Music Industry: Toward A New Business Model?

Abstract

The last ten years have seen many changes in the music industry, mainly caused by Internet music downloading, legal and illegal. The traditional business model of the recording music industry, based on the sales of CDs in retail stores, seems to be on its way out. No clear new model has emerged yet, but several trends are noticeable for the recording music industry. First, the decline of CD sales since the peak year of 2000 has accelerated, totaling 30% in the USA. Second the recording music industry is going through a restructuring, marked by sell offs and mergers among the recording labels, by the disappearance of music retail stores, and by the foray of the majors in new directions, such as concerts. Finally, revenues from digital music sales are increasing, partially compensating for the decrease in CD sales. Whereas the providers of content, namely the labels and the artists, can be seen as victims of music downloading, the providers of the technology have benefited. The sales of its iPod/iTunes systems have provided Apple’s more revenues than the sales of its computers. Other manufacturers are also entering this market. Meanwhile, academics and policy makers have been studying new types of copyright licenses. One idea is to impose a global license, paid by Internet service providers, and repaid to them by Internet users. Many technological and legal questions must be resolved for such a scheme to become viable.