September 14, 2008

Presentation: A Recent History of Music

Posted in University tagged , , , at 2:24 pm by Andrew McMillen

This is a transcript of a presentation I gave as part of my introduction to marketing course on Monday. There were three others in my group; our topic was digital music marketing, focussed specifically on the success of the iPod.

It’s compiled from several sources, including Wikipedia, and it’s over-simplified and facetious.. but it’s okay.
 

So, the music industry today. 2008.

I downloaded Metallica’s new album on Saturday afternoon. Its official release isn’t until Friday. What happened was, someone close to the band or their record label or one of the many pre-release reviewers obtained the completed album, copied it to their computer using an MP3 encoding application, then uploaded it to a file-sharing site on the internet.

I downloaded the album. Tens of thousands of others had done so before. Many more will do so before Friday, which is when the album will be available legally, in both physical record stores and digital music stores.

(*group member interjects*) Hold on a second. Music, on a computer? Download? MP3? I thought that music was only available from my local record store, in CD form. (*holds up CDs*)

Ah, so you’re a bit behind the times. How’s 1998 treating you? Just kidding. Allow me to indulge in a cursory overview of the last ten years in music.

The long-play vinyl record was introduced to the commercial market in 1948. The compact disc was released in 1982. Music was released by artists in one of three forms – single, album, or EP, which was a little longer than a single but a little shorter than an album.

The content of these recordings were created by musicians – songwriters, singers, guitarists, drummers, keyboardists, violinists – and recorded and released by record companies.

A recording contract – commonly called a record deal – is a legal agreement between a record label and a recording artist or group, where the artist makes a record – or a series of records – for the label to sell and promote. 

In the age of vinyl and CDs, labels typically owned the copyright of the records their artists make, and also the master copies of those records. Promotion was a key factor in the success of a record, and was largely the label’s responsibility, as was the proper distribution of records.

This was how the music industry operated, for almost two decades. In 1999, a computer filetype known as MP3 and a handful of enterprising music fans changed everything.

MP3, short for Moving Picture Experts Group, Audio Layer III is an audio format that compresses files with only a small sacrifice in sound quality. MP3 files can be compressed at different rates, but the higher the compression, the lower the sound quality. A typical MP3 compression ratio of 10:1 is equal to about 1 MB for each minute of an MP3 song.

To put this into perspective – (*holds up iPod*) this 20 gigabyte iPod has the theoretical ability to store roughly 5,000 four-minute, four megabyte files. All contained within this portable device, which allows me to play music anywhere. 5,000 songs is 500 ten-track albums.  I don’t know about you, but I find it difficult to carry 500 albums in my pocket.

From the first half of 1995 through to the late 1990s, MP3 files began to spread on the Internet. The filetype’s popularity began to rise rapidly when the software company Nullsoft released their free audio player, Winamp. The small size of MP3 files enabled widespread peer-to-peer file sharing of music ripped from compact discs, which would previously have been nearly impossible due to hard drive capacity restrictions. The first large peer-to-peer filesharing network, Napster, was launched in 1999.

Napster, the name engraved in internet history, was developed by nineteen year old university student, Shawn Fanning. His idea was to allow anyone with an internet connection to search and download their favourite songs. By connecting people, Napster created an online community of music fans practically overnight.

As you can imagine, this free, unchecked distribution method didn’t sit too well with record companies. Music fans ripping, sharing and downloading the creative output of artists meant that nobody got paid. Instead, a lot of people got angry. Most notably, the Recording Industry Association of America, and Metallica.

I’ll cut this history lesson short with a few choice quotes from Metallica’s drummer, Lars Ulrich, in 2000. This was around the time that the band were embroiled in legal proceedings against Napster.

“Napster hijacked our music without asking. They never sought out permission. Our catalog of music simply became available as free downloads on the Napster system.”

“Every time a Napster enthusiast downloads a song, it takes money from the pockets of all members of the creative community.”

Now, Metallica have changed their tune, eight years on. Many artists across the world have. CD sales are still in decline, and will probably stop being a viable music distribution mechanism within five years. Imagine CDs relegated to the same rare, limited edition status that vinyl copies of new albums currently inhabit.

So Metallica probably aren’t all that happy that I downloaded their album for free, especially before its official launch. They’re probably not happy that I have no intention of ever buying the album. But I would pay to see them perform live. And this is the direction that I think the music industry is heading in – an artist’s recorded work, regardless of its method of distribution, will function solely as an advertisement to sell tickets to an artist’s live performances. But that’s an entirely different discussion.

In the place of the physical album sits this (*holds up iPod*). The encoded data contained within 5,000 computer files is processed by this device to produce audio. Music. Songs. Albums. It doesn’t matter. Digital music sales have eclipsed CD sales. iTunes has sold 5 billion songs in 5 years. Five billion songs. And this is within Apple’s closed sales environment, where they receive a significant revenue percentage of each 99 cent song.

Naturally, someone had the common sense to incorporate MP3 playing functionality into the mobile phone. The Apple iPod is the world’s most popular MP3 player. You’ve probably heard of the Apple iPhone, which functions as both a phone and MP3 playing device, among other features. Apple weren’t the first to make this connection. But the immense purchasing power behind the Apple brand has placed them in a pretty solid position to dominate the music phone market. They’re already so far ahead in the MP3 player market that new entrants are at a significant disadvantage. 

170 million iPods have been sold as of March this year. And Apple are continually producing new hardware and functionality upgrades, further segmenting their existing market, and attempting to attract those who are still undecided.

(group member) is going to tell you more about Apple’s history and marketing strategy. Personally, I recommend that you download Metallica’s new album as soon as you get home.

I’ll write more about Metallica in the future.

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3 Comments

  1. This Devil's Workday said,

    “And this is the direction that I think the music industry is heading in – an artist’s recorded work, regardless of its method of distribution, will function solely as an advertisement to sell tickets to an artist’s live performances. But that’s an entirely different discussion.”

    I’d like to read that discussion. Whether or not this is going to be a good thing for musicians, whether they need record companies at all anymore, and if this means manufactured music (you know the type) is going to die or flood the market?

    I bought the Metallica album…

  2. Nice one. Thanks the comment and interest. I’ll address this.

  3. Philis said,

    Keep a good work man!,


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