because there are simply too many users (over 8 million simultaneous) and the process is too costly. So the small probability of being sued inhibits the effectiveness of lawsuits against file sharers. On the whole, the report makes a lot of sense so I've taken the liberty of quoting and paraphrasing a few of the key points below...

"A complete protection of the property rights of music is only possible at prohibitive costs. Hence, it is unlikely, that the worldwide record sales volumes of 1995 and 1996 can be fully recovered just by legal efforts, technological copy protection, moral appeals and licit supply of downloadable music."

--The development of different strategies appears warranted and alternate strategies should be pursued such as diversification. For example, expansion into the merchandise and concert business will help turn the music labels turned into music marketing companies... Lately, many labels have added merchandise production, concert promotion and artist management to their business, i.e. their buyers' scope has expanded.

--As the recorded music market has shrunk the merchandise and the concert segments have actually grown. The worldwide concert audience of US artists has grown US$ 32 Million to US$ 39 Million between the years 2001 and 2003 in spite of rising ticket prices. According to industry analysts, this growth is part of a positive trend in the concert industry.

--Unauthorized copies do not seem to be significantly correlated with licensing revenues...Intuition would suggest that the increased distribution and consumption of recorded music of a specific musician, no matter if authorized or unauthorized, augments the popularity of that specific artist. Increased popularity leads to increased sales of the artist's licensed goods.

--Concert revenues do not seem to be negatively, but rather positively correlated to unauthorized copying of recorded music.

--The concert and merchandise industry is not significantly threatened by any kind of unauthorized copies.

--Interdependencies between the marketing activities of record companies, concert promoters and licensing agencies are a reason to organize all of them in the same company, since the necessary conveyance of knowledge between them causes transaction costs.

"With the transformation of record companies into music marketing companies and sometimes their integration into media corporations (i.e., Bertelsmann Group), unauthorized copies and the subsequent loss of record sales revenues is not a major issue anymore, since a major part of the revenues generated by one artist often comes from different sources and growing markets, unaffected by unauthorized copies."