The case of the music industry

Philip Kern (KEA) discusses how different sectors of the creative economy have had to come up with new economic models in order to adjust to the digital era.

In the following excerpts, he describes specifically the case of music:

Of all Cultural and Creative Industries (CCIs), music has suffered the most from the digital revolution, being hit by digital piracy, the reduction of physical sales (away from highly profitable retail stores), the development of new distribution channels with different monetisation logics (Apple - iTunes setting the precedent by establishing prices of downloads independently of the industry). This industry disruption is driven by new powerful digital players, the development of new business models and new consumption patterns with the instant availability of music on mobile devices and, most specifically, the rise of music streaming. … Taken as a whole the revenue of the music industry has severely declined over the last 16 years, essentially due to the decline in sales of packaged music (recorded music in the form of CDs) - the turnover of the recorded music industry significantly dwindled since 2000 (from EUR 32 billion in 2001 to EUR 13 billion in 2014 – worldwide data). The recent 3.2% increase in recording revenues (in 2015) should, however, be noted. The boom of live music and digital sales has not yet compensated the lost sales: digital sales represented EUR 1.3 billion for EU markets in 2014. …

Artists have suffered from the industry’s painful restructuring and have been forced to adapt to a new landscape. They are playing a greater role in fighting for consumers’ attention by making use of new online tools, notably social media, to develop a fan base and attract the attention of concert venues, festivals, and music businesses. However, user-generated content has not replaced artist-generated content, since consumption of music remains talent driven. Artists are confronted, on the other hand, with the fact that the new generation of music fans are less loyal to given bands or music genres switching more easily than former generations. …

Nowadays artists have to make more efforts to emerge by developing a fan base, thus forcing extensive touring, which contributes to a thriving life music scene (concerts and festivals). Artists have to develop a fan base if they hope to achieve a record deal or to be able to feature in music festivals. Social media are important tools enabling artists to develop such a fan base. The direct monetisation with fans remains relatively limited and artists still have to rely on distribution specialists (the record companies) for most of their revenues.

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How do you listen to music today? Do you use streaming services? Do you follow your favourite artists on social media? Have new digital tools had an effect on the kinds of music you listen to?

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This article is from the free online course:

Culture in the Digital Age

European University Institute (EUI)