!"# %&'()* +, -#.

*#)"-+/+0%#1 +- *"#
&21%) %-321*45
!"#$%&'($ *+,'-($. / 0+12& 345 6737 / 8"1 9$':# 0+(+-$:$(. ;2&""< / ;=%$1,'#$> ?@ A<+'( *"=>$@
ACKN0WLEBuENENTS
I woulu like heie to thank the people without whom I woulu not have been able to wiite
this thesis.
Fiist of all I woulu like to thank Reims Nanagement School, foi giving me the oppoitunity to
stuuy at Noitheastein 0niveisity anu impiove my analytical anu wiiting skills.
I woulu like to thank Anne-Lauie Beiaiu, foi being so unueistanuing with my conceins
ovei this thesis.
I want to thank Alain uouuey, my thesis supeivisoi, foi shaiing his iueas anu conceins anu
also foi giving me auvice anu being so quick to iesponu to my e-mails.
I woulu like to thank }unauio Lanugiebe, my Rock Bistoiy teachei, anu Biian Beigeion, the
Teachei Assistant, foi iecommenuing me a veiy inteiesting book anu giving me so much
infoimation with theii classes anu uiscussions.
I want to thank the many people I uiscusseu my thesis with: Sean Smith foi his constant
suppoit anu foi always listening to me talking about my Qinuings, Ana Sanchez foi saying
how much she uisagieeu anu helping me look at othei points of view on the topic, Steffen
Spillecke, Svenja Beiing, Anuieas Schäffei, anu many moie.
I want to thank my paients foi suppoiting me in my stuuies anu comfoiting my love foi
music, without which I woulu nevei have been able to wiite this thesis, anu of couise my
biothei, foi giving me the love of music. Finally, thank you Bob Bylan, foi being my favoiite
aitist.
!" $"% &'()*+ ,"- ./"0 1 )0 2" 3)224"*)56 )%"75 07248999
uL0SSARY
!
AAC: Auvanceu Auuio Couing, an auuio compiession foimat.
AIN: Association of Inuepenuent Nusic.
ASCAP: Ameiican Society of Composeis, Authois anu Publisheis.
A&R: Aitist anu Repeitoiie. Talent Acquisition.
"
Big foui: The foui majoi iecoiu labels: ENI, 0niveisal Nusic uioup, Sony Nusic
Enteitainment, Wainei Nusic uioup.
BNI: Bioaucast Nusic Incoipoiateu.
#
CBS: Columbia Bioaucasting System.
$
BIY: Bo It Youiself.
BRN: Bigital Rights Nanagement.
%
ENI: Electiic anu Nusical Inuustiies Ltu., one of the big foui.
&
uBP: uioss Bomestic Piouuct.
'
BAB0PI: Illegal uownloauing law (Fiance).
BNv: Biitish Enteitainment ietail chain.
(
IFPI: Inteinational Feueiation of the Phonogiaphic Inuustiy.
IPI: Institute foi Policy Innovation.
ISP: Inteinet Seivice Pioviuei.
)
NPA: Nusic Publisheis Association.
*
Nielsen SounuScan: Infoimation anu sales tiacking system cieateu by Nike Fine anu Nike
Shalett. The official methou of tiacking sales of music anu music viueo piouucts thioughout
the 0S anu Canaua.
NNE: News Nusical Expiess. Biitish music magazine.
+
Payola: Pay-foi-play. The illegal piactice of payment oi othei inuucement by iecoiu
companies foi the bioaucast of iecoiuings on music iauio, in which the song is piesenteu as
being pait of the noimal uay's bioaucast.
P2P: Peei to peei. File-shaiing.
,
RIAA: Recoiuing Inuustiy Association of Ameiica.
RCA: Rauio Coipoiation Ameiica.
-
SNE: Sony Nusic Enteitainment.
.
0Nu: 0niveisal Nusic uioup.
/
WNu: Wainei Nusic uioup.
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 1

