Running head: EVOLUTION OF MUSIC INDUSTRY 1

Evolution of the Music Industry over the Last Twenty Years

Albany Arrage

Divine Savior Academy

EVOLUTION OF MUSIC INDUSTRY 2

Introduction

The music industry has evolved positively, overcoming the problems of new technology

changing the world. Indeed, the emergence of the latest technology itself has led to the growth of

the music industry through dramatic changes which have occurred in the production, recording,

advertising, and distribution of music. From vinyl, tapes, and cassettes to Apple Music,

YouTube, and Spotify (Agrawal, 2016). For example, decades ago, records with cultural impacts

such as classical music, jazz, and pop were recorded in professional recording studios. Once the

recording was completed, the musicians relied on labels to distribute their music physically and

to a lesser extent, through the use of the internet. At the same time, radio was the chief

competitor of the music industry. By the 1950s the industry was stable, and many music

companies focused on blues because this was the genre most people liked to listen to (Alhadeff,

2008). However, over the years, a constant global evolution has transformed the music industry

to an entirely new sector where the analog systems have been replaced by digital. Thanks to new

technology which has transitioned the music industry from vinyl to tapes to compact discs, and

finally to iTunes, Youtube, and Spotify, artists are learning new ways to generate money from ad

revenues like these streaming platforms.

In the last twenty years the music industry has evolved remarkably. The modern internet

technology plays a vital role in facilitating the transition which has occurred in the industry over

the previous two decades. There have been a few challenges and barriers that have persisted in

the music sector during decades of transformation. The significant changes that have occurred in

the sector in regards to the issue of intellectual property and copyright. ​Even though the music
EVOLUTION OF MUSIC INDUSTRY 3

industry has had its downfalls, new technology has allowed the embetterment

revolutionizing it in a positive way.

Literature Review

The Internet and the Music Industry Transformation

The modern internet technology has played a significant role in facilitating the transition

in the music industry. The development and use of the web to store and distribute music has

resulted in a widespread transformation in the music industry over the last twenty years.

According to Anthony Cerullo (2017), technology has dramatically transformed how consumers

relate to artists and retail music stores. With the continued use of the internet, the music

consumption has significantly changed. Horrigan (2008) said that the internet plays a critical role

in how online users engage with music after they have bought it. After purchasing music, the

majority of the buyers talk with friends or family about the music and share it with them, others

search for the artist and go to see them in concert. Consumers connect with musicians and access

music records via the web. The increased dependence on the internet has played a notable role in

the decline of album sales over the past two decades. Notably, the modern mainstream has

availed all kinds of entertainment to consumers by just one click. This transformation has been

accompanied by fierce competition as artists try to become successful and creative with the

internet for a chance to be heard (Cerullo, 2017).

Moreover, currently, music lovers do not need to buy the entire album (or even download

it). Instead, with the popularity of the internet, consumers can choose to download a specific song

from an album, and this has resulted in a substantial change in the consumption trend. Alhadef

(2008), explains how obtaining music via the internet has become more comfortable throughout
EVOLUTION OF MUSIC INDUSTRY 4

the years. According to him, many consumers currently access music free without having to buy

it from a record store or paying for it. Alhadeff’s argument is primarily based on the fact that the

internet has permitted fans to store large music libraries, share music online, and download free

albums by use of online-based tools such as iTunes. As a result, consumers no longer need to rely

on the traditional recording media such as the compact disc. Cerullo (2017) believes that the

advent of the peer-to-peer network in 1999 was instrumental in the industry's transition. The P2P

networks such as ​Kazaa​ and ​Napster​ have been essential facilitators of change in the music

industry by allowing music lovers to exchange music files.

Alhadeff (2008) proceeds to describe many other significant trends in the music industry

concerning how musicians generate revenue. Modern artists do not need to heavily depend on

album sales for profits as used to be the case over the past decades. In fact, it is probably the

reason the dependency on music promoters has declined. For example, traditionally, musicians

depended on music labels to record, promote, and market their music (Alhadeff, 2008). On the

contrary, modern artists have identified new alternatives to develop and commercialize their

works in more economical ways.

One of the essential ways of promotions, marketing, and selling approaches in music is

live performances (Alhadeff, 2008). According to the author, there is a substantial flow of

revenue for musicians who have realized the value of live performances in private settings. For

example, in North America, Alhadeff argues that live music performance in public environments

was estimated to generate revenue of 3.9 billion dollars in 2007 alone. Surprisingly, the number

could even be higher than this estimated value if private functions such as weddings were

considered. On the other hand, in the U.S, the Bridal Association of America recorded a massive
EVOLUTION OF MUSIC INDUSTRY 5

amount of 2.3 million dollars for weddings in 2007. The statistic is evidence that live

performances on wedding occasions generate a significant amount of money for musicians.

