The following are some highlights from the report:
• Illegal downloads could be costing the global music industry $10 billion a year, the very amount by which the global industry has declined since 1999.
• Entrepreneurial artists have more opportunities than ever to make it without the backing of a label.
• Transaction activity in the music industry has been robust from 2006-8, with over 150 deals valued at $11.2 billion.
• The music industry is still searching for a business model as the Internet has cannibalized CD sales, yet the pace of innovation and sense the industry has come close to bottoming makes it seemingly safer for investment.
• MySpace Music has a lot of competition based on our review of the major ventures in this arena.
So, to this former newspaper industry analyst's eyes, being asked to look at the music industry felt like being asked to witness a train wreck, again. The music industry is facing the same trials and tribulations as most traditional media. The Internet has reduced the barriers to entry and not surprisingly has put incredible pricing pressure on the industry, increased competition, and put a lot of the power into the hands of the artists and consumers.
CDs are now unbundled and songs can be purchased individually; estimates suggest that illegal downloads could be costing the global music industry $10 billion a year, the very amount by which the global industry has declined since 1999. Consolidation is rampant as witnessed by the proposed Ticketmaster/Live Nation merger and the very fact that there are now only four record labels representing 74% of global music sales.
Yet, entrepreneurial artists have more opportunities than ever to make it without the backing of a label and so many more ways to make money than in the past. The advent of the Internet has produced new sites and services that allow artists to get discovered, fund, produce, and market a CD, online and off; they can find their fans, set up a tour, sell merchandise and license their work. Consumers can find all types of music online and compare their tastes with others. They can stream for free, sample indefinitely, and communicate with other fans and artists. The era of D-I-Y is here.
Radiohead tried the ultimate experiment in 2007 releasing their CD online and allowing consumers to pay what they wanted. While some consumers took full advantage of the offer, others paid; Radiohead generated tremendous revenues from hard copy boxed sets and went on to sell more tickets on tour than in the past. Aerosmith generated more revenues from a special edition of Guitar Hero: Aerosmith both through licensing and downloads.
The music industry is still searching for a business model as the Internet has cannibalized CD sales, yet the pace of innovation and sense the industry has come close to a bottoming makes it seemingly safer for investment. Transaction activity has been robust with over 150 deals valued at $11.2 billion over the last three years.
Who put out the original report upon which this article is based and is there a link to it online?
Thanks.
At our company, we're creating a new platform for labels and artists to make money from music - combining music with online games. This is the next shift for the music industry - consumers being able to actively experience music with their friends while playing games no matter where they are located, in the same way that Guitar Hero offered shared music experiences offline. Engagement with music has proven to be a way to consistently monetize music (ringtones, concerts, iPhone apps, etc). Online games are the next frontier.
Lauren, it would be great to know what report you are referencing in your post.
Hi S.E. Olson, go to http://www.paidcontent.org/reports to click-to download this report and check out ContentNext's other reports. More to come so check back regularly!