The music industry has gone through a paradigm shift in operations thanks to developments in information and communications technology (ICT), which have positively impacted and transformed the music distribution value chain, improved accessibility and promotion activities. The recorded music industry has experienced a lot of changes since the development and commercialization of Edson’s Cylinder to the development of Compact Disks (CDs). Some of the significant changes in the music industry include the Edison’s cylinder, development of 12-inch diameter records and the gramophone in the 1900s. Electrical recording in 1910 boosted the industry followed by emergence of radios in the 1920s. Stereo recording was established in 1930s while the first Gold Disk was developed in the 1940s. Multi sound track stereo products hit the market in 1950s and replaced mono recording by 1960s. Quadraphonic records and Walkman II were released in the 1970 and 1980 respectively while Compact Discs Interactive and Digital Versatile Discs were introduced in the 1990s. In the late 1990s, Mp3 emerged and further transformed the industry (Alfred, 2002). The traditional music value chain was made up of the composer, publisher, the record label, manufacturer, distributor, retailer and consumer. The publisher collects royalties due to the composer while the label is charged primarily with the task of discovering new talent and management a catalogue of established artists, marketing and promotion and pushing sales, which was mainly made through tapes and vinyl plates. Manufacturers were charged with the task of manufacturing and packaging CDs while distributors mostly distributed the CDs physically to retail outlets. Retailers who were composed of large scale record stores such as Virgin, supermarkets, specialized music stores and clubs were the front end of the value chain where consumers bought music. Music consumption was mainly through CDs, tapes or vinyl records or listening on the radio or TV (Adner, 2012).
This value chain was, however, disintegrated due to a shift in technology characterized by networked memory space for storage of music, digital format conversion, Digital Right Management (DRM), which protects music copyright, bundling and packaging music, online music distribution and social media marketing. One of the peer-to-peer systems that revolutionized interconnectivity of music users is Napster in the 2000, but later collapsed due to legal challenges. Today, digital music services depend on a network connection between primary device and software, which transfer data to secondary devices and software thus enabling distribution of music content (Klym, 2005). After the fall of Napster, other platforms emerged such as FastTrack, Gnutella and Freenet. These platforms sealed the legal loops that Napster had overlooked by avoiding use of main servers enhancing peer-to-peer sharing, thus, negating legal responsibility. iTunes is also a force to reckon with the digital and online music distribution though other platforms such as Amazon are coming up as music promotion strategies. Youtube and Mp3 Skull enable online streaming and on demand access to music content. Such platforms have transformed and shortened the value chain to include the artists, record companies, retailers and consumers (Alfred, 2002). Record Labels have had to restructure their business models to include online discovery of talent where potential musicians can drop their tracks for auditions. Music promotion has also shifted from the traditional marketing strategies to the more interactive online marketing especially through social media such as Facebook, Twitter, MySpace amongst others. Musicians are more involved in promotion of their music through social media and Youtube where they share their music with their fans, inform their fans about tour dates and interact constructively with fans. Development of smartphones has also seen the amalgamation of online music platforms and applications into the phones operating systems further enhance digital music distribution.
The music industry is expected to become more digitalized, with companies further integrating digital platforms into their downstream and upstream activities. Moontoast is a new organization in the industry. It has partnered with major records and PayPal to start offering music on Facebook. Fantrail allows artists to develop mobile applications, which enable them to connect with fans and provide offers either after or before events. Fairshare, an online music store, is enabling fans to donate to good causes through downloading and paying for music through the platform (Kolaja, 2012). Digital radio may in the future become the primary source of inserting music into the communal networks, which will lead to plummeting of CDs, which are currently used as the main physical music distribution channels.
Impact on Society
Increased use of digital platforms will lead low operating costs and increase the profits earned by musicians due to a reduced value chain as they will not have to share their profits with physical distributors or stores. Music lovers will also be able to access music content at low prices and easily as all it takes is an internet connection either from a phone or a personal computer. The internet has broken physical global barriers and as such music content is able to be accessed from any point in the globe. Musician will also have a variety of producers to choose from as the digital age his evidenced with coming up producers. However, musicians will have to contend with increased competition and increased piracy issues especially in countries with lower legal standards. Currently various illegal service providers such as PirateBay and Grooveshark have already been identified. Finally, digital music distribution as demonstrated by the business model Fairshare will enhance donations to worthy causes through purchase of music content and music related merchandise.