However, as Alhadeff explains, many music artists argue that spending on live music seems to be

exclusively profitable at amphitheaters, top concert venues, or clubs. However, the Bridal

Association of America’s reliable data has disproved such claims.

Peter Alhadeff’s observations about new trends in music promotion have been supported

by Anthony Cerullo. According to Alhadeff’s article “The evolution of the music industry: An

approximation to today's challenges” (2008), he argues that the modern music business employs

new ways of exposure and promotion which are primarily essential for artists to generate

revenue. The author mentions methods such as music performance in public events, the

formation of partnerships with famous musicians (collaborations), showcasing, and

merchandising as necessary for today's musicians to popularize their works. Accessing fans

through new sales methods is becoming the top priority for all artists in the music industry.

Furthermore, according to Anthony Cerullo, YouTube is an essential agent of change to

the music industry. Undoubtedly, the platform has become the number one driver of video music

promotion for the majority of modern artists (Cerullo, 2017). For example, in addition to

allowing artists to sell their music online, YouTube is indeed the top search engine for music

videos. It is the most preferred platform for listening and watching music albums by young fans

globally. Most importantly, videos posted on the YouTube are highly shareable through social

media such as Facebook. Thus, YouTube, besides promoting music genres, allows artists to make

large sums online via YouTube advertising. Indeed, it is not surprising that many artists have
EVOLUTION OF MUSIC INDUSTRY 6

discovered this secret and are fast switching to selling their releases by uploading album-art

videos for every song.

Additionally, Social Media Marketing is contributing to the modern change in the music

industry over the past two decades. In particular, mobile and media technology is transforming

how artists promote and market their releases. For example, with social media, artists can directly

target, access, and engage a group of fans. Moreover, the practical interaction achieved via social

media enables musicians to acquire immediate replies and recommendations from fans, which

allows them to improve the quality of their releases.

Advertising on social media such as Twitter, Facebook, and Instagram is often highly

successful and profiting to most artists. This transition has been characterized by a shift to the

digital platform from print media and publication (Agrawal, 2016). The main reason for the

popularity of social media marketing is due to the need for active content by music consumers.

Mostly, fans would want to read, see, or hear the latest news relating their favorite artists. Since

social media guarantees this speed, it has attracted the attention. As the social media

advertisement draws the attention of more and more artists, the traditional bus stop and billboard

advertisements seem to give way to the new trends.

With the increasing popularity of social media, artists can quickly raise funds through the

contribution of their fans. Over the last decades, consumers mainly contributed funds to their

favorite artists by purchasing the artists’ products and concert tickets. Initially, fans had relatively

limited opportunities to assist the artists to access money for recording. This trend has, indeed,

entirely changed to the advantage of artists. For example, today fans can help musicians to fund

their projects such as recording videos and financing events through platforms like PledgeMusic.
EVOLUTION OF MUSIC INDUSTRY 7

As evidenced today, the strategy works efficiently whereby many fans donate small contributions

which add up to a substantial amount of money to fund the artists’ project. It can also be

completed by mobilizing families and friends to purchase the music through a pre-order process

that helps to bring the music to the world.

Indeed, the turmoil in the industry has also transformed the balance of power among the

different players as well. One of the most critical areas of change in this regard concerns the

learning of music. According to Cerullo (2017), mastering music before the internet was

considered a difficult task which required lessons to learn music and instruments. However, in

the modern world, becoming a proficient musician is a simple process. Video sites such as

YouTube have several video instructions which are useful for learning by watching.

The impact of the rise of digital production is notable in the music industry. With the

increasing popularity of and dependence on various software such as ProTools, the professional

recording, mixing, and mastering of music has become highly affordable. For example, twenty

years ago, musicians were still dependent on expensive professional studios for recording.

However, this trend has significantly changed as talented recording artists can save huge amounts

by making perfectly competitive music records from laptops. For example, through loop-based

compositions made via PCs, hip-hop and dance music spread their influence into other music

genres.

According to Agrawal (2016), there has been an increased expenditure on subscription

services. Unlike in past decades, today's fans can find out about new music through different

services such as Spotify playlists and recommendation lists. Indeed, there are many other online

subscription services through which music consumers can download an unlimited number of
EVOLUTION OF MUSIC INDUSTRY 8

albums or songs for monthly fees. This approach, according to Open Music Model, is designed

for long-term revenue maximization. Napster (formally known as Rhapsody), which is the sector

leader, for instance, charges up to $12 per month and provides over six million downloads.