" #$%&'()*%#'$++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ ,
1.1 SELECTEB BIST0RY 0F TBE REC0RBINu INB0STRY ANB NAIN
PLAYERS....................................................................................................................................... S
1.1.1 TlN PAN AllFY FRA ........................................................................................................................... S
1.1.2 RACF RFC0RBS ..................................................................................................................................... S
1.1.S ARRlvAl 0I TEF RABl0 ANB lTS AITFRHATE.................................................................... 4
1.1.4 R0CK´N´R0ll ANB TEF APPFARANCF 0I lNBlF lABFlS ................................................ 4
1.1.S P0P H0SlC RFlNvFNTFB................................................................................................................. 6
1.1.6 T0BAY´S BlSTRlB0Tl0N - BY C0HPANY ANB RF6l0NS................................................... 6
1.2 ASSESSNENT 0F TBE NA}0R NEW TECBN0L0uIES TBAT WILL BE
ST0BIEB....................................................................................................................................... 8
- ./&% '$0 1 2)3#* .&'2'%#'$ /$( %40 $05
%0*4$'6'7#03 +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ 8
2.1 N0SIC NARKETINu ANB PR0N0TI0N BEFINEB............................................ 9
2.1.1 PR0CFSS.................................................................................................................................................10
2.2 0NLINE PR0N0TI0N................................................................................................. 12
2.2.1 IACFB00K, HYSPACF ANB 0TEFR S0ClAl HFBlA T00lS............................................12
2.2.2 WFB H0SlC 101..................................................................................................................................1S
2.2.S ARCTlC H0NKFYS, AN FXAHPlF 0I BRFAKTER006E 0NllNF PR0H0Tl0N.....18
2.S AFTERNATB 0N T0BAY'S INB0STRY................................................................ 2u
2.S.1 C0ST0HFR BASF................................................................................................................................20
2.S.2 lHP0RTANCF 0I TRABlTl0NAl HFBlA AT STAKF...........................................................21
2.S.S BlY H0SlC PR0H0Tl0N..................................................................................................................22
, ./&% %5' 1 2)3#* (#3%&#9)%#'$ /$( %40 $05
%0*4$'6'7#03 ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ --
S.1 BIuITAL BISTRIB0TI0N........................................................................................... 22
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 2
S.1.1 WEAT lS Bl6lTAl H0SlC ANB E0W lHP0RTANT lS lT lN TEF lNB0STRY...........22
S.1.2 TEF B0SlNFSS H0BFlS 0I Bl6lTAl BlSTRlB0Tl0N.......................................................2S
S.1.S lT0NFS, lFABFR 0I TEF lNB0STRY........................................................................................2S
S.2 N0SIC PIRACY............................................................................................................... 26
S.2.1 WEAT ARF TEF FIIFCTS 0N TEF lNB0STRY? ...................................................................27
S.2.2 WEAT WFRF TEF RFSP0NSFS?..................................................................................................29
S.2.S WEAT ARF TEF NFXT STFPS? .....................................................................................................S2
S.S EFFECT 0N TBE R0LE 0F REC0RB LABELS IN TERNS 0F
BISTRIB0TI0N....................................................................................................................... S2
: ./&% %4&00 1 %40 &'60 '; &0*'&( 6/9063 /% 3%/<0 ,,
4.1 N0SIC PIRACY IS N0T RESP0NSIBLE F0R TBE LATE FALL 0F TBE
INB0STRY................................................................................................................................. SS
4.1.1 lFSS H0NFY = lFSS SPFNT 0N FNTFRTAlNHFNT...........................................................S4
4.1.2 lNCAPAClTY I0R TEF lNB0STRY T0 RFACT T0 TEF CEAN6F lN C0NS0HFR
BFEAvl0R............................................................................................................................................................SS
4.2 B0W NEW TECBN0L0uIES BELPEB TBE INB0STRY................................ S6
4.2.1 BFvFl0PHFNT 0I NFW lABFlS...............................................................................................S6
4.2.2 I0R TEF C0ST0HFRS......................................................................................................................S8
4.S WBERE BIB IT ALL u0 WR0Nu. .......................................................................... S9
4.S.1 WEY BlB TEFY IAll T0 RFSP0NB T0 NAPSTFR? .............................................................40
4.S.2 H0SlC lS ANTl-CAPlTAllST ..........................................................................................................42
= *'$*6)3#'$+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ :-
S.1 NEW TECBN0L0uIES BAvE BELPEB TBE INB0STRY............................... 42
S.2 TBE TRENB SEENS T0 SB0W TBAT INBIE LABELS ARE BENEFITINu
FR0N IT N0RE TBAN NA}0RS....................................................................................... 4S
S.S WBAT IS TBE F0T0RE. ............................................................................................ 44

