The Transformation of the Music Industry, or: How They Learned to Stop Worrying About Download Culture and Love It

31 March 2014 Comments Off on The Transformation of the Music Industry, or: How They Learned to Stop Worrying About Download Culture and Love It

BY ALTUĞ KARAKURT (EE/II)
altug.karakurt@ug.bilkent.edu.tr

In my previous column, I tried to describe the impact of the digitization of music on listeners and how this impact changed over time. I also tried to demonstrate this transformation by explaining mine. My conclusion was that even though we tend to approach the download culture as an evil tool for stealing money from the music industry, it has much more to offer us. The digital revolution will inevitably shape the future of music, and the sooner we embrace it instead of fighting it, the sooner we will start utilizing it.

This time, I will focus on how the music industry has been affected by the download culture and how it is trying to adapt to this revolution. With the initiation of file-sharing systems, piracy and illegal downloading reached a gigantic audience and spread rapidly. However, as I stated in my previous column, as people get used to it, their enthusiasm about downloading every available record vanishes. On the other hand, a huge number of listeners, including most of the older generation, could not adapt to the download culture and were feeling quite unhappy about not being able to benefit from such accessibility.

The music industry was very successful in seizing this opportunity. They targeted the excluded listeners just mentioned, as well as the growing population of ex-pirates who had become conscious and, while wanting to keep their downloading habits along with the advantages of the digital revolution, also wished to stay legal. Considering the fact that pirated music downloads have been declining in recent years, with a 26 percent decrease in the volume of P2P music in the US in 2012 alone, this is quite a large number of customers. The iTunes store was a perfect fit for this audience. The amount of music available via this outlet was large enough to compete with the file-sharing systems. It was fast, cheap and easy to use. So, iTunes got hold of quite a large portion of the industry’s income in a very short time. Similarly, after the long reign of iTunes, the recent problem has been the impracticality of storing music on computers, which is why legal streaming services such as Spotify and grooveshark are spreading rapidly. The point I’m trying to make here is that the companies that were able to analyze the changes, adapt to them and see them as an opportunity profited much more than they ever could have otherwise. On the other hand, some other companies were stubborn—they didn’t embrace a revolution supported by the listening public and tried to fight it through the legal system. In the end, they lost money and time, while their wise colleagues were making fortunes simply by adapting.

As I stated earlier, the great opportunity in the current music market has been to successfully target those listeners who are, for whatever reason, not making use of the digital revolution, but what about the others? These listeners have a very different customer profile. They have been downloading their music, so they don’t buy records—meaning no profit from copyrights or distribution. How, then, can the big music companies squeeze money out of them? These customers, the downloading segment, were an unconquered territory, and as the big companies have been reluctant to approach them, new competitors have appeared in the sector: the independent labels.

The digital revolution also made the Internet a free advertising and publication field for musicians. By eliminating the necessity of signing contracts with expensive big music companies to reach their audience, this new situation made the competition more equal for independent and underground artists. With the increasing number of outstanding independent musicians on the Internet, new independent music labels started forming. They work only with independent artists and approach music more as an art than a profitable product. That’s why I personally support them, rather than millionaire companies that just rob the artists. Unfortunately, further criticism of such companies will have to be reserved for a future column.

In reference to this column’s title, the music companies that stopped worrying about the digital revolution and accepted it as an opportunity rather than a threat are doing better than ever. They have adapted their marketing strategies to the needs and preferences of the customers and to the new features of the industry. In contrast, some other companies are so hostile toward the download culture that they have tried to force their old strategies and habits upon the customers, which doesn’t work not only for the music industry, but for any sector at all. Expecting the public to change their musical habits just because some companies ask them to is very unrealistic as well as impolite. As a result of all this, those companies that embraced the change and became a part of it are standing tall, while the companies that refused to adapt are now busy pursuing lawsuits and calculating their decreasing profits.

I would like to finish this column by emphasizing something that I stated in my previous one. No matter how we feel about it, the download culture, or digital revolution, is here to stay. The download rates may be decreasing rapidly, but even if downloading completely disappears in the future, listeners’ habits will not change. The companies that are unable to understand them do not have a future in this industry.

See you next time with my last conceptual column (at least for the time being), where I question the way music reviewing is generally done, and make some suggestions as to how it should be done.