Not many years ago, music was majorly monetized through the sale of CDs and

publishing loyalties. However, monetization has significantly changed because it is no longer

about CD sales, but experience. The formats have further transformed from CDs to MP3

downloads and today, to live streaming via platforms such as Spotify, Apple Music and YouTube

(Agrawal, 2016). In fact, the fundamental observation in this regard is that monetizing is not

about convincing consumers to buy. Instead, today, musicians make money based on the social

aspects of their releases. In particular, selling music in the modern-day market is about telling the

consumers about what they can do with the music rather than convincing them to purchase. For

example, the best artists of our time are those artists who have been able to allow consumers to

share their releases with friends on social media, create YouTube videos using the music, or add

the song to a Spotify list (Agrawal, 2016).

Challenges

In his article, Charles Fairchild (2015), has comprehensively discussed certain barriers to

the success in the music industry despite the significant contribution of technology since the past

two decades. The author notes that, although it has become significantly easy to record music and

make it accessible to potential audiences, the impact has been entirely profitable in regards to the

relationship between fans and artists. According to him, many contemporary barriers to access

into the music sector continue to have a powerful influence. The majority of modern artists have

lamented the inability to sustain profitable experiences caused by technology. It has been noted
EVOLUTION OF MUSIC INDUSTRY 9

that the internet allows consumers to access music albums free or at significantly low costs which

makes it difficult for artists to make profits from their works. The modern music has to deal with

sudden changes in demand due to complicated, capital-intensive logistics and problems of music

distribution channels (Fairchild, 2015). The cost of bringing music to the market and maintaining

its marketability has become unbearable for some artists. As Fairchild (2015), notes, the logistics

associated with this situation can result in various adverse impacts especially to upcoming artists

who may end up with shocking levels of failure.

Additionally, the modern music sector tends to be extremely ruthless or aggressive in

regards to how intellectual property is managed. According to Fairchild (2015), the music sector

allows the hedging of risks in ways which are not available to new artists who want to emphasize

on promoting their materials. Unfortunately, the availability of web-based devices and which

were expected to eliminate or solve these risks have failed until today (Fairchild, 2015).

According to the author, different kinds of continuity within the music sectors indicate that the

obstacles to entry into the industry still exert negative forces against music in the market. For

example, a few sales and revenue records confirm that certain critical elements remain

unchanged in the music industry despite all the various tumult since the past few decades.

Among the most important indicators of the persistence of barriers in the music industry

is the continued multi-decade trend toward market expansion and industrial consolidation. For

example, in spite of the many changes that have occurred in different sectors of the economy, the

music industry continues to be owned and controlled by a relatively small number of large firms.

In 1996, for instance, 80 percent of the global music was controlled by only six big corporations

(Fairchild, 2015). While it would be thinkable that the industrial development and expansion
EVOLUTION OF MUSIC INDUSTRY 10

ought to have favored more companies into the sector, it is surprising that until 2012, the total

global sales of recorded music was controlled by three bigger organizations.

The Music Industry and Copyright

It is exciting to discover that corporate capital has extended its coverage of the intellectual

property rights. As discussed by Garofalo (1999), the expansion has occurred in three primary

areas, namely: (1) forming brand-new intellectual property rights, (2) narrowing the arena for fair

use, and (3) extending the term of copyrights. In 1996, for instance, the U.S and the European

Community expanded their copyright terms to effectively remove the public domain for all music

recorded in the 19​th​ century (Garofalo, 1999). In the U.S., the individual-held copyrights were

expanded 70 years beyond the life of the artist. The amendment was affected under the 1998’s

Sonny Bono Copyright Term Extension Act. By the same Act, the copyrights owned by

corporations were extended 95 years (Olteteanu, 2009). The move was primarily directed by

Disney. According to Ion Olteteanu, the new legislation was necessary for serving the interest of

transitional capital.

Today, the music industry largely relies on the World Intellectual Property Organization

(WIPO) as an avenue of protecting the interest of various players in the sector. As recorded by

Garofalo (1999), the WIPO was formed in 1970. Currently, the organization represents a total of

one hundred and seventy-one member nations. WIPO’s main function is to develop treaties to

protect the rights of owners of intellectual property. According to Reebee Garofalo, the copyright

agreements under WIPO have been updated and codified in various national legislation including

the United States’ Digital Millennium Copyright Act of 1998. The Act repeals the circumventing
EVOLUTION OF MUSIC INDUSTRY 11

of innovational measures to protect copyright materials such as sound recordings. Notably, to

creative artists’ interests, the regulations compel us to review the diminishing terrain of fair use

Survey

The survey was one simple question conducted via an instagram poll. Out of four hundred

forty four people who saw the poll, a hundred forty eight people voted.