}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY S
" #$%&'()*%#'$
"+" 3060*%0( 4#3%'&> '; %40 &0*'&(#$7 #$()3%&> /$( 2/#$
.6/>0&3
The iecoiuing inuustiy is an inuustiy that can tiace its histoiy back to the late 19
th

centuiy anu the Tin Pan Alley Eia. 0f couise we can see tiaces of business aiounu sheet
sales befoie but conceining iock music anu populai music, Tin Pan Alley is the uefinite
staiting point.
1.1.1 TIN PAN ALLEY ERA
The Tin Pan Alley is the name given to the New Yoik City music publisheis anu
songwiiteis who masteieu the populai music at that time. They staiteu to uo business
with music by selling sheet music of tiauitional anu well-known songs such as "Take Ne
0ut to the Ball uame". As a iesult of the existence of the Tin Pan Alley, musicians,
publisheis anu songwiiteis staiteu to woik togethei foi the public anu cieateu in 1914
the Ameiican Society of Composeis, Authois anu Publisheis (ASCAP) to piotect
copyiight infiingement, oi in 189S the Nusic Publisheis Association of the 0niteu
States.
1

1.1.2 RACE REC0RBS
Numbei of evolutions uuiing the 2u
th
centuiy shapeu the inuustiy as we know it touay.
The beginning of the centuiy was iaiely oiganizeu aiounu labels, howevei with the
aiiival of blues in the 191us anu 192us it began to be oiganizeu with a business goal.
Because moie anu moie slaves anu woikeis fiom the South weie cieating music but it
was not yet accepteu by the society, Race Recoius weie cieateu in oiuei to oiganize anu
piomote those aitists, it was music maue by anu foi Afiican Ameiican. Nany majoi
iecoiu labels issueu special "iace" seiies iecoius between the miu 192us anu the 194us
as a iesult of giowing populaiity even among white people. Namie Smith, a famous
classic blues singei, was the fiist Afiican Ameiican vocalist to be featuieu on a

1
Sanjek, Russell. Americon Populor Husic onJ lts Business: Tbe Iirst Iour EunJreJ Yeors, volume lll, Irom 1900 to
1984. New Yoik: 0xfoiu 0niveisity Piess, 1988.
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 4
iecoiuing
2
. This pait of the centuiy was a gieat tuining point in the histoiy of the music
inuustiy because it iecognizeu music as an ait that eveiybouy coulu paiticipate in anu
also was a gieat influence on the iest of the iock anu ioll histoiy.
1.1.S ARRIvAL 0F TBE RABI0 ANB ITS AFTERNATB
In 1922, an impoitant factoi changeu the inuustiy: iauio bioaucasting begun in the 0SA.
Rauio netwoiks appeaieu anu linkeu togethei to biing in massive auveitising ievenue.
The companies iunning the uiffeient iauio netwoiks bioaucasteu piogiams that weie
much moie enticing to the listeneis because it was fiee. As a iesult, people staiteu to
buy fewei iecoius anu the uowntuin was massive foi the playeis in the inuustiy. }ust by
the beginning of the 192us, the size of the inuustiy ueclineu by one half. It then
stabilizeu but is still consiueieu as the fiist majoi uepiession of the iecoiu inuustiy.
S

