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How digital downloads have acted as a catalyst to the decline of physical sales in the music industry

Background

Advances in technologies in the past two decades have increased the number of platforms and mediums for which listeners can obtain music. Before the digital era, some of the primary methods of listening to music were on the radio, listening to CDs or attending concerts. However, the emergence of internet and broadband have led to significant structural and preferential changes in how consumers access and download music. 2015 was the first year that digital sales overtook physical sales for the first time. This can be seen as the start of the downfall of physical sales in the industry. Structural changes as mentioned before is just one of the possible catalysts that resulted in digital sales being the majority breadwinner in the music industry in the last year. Other possible influences could be due to artist led distribution, music streaming sites and piracy being used to influence peer-to-peer selling.

The emergence of technology in the music industry.

Before technology became an everyday necessity physical sales were essentially the only way that consumers could have music on demand. Technology and the sale of music essentially go hand in hand today. This emerging trend has certainly had an impact on how consumers listen to and obtain their music. The late 1990s to early 2000s is deemed to be the starting point for this technological revolution in the music industry. Services such as Kazaa and Napster allowed users to share music via Peer-to-peer (P2P) sharing. Upon their breakthrough, as P2P leaders they faced criticism over Copyright infringement issues. The original Napster website was shut down due to a court order which emerged from A&M Records, Inc. v. Napster, Inc. However, other peer-to-peer sharing sites, such as Kazaa and LimeWire used Napster's challenges to their benefit and have been able to surpass copyright violation charges due to advances in technology. However now, as was the case with Napster, neither of these websites still exist due to court injunctions such as Arista Records LLC v. Lime Group LLC for Limewire. Since these peer-to-peer sites were unable to continue on due to legality issues we saw the emergence of "legal" music sharing sites such as ITunes.

The effect this has had on physical sales.

Technology has not only had an effect on physical sales but has also made the distribution of physical sales a lot more innovative. Physical sales in a pre-technology era meant that a consumer would go into a retail store to purchase CDs or Tapes. However, with the emergence of technology the option of physically purchasing a CD through an online merchant has meant that a new distribution chain has had to be put in place to accommodate for this. One of the biggest trends that can be seen with the emergence of technology in the industry is the significant reduction in sales of whole albums. Consumers may not necessarily want to purchase whole albums and may just want access to individual tracks. Though singles are available for physical purchase more often than not other tracks are added to the "single" which may not be warranted by the consumer.

Each year the Recording Industry Association of America publish year-end reports on Industry shipment and revenue statistics. If we look at physical sales in 2014 and 2015 alone it is clear to see the declining trend in physical sales year on year. Total physical units sold and total physical values were down in that period by 10.8% and 10.1% respectively.

Structural changes in the industry

Before the technology infestation in the industry record labels were the pinnacle of the music industry. At that point in time, other competitors were nonexistent as physical sales held a monopoly position in terms of how and when music was released. In order to keep up with trends, the industry must constantly restructure itself to keep up. The trend toward artist led distribution and the popularity of music streaming sites have in turn each changed the structure of the industry and how consumers retrieve their music. Music these days is portable as mobile phones are used as a storage facility. Music is more often than not consumed before it is purchased and this factor must be considered when viewing the structure of how consumers access music.

 :: this is probably where most data and statistics will need to be incorporated AMJM8 (talk) 17:05, 21 October 2016 (UTC)

Artist led distribution

With the structural changes in the industry and the diminished role of the record label, it has become possible for consumers to purchase music directly off the musicians themselves. Artist themselves have so much reach towards their fans that it makes logical sense that they promote and distribute their own music. Artists have certainly felt the pinch of reduced incomes from physical sales. Intelligently established artists have been able to remove the "middle man" of the record label. However, for new unestablished artists, it is a lot harder for them to break into the market in this way. A lot of artists have even promoted their music through free "surprise" concerts.

Music streaming sites

Music streaming sites have become an everyday source of access to music for listeners. Such sites as SoundCloud, Spotify, Tidal, Apple Music, and Pandora Radio are just a few of the on-demand streaming services. For a small monthly or yearly fee, you can have unlimited access to music and can create playlists or have free choice as to what song you want to play. Many of these sites offer trial periods of their premium accounts or else subscription free versions to entice listeners to then subscribe to premium options. In terms of certain subscription sites such as Spotify, they offer both family plans and also student discounts to help appeal to the masses.

The future for physical sales

In terms of margins obtained, artists would understandably wish for physical sales to regain momentum. Digital downloading has led to a trend of per-song purchases as opposed to whole album sales. It is in this regard that we really see the influence of digital downloads on physical sales. The new margins that are gained from streaming services and digital purchases are fractional compared to what was previously gained on physical sales of music. However, these days artists are making up for these losses through the sale of concert tickets and merchandise. Using these alternative methods and trying to use technology as an advantage rather than a catalyst for the decline of physical sales. The CD could essentially be at the end of its life cycle. It has not tried to change to keep up with technology and roughly has stayed in the same price bracket over the past ten years. This model is not sustainable and CDs need to recognise its place in the industry at this current point in time.

Overall Comments: I like the different sections included in your article - they conjointly cover a fascinating and extremely relevant topic. This will undoubtedly be a very interesting read! AMJM8 (talk) 17:05, 21 October 2016 (UTC)

See also

Music Industry
Music download
Recording Industry Association of America
Open Music Model

External sources

Physical Sales
Global music on different platforms