After twenty four

hours, the final responses

were that 58% (percent)

obtains their music

payed and 42% (percent)

free. Some of the sent

private messages

saying they obtain

their music both ways.

EVOLUTION OF MUSIC INDUSTRY 12

​ Surprisingly, the majority of the people pay for their music. There are many ways of

obtaining music out there, but the majority have some restrictions that can be unlocked only if

there is a monthly fee, leading us to pay that certain amount of money to get what it is desired.

Out of eighty six people that answered that they pay for their music, six of them got the

chance to explain why they pay for it. Most of them had the same reasons. Some answered that

they get to play their music even when they are offline, others that they can play music without

ads popping between songs, and finally, because it is illegal to obtain it free or from places that

are not authorize.

This one question survey was conducted to prove how the way people get their music has

changed through time. Today, the majority get their music online. Instead of going to a physical

store, people actually buy music via their smartphones or computers in less than one minute. It is

faster and efficient.

Conclusion

In overall, the past two decades have brought about significant changes in the music

industry. Artists have had to learn to adapt to the changing trends in the way music is being

consumed, promoted and marketed. Indeed, it is interesting to imagine music industry of the

1930s and 1940s when the radio was the sector’s leading competitor to the modern industry

where firms are forced to reshape to cope up with extreme competitive pressure. As evident from

the discussion, traditionally famous institutions such as production, recording studios, and

distribution firms are quickly diminishing as technology continues to empower creative and

talented artists to complete tasks on their own. Digital marketing via social media, online selling
EVOLUTION OF MUSIC INDUSTRY 13

of albums through iTunes and Spotify have typically revolved the music industry while their

impacts are expected to remain significant in the coming decades.

EVOLUTION OF MUSIC INDUSTRY 14

References

Agrawal, A. (2016, July 21). The evolution of the music industry - Where we go from here.

Huffington Post

https://www.huffingtonpost.com/aj-agrawal/the-evolution-of-the-musi_b_11109130.html

Alhadeff, Peter. (2008) U.S. music industry statistics: a reappraisal. ​MEIEA Journal, vol. 8,

13+.

Https://go.galegroup.com/ps/i.do?p=AONE&sw=w&u=29081_mdpls&v=2.1&id=GALE%

7CA234791370&it=r&asid=ee4053e0fa7b27a00c106971fd70ffc7

Baden-Fuller, Charles, et al. (2001) Co-evolution of firm capabilities and industry

competition: Investigating the music industry, 1877-1997 (*). ​Organization Studies, vol. 22,

971+.

Https://go.galegroup.com/ps/i.do?p=AONE&sw=w&u=29081_mdpls&v=2.1&id=GALE%

7CA84670646&it=r&asid=ce01ea29ffb36aaa0ff43514305d3ecb.

Cerullo, Anthony. (2017, November 04). The evolution of the music industry: An

approximation to today's challenges.

https://themusicdevelopmentagency.com/the-evolution-of-the-music-industry-an-approxim

ation-to-today-challenges/

Fairchild, Charles. (2015) Crowds, clouds, and idols: new dynamics and old agendas in the

music industry, 1982-2012. ​American Music, vol. 33,​ 441+.

Https://go.galegroup.com/ps/i.do?p=AONE&sw=w&u=29081_mdpls&v=2.1&id=GALE%

7CA458839755&it=r&asid=27421809a0aa580fa0bc8b8f9ecda2c7​.
 EVOLUTION OF MUSIC INDUSTRY 15

Garofalo, Reebee. (1999) From music publishing to MP3: Music and industry in the twentieth

century. ​American Music, vol​. 318.

Https://go.galegroup.com/ps/i.do?p=AONE&sw=w&u=29081_mdpls&v=2.1&id=GALE%

7CA62052928&it=r&asid=bbdcb21c0f6399fbd3502d53fe9c2635​.

Horrigan, John B. (2008) The Internet and Purchasing Music. ​Pew Research Center: Internet,

Science & Tech.

Https://www.pewinternet.org/2008/05/18/the-internet-and-purchasing-music/​.

Olteteanu, Ion. (2009) The origins and evolution of music copyright. ​Contemporary Readings in

Law and Social Justice, vol. 1,​ 121+.

Https://go.galegroup.com/ps/i.do?p=AONE&sw=w&u=29081_mdpls&v=2.1&id=GALE%

7CA267134926&it=r&asid=32bf5448246247648ffe18025df29aa1​.