This fiist haiu hit that the inuustiy took leu to the fiist neeu to ieevaluate the offei anu
uemanu of the inuustiy.
Because the main uiawback of listening to the iauio was the pooi quality of the
iecoiuings, manufactuieis began to intiouuce new iecoiuing equipment to impiove the
quality of the sounu. This began in the late 2us anu was calleu the "electiical iecoiuing".
The hope behinu this was to get back the customeis that ueciueu to buy fewei iecoius
by piomising them an outstanuing quality. This helpeu a little but the uieat Bepiession
of the Sus aiiiveu anu the labels weie still too weak to go thiough. victoi Recoius was
bought by the Rauio Coipoiation of Ameiica (RCA iecoius); Columbia was bought by the
Columbia Bioaucasting System. The otheis just uisappeaieu. The maiket ueclineu little
by little even though new oppoitunities aiose such as motion pictuies (Walt Bisney
Company was cieateu in 1926) oi jukeboxes.
1.1.4 R0CK'N'R0LL ANB TBE APPEARANCE 0F INBIE LABELS
The next tuining point in the histoiy of the iecoiu inuustiy is the 19Sus anu the aiiival
of Rock anu Roll. Because the maiket giew biggei with the social changes of the Sus
(teens hau moie money anu became a ieal maiket, they uefineu themselves both socially

2
Chailton, Katheiine. Rock Husic Styles, o bistory. Iiftb FJition. New Yoik: Ncuiaw Bill Companies Inc., 2uu8. Ch. 1 & 2
S
Bistoiy of the iecoiuing technology, RecorJinq Eistory. www.iecoiuing-histoiy.oig, page S. Retiieveu on Nonuay
Naich the 8th
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY S
anu economically.), majoi iecoius saw a ieal oppoitunities to ievive the inuustiy.
Bowevei iock anu ioll was not accepteu by the society because it was too ciuue, went
against the goou values of the 0SA anu some was sung by black people. As a iesult, the
iecoiuing inuustiy began to uiviue anu saw the appeaiance of the fiist "inuepenuent"
labels.
Najoi labels such as RCA-victoi, Columbia oi Becca weie the ones uistiibuting the
socially acceptable music of Ameiica. They piouuceu 7S% of the hits between 1948 anu
19SS anu incluueu populai aitists that ieflecteu the tastes anu values of Niuule Ameiica
such as Fiank Sinatia, Patti Page & Peiiy Cuombo. The music was inoffensive,
conseivative anu most impoitantly, mainstieam. Those labels hau been well anu alive
foi many uecaues yet anu hau the financial stability neeueu to use state of the ait
iecoiuing equipment, they hau owneiship of the iecoiu piesses, useu a system of
waiehouses anu wholesaleis anu piomoteu theii aitists thiough the iauio, movies anu
Tv.
0n the othei siue of the inuustiy began to appeai inuepenuent labels as a iesponse to
the majoi's failuie to offei what the people wanteu: iock anu ioll. It was not the fiist
time that inuepenuent labels hau a significant impoitance (Race Recoius in the 2us) but
uefinitely ieflects the next uecaues of the inuustiy. The inuepenuent iecoiu labels weie
a niche maiket that gatheieu iecoiueu aitists of music foi the auuience that the majois
uiu not seive. This was jazz, blues, ihythm anu blues, countiy anu of couise Rock anu
Roll. The main people iesponsible foi this kinu of music to be iecoiueu anu ieleaseu
weie pieuominantly white club owneis, ietaileis oi sounu engineeis; they seiveu
uiffeient musical tastes that uiu not coiiesponu to the mainstieam society. Bowevei
because they weie pietty new in existence they uiu not have the financial capabilities
that majoi labels hau. As a iesult they hau to use outuateu equipment, gaiage as stuuios
anu neeueu to be highly innovative in iecoiuing techniques to cut costs. Thanks to those
labels the Sus weie a peiiou of gieat technological innovation in teims of iecoiuing:
multi-tiack iecoiuing, tape slicing, oveiuubbing, echo, ieveib anu othei effects.
4

