Streaming digital audio and video, MP3 ripping and CD burning, podcasts, webcasts, satellite radio, digital audio broadacasting (DAB) and now streaming mobile wireless: The rapid advent of new digital audio technology has created a wealth of options and opportunities for technology providers, new and established music companies, musicians and music lovers alike.
It has also caused panic, consternation and dramatic, painful changes — sometimes massive restructuring — of relationships between recording companies, broadcasters and musicians. For a long time, those relationships have been volatile, but if they were not always cozy, they were often hugely financially rewarding and mutually beneficial.
Earth Still Shaking
The record companies and broadcasters had the capital, the technology and the distribution; the musicians provided the product. However, all that has changed — and rather quickly.
Today, individuals can rip and burn their own CDs, download MP3s, and build a music library to rival that of the recording companies. Many millions of people, young and old alike, can easily access the technology to turn themselves into webcasting DJs or even to establish themselves as musicians of potentially international repute.
The music industry landscape isn’t about to settle down anytime soon, either. You don’t need to rely on the views of big-time industry players, long-time observers or industry experts to realize that, but it does help to listen to what they have to say, especially if you’re not simply a passive music consumer or just casually interested in the business.
After all, one day you too might get into the business and find yourself negotiating and dealing — or even playing and competing — with them.
Growing Up Fast
In late April, Arbitron and Edison Research released the results of their latest survey of the digital radio world, “The Infinite Dial, Radio’s Digital Platforms: Online, Satellite, HD Radio and Podcasting.”
Researchers found that more than one in five people, that is, 21 percent of respondents, listened to Internet radio during the previous month — an audience that adds up to some 52 million people if the statistic is applied to the general U.S. population — and that the weekly Internet radio audience grew by more than 50 percent from a year earlier.
Listeners tend to be young, the survey suggests — 41 percent of respondents fell between the ages of 18 and 34 — and male (58 percent).
Worldwide music sales via the Internet and mobile phones exploded around the globe in 2005: Sales grew three-fold, or 300 percent year over year, and generated US$1.1 billion in revenues for recording companies. That’s up from US$380 million in 2004, according to the International Federation of the Phonographic Industry’s, “IFPI Digital Music Report 2006.”
Some 420 million single music tracks were downloaded globally in 2005, twenty times more than two years ago and more than double the 2004 total. Digital music sales grew to account for 6 percent of total music sales for the year — Internet downloads accounted for roughly 60 percent, and mobile phone downloads for 40 percent, as of 2005’s half-year mark.
New Wave of Commerce
While Internet listeners and mobile phone users were downloading more music than ever before, the number of songs available for download and the number of Internet music service providers also were growing substantially.
The number of songs digitized and available online from major service providers doubled to surpass the two million track mark, while the number of legitimate online service providers grew to 335 — that’s up from 230 in 2004 and 50 as of year-end 2003.
“Record companies are licensing their music prolifically and diversely,” said IFPI Chairman and CEO John Kennedy, summing up the year in review report.
“A new wave of digital commerce, from mobile to broadband, is rolling out across the world. It is generating billions of dollars in revenues, and it is being driven, to a large extent, by music — by the people who create music, who produce it, and who invest in it.”
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