What comes after iTunes?

by: Audel Shokohzadeh

Introduction

The Music Industry is steadily in decline. There lack of adaptation to new technologies and consumer trends have resulted in a loss of revenue as other companies such as Apple have taken advantage and reaped the benefits. However as technology grows and illegal downloading continues new business models must be pursued. This blog will examine how the Music Industry fell behind, how Apple picked up the slack and how the future of listening to music is in for a huge change.

The Music Industry had a very sweet deal at the peak of its success in the 80s and 90s. The only way to listen to music would be to save money, usually $20, and go to a record store and buy a cd and the radio was dominated by the Top 40. Then in 1999 Shawn Fanning created Napster the first major peer to peer file sharing website. Not only was music free to download but people could pick and choose which songs they wanted to download. Not only did you not need to buy an entire album but the music choice you had at your finger tips was astounding.

In 2001 the RIAA sued Napster to eliminate any copyrighted material on its website resulting in Napster creating a deal with the Big 5 (EMI Records, Sony, Vivendi Universal, AOL Time Warner and BMG) by using a subscription based-model. However the revolution had begun and many different free and now illegal file sharing websites begun to emerge. Since 2000 the music industry has noticed a downward trend in the number of units (albums) sold. In 1999 almost 1,100,000,000 total units were sold. In 2010 roughly 300,000,000 units were sold.

Many point to these peer to peer sites as the reason why the music industry begun to decline. If you ask many musicians however you will find that the only person the music industry can blame is itself. Frank Zappa explains that during the 60s experimental music was released because the industry took a chance. Thom Yorke lead singer of Radiohead claims that now we are hearing more of the same but not what people want.

Along came an Apple

January 9, 2001 was a day that would change the music scene forever, with the introduction of Apples iTunes. Created to help fuel sales for the Apple iPod, iTunes allowed users to download singles for 99¢ and Albums for $9.99. iTunes’ debut meant the “demise of [the] album” and singles became the money maker for the music industry. iTunes also made music incredibly mobile and portable. People could listen to the music they downloaded on their computers, on their iPods, and even burn songs onto blank CDs so they could listen in their cars. In 2008 Apple surpassed Wal-Mart as the number one muisc retailer. As iTunes success grew so did tension between the music industry and Apple. In 2010 almost 1,000,000,000 singles were downloaded. The Big 5 claimed that the pricing devalues the product and in response iTunes has created a new pricing structure ranging; singles will now cost 69¢, 99¢ and $1.29 to appease the labels.


The Competition

Apple however still faces a problem, people still don’t want to pay for music. A survey of 1,000 respondents between the ages of 15-24 found that 66% found it was morally acceptable to download music for free, 63% admitted to downloading music illegally and 70% of those who downloaded music illegally did not feel bad about downloading the music. This has opened the door for services such as Rdio, Mog, and Spotify to grow.

Rdio and Mog are services that require a $9.99 monthly service but grants users unlimited access to as much music as the want. With libraries at 10 million songs and growing suers have the opportunity to broaden their horizons and explore many different types of music. Mog has a Pandora-like service. If you are listening to Lupe Fiasco you will notice a bar at the bottom of the screen, moving this bar further to the right allows Mog to play artists that are similar to Lupe. Rdio has an emphasis on social networking where you can follow and like playlists and see what your friends are listening to if they are using the same service. The downside with these two services is that if you stop paying the monthly fee you lose access to the online catalog and the music you already have when you no longer have internet access.

Spotify is a very unique music streaming site that can pose the biggest threat to iTunes. Having gained legal status in the United Kingdom as well as Finland, France, Norway, Spain, Sweden, the and Netherlands. Spotify is ad-funded, users search for music and create playlists that they wish to listen to and at certain points during the playlists ads are played in order to pay artists for the music they have created. Spotify also allows for users to download playlists to their computer or mobile phone so they can be accessed even with a lack of an internet connection and even provides a premium service to bypass ads and the need to download playlists and even to play music on any device hooked up to an internet connection in your house.

What does this mean for us?

The consumer only stands to benefit from the evolution of the music business model. Music services such as Rdio, Mog and Spotify will give consumers the opportunity to explore what music means to them. In the words of H.A. Overstreet “I have my own particular sorrows, loves, delights; and you have yours.  But sorrow, gladness, yearning, hope, love, belong to all of us, in all times and in all places.  Music is the only means whereby we feel these emotions in their universality.”

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