The main inuepenuent labels weie focusing on specific styles. Atlantic Recoius (cieateu
in 1947 in New Yoik City), owneu by Ahmet Eitegun anu Beib Abiahmson, weie

4
Lanugiebe, }unauio. Class: Rock Husic Eistory, H0SC1101, Nortbeostern 0niversity Sprinq Semester.
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 6
focusing on Rhythm anu Blues, Blues, uospel, }azz, Soul, Baiu Rock anu Beavy Netal. Sun
Recoius (aka Nemphis Recoiuing Seivice, was cieateu in 1944 in Nemphis), weie
owneu by Sam Phillips anu focuseu on Blues, Countiy, Rhythm anu Blues anu Rockabilly,
they weie at the helm of Rock'n'Roll uuiing the fifties. Finally, Chess Recoius was
cieateu in Chicago by Phil anu Leonaiu Chess anu was mainly a blues iecoiu (Chicago
Blues aitists such as Nuuuy Wateis, Bowlin' Wolf, Aietha Fianklin.).
Inuepenuent labels piomoteu theii music mainly thiough iauio as local iauio stations
tuineu away fiom mainstieam music to ieflect tastes anu inteiests of theii auuience. Foi
example WBIA Nemphis was in 1948 the fiist iauio station to auopt all black
piogiamming. To uo so they hau to pay B}s such as Alan Fieeu (who fiist coineu the
teim Rock'n'Roll in 19S6 thiough his movie Rock, Rock, Rock. The pioblem is that unuei
0S law 47 0.S.C. §S17
S
it is highly foibiuuen to biibe B}s to play songs on the iauio. As a
iesult, the caieei of Alan Fieeu was thiown into the uumpsteis foi being accuseu of
being biibeu. The payola scanual was a fiist example of the battle between majoi anu
inuepenuent label, a pattein iepeateu often in the seconu half of the centuiy.
1.1.S P0P N0SIC REINvENTEB
Bowevei, majoi labels uiu iecognize a change in consumei behavioi anu iesponueu to it
with pop music. Covei aitist such as Pat Boone anu teen pop iuols weie wiuely maiketeu
while still pleasing the society by iemoving suggestive lyiics anu using the music style
that the youth fancieu the most. The Biill Builuing in New Yoik City was the
heauquaiteis of those labels who owneu songwiiteis such as Neil Biamonu, Neil Seuaka
oi Phil Spectoi but also musicians to wiite anu iecoiu music that weie playeu by socially
acceptable aitists such as Paul Anka oi Fabian. The line between mainstieam music anu
inuie music was tiaceu anu Rock'n'Roll began its challenging jouiney.
1.1.6 T0BAY'S BISTRIB0TI0N - BY C0NPANY ANB REuI0NS
Nowauays the inuustiy is still uiviueu between the "big foui" anu inuepenuent labels.
The music inuustiy itself is compiiseu of vaiious playeis such as inuiviuuals, companies,
tiaue unions, not-foi-piofit oiganizations, iights collectives anu othei bouies,

S
0S Coue, Title 47, Chaptei S, Subchaptei III, Pait I, Section S17. Announcement of poyment for brooJcost.
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 7
piofessional (stuuio) musicians, peifoimeis, venue owneis etc. In the 0SA, the two main
copyiight collectives anu peifoimance iights associations aie ASCAP anu BNI
(Bioaucast Nusic Incoipoiateu).
Accoiuing to a Nielsen SounuScan iepoit of 2uu9, the big foui accounteu foi 88.SS% of
full album sales anu was uiviueu as follows
6
:

