Impact of digital streaming and download services
A key driver in the global development of the music industry historically has been technology (Laing, 2009), so it is impossible to discuss current and future developments in the industiy without some discussion of the impact of technological changes. Historically, the commercial music industiy developed as a way to find commercial opportunities for music as a product and or seivice, in which technological innovation has always been a key driver. Before the invention of the printing press, musicians earned income either thr ough patronage or by getting paid for performances. With the development of the printing press and copyright, a music publishing industiy began to develop. Sheet music along with the popularity of the piano enabled the publishing industry to dominate the music industry until the 20th century. However, arguably the largest technological impact on the music industry was the gramophone in 1877, which enabled musical performances to be recorded and played back. This allowed the voices of singers to be recorded and distributed worldwide, thus enabling the rise of global superstars such as Enrico Caruso and Dame Nellie Melba as well as the rise of global recording companies such as EMI (Gronow and Saunio, 1998).
Figure 2.12 Grammy nominations of Australian artists 2015-2018. Source: Sounds Australia Annual Reports.
Figure 2.13 BRIT Award nominations of Australian artists 2015-2017. Source: Sounds Australia Annual Reports.
The global expansion of the industry continued following the development of radio and television technologies in the first half of the 20th century which enabled music to be broadcast worldwide, further widening the reach of recorded music. However, the most significant developments in the industry in more recent years have been due to developments in digital technologies which enable music to be stored and distributed in digital format, beginning with the development of compact discs (CDs) in the 1980s which enabled hi-fi quality audio to be stored on laser-readable disks in digital format, followed by the development of the MP3 standard which enables audio files to be compressed to a small size and played on mobile devices.
The development of the World Wide Web and music file-sharing platforms such as Napster which enabled MP3 files to be shared on the Internet further expanded the digital marketplace for music and revolutionised traditional value chains in the industry (Baym, 2007; Bockstedt et al., 2006). While Napster and similar file-sharing sendees greatly assisted the global reach of music, from the point of view of the music industiy, they had a downside in that they made it easier to share pirated music, thus depriving recording companies and artists of revenues.
In response, various legal music download services entered the market in the early 2000s, the most notable example being Apple’s iTunes and, more recently, the development of streaming technology, which has now become the most common means of listening to music. Instead of downloading a copy of the audio file to the listener’s computer, to be stored and subsequently played by a media player software, streaming works by downloading small chunks of the audio file in a continuous stream, storing the data in a buffer and then playing each chunk of the music after a slight delay. This provides the owners of the recording more control over the song as the listener does not have a copy of the entire song at any one time.
The increase in digital music has led to a reconfiguration of the traditional music industry value chain (Figure 2.14) in which technology-based companies in music downloads and streaming like Spotify, Apple, YouTube, Google, etc., are emerging as the new dominating force of the music industry. One commentator even went as far as to say they are now the most important players in the industry:
You’ll read a lot in the news about YouTube, Spotify, Apple, Soundcloud, Microsoft, Google, Samsung, Nokia and other tech giants “negotiating with the music industry” over one thing or another. But that’s not actually what’s happening. Those guys ARE the music industry. They’re negotiating with record companies. Where “the music industry” is located has shifted again.
Streaming technology has transformed music distribution from a model based on ownership to a model based on access. Whereas in the last century the “ownership
Figure 2.14 The digital music value chain. Source: Adapted from Siemer and Associates 2013.
model” has dominated with the sale of recorded music in formats like CDs, records, sheet music and tape where the user paid for and owned the music, in this century the model has switched to an “access model”, where users pay for access to streaming and online subscription-based music services like Spotify, Apple Music and Deezer (Wikstrom, 2012).