Analysis on Digital Music Services - Sample Essay
Digital download is becoming more and more popular as the years go on. It has become part of the music revolution. As revenues for the major record labels are declining, we see an exponential growth from digital music sales. Online store, ITunes, is one of the premier sites that offer digital music. It is now rank number one for sales in the music industry. This is the first digital-only retailer to be ranked number one in music sales with a share of 19%.This just helps demonstrate the growing popularity and trend of digital music services worldwide. As the trend of music distribution evolves from piracy to legal online sites, we must adapt our business to it.
Background The trend first started with another trend that involves illegal piracy of copyrighted music also known as peer-to-peer sharing. It all started in 1999 with the online application of Napster, which allowed users to swap media files across the internet. The result of this application was huge as at one point there was about 2.79 billion downloads in one month. The application survived for two years until the RIAA (Recording Industry Association of America) shut it down for copyright infringements.
After the success and failure of Napster, a slew of other peer-to-peer applications soon made way to the internet. Programs such as Kazaa, LimeWire, Bearshare and Bit Torrent were soon used to share illegal copies of music as well as other copyright forms of media like software, games and movies. In 2007 alone, there was an estimated 700 million who were willing to say that they have used peer-to-peer software to get music. It was also determined that due to this global act of piracy, music sales dropped from $38 billion in 1999 to only $32 billion in 2003 worldwide. Piracy of copyrighted materials has become a massive issue in the world.
After surveys and research were done regarding why people illegally download music, there were several reasons why in regard to the music industry. The reason being that the CDs for the artist is overpriced compared to the production cost. In addition, consumers who only want one or two songs that were not released as a single should not be forced to pay for the entire album. Lastly, it is a convenience to them as they can put their newly downloaded song onto their media player and listen to it there. And from these reasons, it helped the success of the ITunes store.
The trend of legal digital music download started shorting after the release of ITunes store. First launched in April 28, 2003, Apple provided only a limited 200,000 tracks for Mac users. By the end of the year, however, the service was soon expanded to PC users as well. There was such a high demand for the growing trend that the site sold about 275,000 tracks in less than 18 hours. This was only the beginning of ITunes success.
By the end of 2004, it soon expanded to other parts of the world, especially in Europe. As of this year, ITunes now sell 25% of all music sold in the US and 69% of all digital music. After realizing the huge success of ITunes and the falling sales of CDs, there has been a huge boom of music services that enable musicians to sell their music directly to their fans without the need for a 3rd party. A number of other major downloading sites started to surface to sell digital music as well such as Amazon, Wal-Mart, Rhapsody, Yahoo, and Zune marketplace.
The major advantages of digital music downloads are the price, the selectivity, the fast broadband connections for regular homes, and the invention of the iPod. Although the price of a digital music CD is almost the same as a regular CD, it is the fact that you can pick certain songs off an album and just buy those that interest most consumers. 99 cents for one song is great want only one song. To add to that, just purchasing the songs that you like and want is better than having to buy their entire album. Just as well, with the increase of homes having broadband connection, downloading music off a computer have become easier and faster. It takes about two to three minutes to download just one second off ITunes which is faster than having to drive to a music store to buy the CD. Lastly, because of the popularity of the iPod, more people are purchasing digital music than CDs. One of the reasons why ITunes, Apple’s online music store, is rank number 1 is because of their iPod.
In 2008 Anderson’s article, you can see that digital sales have been almost doubling since 2004. And by 2007, it has become half of the total music sales. In addition, by 2009, digital music sales have become 20% of IFPI digital music sales which is about $2.7 billion (Music Week 2009). This was, according to the article, a 25% jump from last year alone. In 2007, the digital music industry is to be $3 billion in sales and is estimated to be about $10 billion in year 2012 (Bangeman, 2007). Altogether, a total of 1.5 billion songs were sold digitally last year.
With the growth of digital music sales also comes the decline of CD sales. According to Chartier 2009’s article, a reported 17 million people have stopped purchasing CD altogether. Even though there is a 10 percent increase in music sales, there is still a drop in CD sales. This data correlates with Anderson 2008 article, in which you can see the drop in CD growth. Recommendation and Conclusion With the analysis concluded, it is my recommendation to start selling our music online.
There is a huge market of consumers if we do so. We could sell our music through already successful stores like ITunes and Amazon but we could make more if we start up an independent store. However, the risk involve as well as the cost to do so could be too much to handle. Therefore, it is favorable to sell it through ITunes as it can reach to more potential customers faster. We need to give our consumer another option than buying the CD or pirating our music because it has been hurting our sales as well as our potential sales we could be getting. We must adapt to the current problem and adjust our business model accordingly.
We should also start thinking of discontinuing the production of CDs. Although, there is a market for CDs, it is not as big as it once was. Decreasing the production and marketing of CDs and aiming more consumers to digital sales would be recommended. There are plenty of ways to market our artists online through various networking sites like Myspace and Facebook that are also free. We also have such sites like Youtube and Twitter to further increase our artist’s music. Doing so will decrease cost and increase awareness of our music.
To conclude, online music services are the new method of music distribution. It has been proven to be both easy and efficient. In addition, to the new technology that gives us another way to listen to music, the format of CDs is becoming obsolete. Such media players like the Zune and the iPod are becoming so popular that more people prefer their music to be digital anyways. It is just the evolution of music that we must adapt to.
Anderson, N. (n.d.). A brave new world: the music biz at the dawn of 2008 – Ars Technica. Retrieved October 27, 2009, from http://arstechnica.com/old/content/2008/01/state-of-digital-music-2007.ars
Bangeman, E. (2007, June 24).Digital sales exploding as Apple muscles to the number three spot in music sales – Ars Technica. Retrieved October 27, 2009, from http://arstechnica.com/apple/news/2007/06/apple-muscles-past-amazon-to-number-three-position-in-music-sales.ars