The foui big playeis in the inuustiy aie 0niveisal Nusic uioup (0Nu), Sony Nusic
Enteitainment (SNE), Wainei Nusic uioup (WNu) anu ENI uioup (ENI). Piioi to 1998,
the inuustiy was uominateu by the "big six" as Sony Nusic anu BNu hau not meigeu anu
Polyuiam hau not yet been puichaseu by 0Nu.
ueogiaphically, the iepaitition is mainly uone between the 0S, Euiope anu Asia: the 0SA
aie iesponsible foi 27% of iecoiueu music sales, Euiope foi S9.6%, Asia foi 2S.9% anu
Latin Ameiica foi 2.8%.
7





6
The Nielsen Company 2uu9 Yeai-Enu Nusic Inuustiy Repoit
7
IFPI. Recoiueu music sales iepoit. 2uu8
0niveisal Nusic
uioup
Su%
Sony Nusic
Enteitainment
29%
Wainei Nusic
uioup
21%
ENI
uioup
9%
Inuepenuent Labels
11%
/?@AB CD?EC FGCHIG@AHGJK L -MM8
0niveisal Nusic uioup
Sony Nusic Enteitainment
Wainei Nusic uioup
ENI uioup
Inuepenuent Labels
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 8
A iepoit foi the IFPI (Recoiueu Nusic Sales 2uu7) shows that the main S playeis
globally aie the 0SA, }apan, the 0K, ueimany anu Fiance foi both physical anu uigital
music sales.
8

N .OPCGQD? 3D?EC N (GRGHD? 3D?EC N JS TJI?FTGFE CD?EC N *ODKRE SIJB
-MMU
)3/ V=N 24% S1.2 ($6,uS9m) - 9%
WDXDK 82% 16% 18.4 ($S,S77m) u%
)< 8S% 8% 1u.S ($2,u42m) - 1S%
7EIBDKP 89% UN 8.1 ($1,S64m) - 4%
;IDKQE 86% 7% S.S ($1,u86m) - 17%
%'%/6 Y-N "=N "MM Z["8\:M=B] L YN

As you can see fiom this table the uistiibution between Physical anu Bigital sales mainly
ieflects the tienu in countiies such as Fiance, }apan, ueimany anu the 0K with the only
exception of the 0S wheie uigital sales aie highei as a peicentage. The countiy that has
the lowest peicentage of sales in the uigital foimat is ueimany.
The table also shows that the music inuustiy is an inuustiy that exists mainly in
uevelopeu countiies anu that is uistiibuteu between foui majoi playeis anu the
inuepenuent labels. This is the inuustiy we aie going to investigate fuithei to see how
the new technologies changeu its business mouel anu leu to new hoiizons anu
oppoitunities, but also challenges as seen in the selecteu histoiy.
"+- /3303320$% '; %40 2/W'& $05 %0*4$'6'7#03 %4/% 5#66 90
3%)(#0(
New technologies in the music inuustiy aie technologies that showeu big changes in the
last uecaues. Those aie iecoiuing technologies fiist of all, but also exogenous
technologies, not uiiectly ielateu to the inuustiy, which hau an impact on the way
companies uiu business. Those aie the Inteinet anu mobile technologies (new piouucts
oi seivices that can be useu to enhance oui lives anu piouuctivity when we aie on the
go
9
). Because we will mainly focus on the business siue (piomotion anu uistiibution),
the new technologies we aie going to stuuy aie Inteinet, high-tech impiovements anu

8
IFPI. Recoiueu music sales iepoit. 2uu7
9
NIT $1uuk Entiepieneuiship Competition - Tiack Besciiption. Retiieveu fiom http:¡¡www.mit1uuk.oig¡the-1uuk-
competition¡tiack-uesciiptions¡ on Naich the 8th
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 9
the technology linkeu to mobile uevices impiovement. We will investigate the tienus
linkeu to the uevelopment of social meuias websites, online iauios, uigital stoies such as
the iTunes Nusic Stoie, viueo games, smait phones, NPS ieaueis etc.
- ./&% '$0 1 2)3#* .&'2'%#'$ /$( %40 $05
%0*4$'6'7#03
In oiuei to fully compiehenu the changes linkeu to the auvancement of new
technologies, we have to fiist investigate how maiketing anu piomotion of the music is
tiauitionally uone.
-+" 2)3#* 2/&<0%#$7 /$( .&'2'%#'$ (0;#$0(
The bottom line of music maiketing anu piomotion is anu has always been maximizing
sales anu exposuie of the music. It is the systematic appioach to looking foi money with
commeicial music anu uoing with as much piecision anu skills as any othei inuustiy.
The piocess of maiketing in the music goes fiom point A to point B. Point A being
"having a piouuct" anu then getting "iack space". Rack space is making suie that the
piouuct is piesenteu anu solu in eveiy uistiibution channel one can think of, both
physical anu uigital.
Nusic piomotion is one pait of the maiketing piocess, music uistiibution is the othei.
Nusic piomotion involves launching awaieness of the piouuct anu spuiiing attiaction
to it, always with the goal of boosting sales befoie eveiything else. Piomotion can be
maue thiough 4 meuia: piint, iauio, television anu the Inteinet. They all piesent
uiffeient oppoitunities anu challenges anu can all be tiaceu back to the histoiy of the
iecoiu business.
Auuitionally, we can consiuei live peifoimance as anothei kinu of piomotion as the
aitist itself is a piouuct, being maiketeu as himself anu not only as the music he
peifoims.
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 1u
The basic infiastiuctuie of touay's maiketing can be tiaceu back to the 19Sus when the
main foimats (iecoius anu sheet music) weie accompanieu by communication tool to
piomote theii sales (iauio, movies, jukebox anu live peifoimances) anu expose theii
music to a much wiuei customei base. In the 198us, Nusic Television (NTv) appeaieu
anu leu path to a new kinu of piomotion tool: music viueos. Peifoimeis' image became
moie impoitant to the ciowus anu a biggei emphasis was put on viueo stais. NTv was a
fiist because it showeu music viueos anu not live peifoimances on the contiaiy to the
0lu uiew Whistle Test, Eu Sullivan Show, the Rock'n'Roll Ciicus oi othei shows that
biought live banus to be bioaucast globally (that is to say in uevelopeu countiies anu
mainly the 0S anu the 0K). Finally the 21
st
centuiy showeu the appeaiance of a new
communication tool: the Inteinet.
1u

2.1.1 PR0CESS
Tiauitionally theie aie 6 uepaitments involveu in the maiketing activities of a laige
iecoiu companies. Those aie
• 3D?EC^ iesponsible foi uistiibution anu sales piomotion. They will check
out the ietaileis' calenuais foi iack space availability anu cost, look foi CB piessing
facilities aligneu with theii cost stiategy (usually the lowest), set the suggesteu ietail
piice of the CB anu confiim au placement to make suie it is aligneu with the cost
stiategy.
• .A@?GQGHP^ iesponsible foi exposuie of the piouuct thiough piint,
electionic anu bioaucast meuia. The publicity uepaitment will ensuie that the meuia
exposuie campaign is aligneu with theii goals. They will uesign anu oiganize piess
ieleases oi othei PR mateiials such as photo shoots, inteiviews of the aitists anu make
suie that the CB ielease go to the iight peisons to get the most neeueu ieviews.
• *IEDHG_E 3EI_GQEC^ aie iesponsible foi cieation anu piouuction of
maiketing mateiial. This also means CB packaging (usually co-ueciueu with the banu),
web-site uesign (if a web-site is ueuicateu to the banu, anothei publicity platfoim) oi
viueo piouuction foi the music viueo.
• /F_EIHGCGKR^ iesponsible foi the cieation of aus anu placement in piint,
electionic anu bioaucast meuia.

1u
Lathiop, Teu. Tbis business of Husic Horketinq onJ Promotion. New Yoik: Billboaiu Books. 2uuS
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 11
• .IJBJHGJK^ iesponsible foi iauio play of iecoiuings. The vP will be in
close contact with iegional piomotion peisonnel such as B}s, piogiammeis, anu piess
people.
• 2DI`EHGKR^ iesponsible foi uevelopment anu management of maiketing
piogiams. This means iesponsible foi eveiy step fiom manufactuiing to uistiibution. In
the music inuustiy, manufactuiing also means uiscoveiing the aitist anu oiganizing
iecoiuings.
Tiauitionally then, the maiketing piocess can be seen as the flowchait exhibit 1 -
Ilowcbort of tbe stonJorJ recorJ monufocturinq,morketinq process.
The fiist link between the aitist anu the iecoiu company is the A&R (oi Aitists anu
Repeitoiie aka Talent Acquisition), the most impoitant links between the aitists anu the
consumeis aie theiefoie A&R, Recoiuing Stuuio, Piessing¡Buplication, Bistiibutoi anu
Nass Neuia. All those steps aie piominent to the uistiibution of an aitist. If an aitist
uoes not get mass meuia, it means it will get no aiiplay oi publicity anu will be unknown
to the public. 0n the othei hanu if the iecoiuing stuuio oi the Piessing¡Buplication steps
aie foigotten, the banu can get much aiiplay oi be inviteu to many live shows, they will
not be able to sell theii album, i.e. not iesponu to the uemanu anu will soon be foigotten.
It is impoitant to note howevei than an aitist can come uiiectly to the A&R of a iecoiu
company anu sell his alieauy iecoiueu album, the next step will then be
Naiketing¡Piomotion as shown on the chait.
The ciucial element in this entiie piocess is finally the uistiibutoi, anu thus the sales
team, making suie it has enough iack space, is uistiibuteu wheie theie is uemanu anu at
the iight time.
0thei steps in the piocess incluue copyiight, peifoimance iights anu mechanical anu
synchionization iights. Copyiights aie iegisteieu with the 0S Copyiight 0ffice (in the
0S), it pioviues legal piotection fiom theft oi plagiaiism foi both the music anu the
lyiics of a song. Peifoimance iights aie iegisteieu with the ASCAP oi BNI. This step is to
make suie the ioyalties uue to the aitists aie calculateu without any conflict of inteiest
anu paiu to uuly. It coveis eveiy souice of income foi a song as shown in exhibit 2 -
Fxomples of income-qenerotinq uses for o sonq. Nechanical anu synchionization iights
covei "the collection anu payment of licensing fees foi new veisions of the music useu
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 12
on othei aitists' CBs anu tapes", the synchionization iights incluue the use of music in a
movie, television oi even home viueos.
11

Those foui iights auu a veiy luciative aspect to the business in the hope of uiminishing
copyiight infiingement anu geneiating moie ievenue oi, as the goal is, maximizing
piofits anu exposuie.
This paiagiaph shows us well how the usual piocess goes foi maiketing of the music.
Lately new technologies have openeu the way to new challenges anu also new
oppoitunities that we will investigate fuithei.
-+- '$6#$0 .&'2'%#'$
0nline piomotion is the act of ueveloping a piomotional campaign via online tools, that
is to say the Inteinet. This can be uone thiough many uiffeient meuia but always imply a
website. The teim meuia then iefeis to the uiffeient platfoims: social meuia, online
iauio oi online management tools.
2.2.1 FACEB00K, NYSPACE ANB 0TBER S0CIAL NEBIA T00LS
Facebook anu NySpace might piobably be the best-known social meuia tools anu the
veiy fiist too.
Facebook was cieateu fiom Naik Zuckeibeig's uoim at Baivaiu in 2uuS, fiist as
Facemash, a website ueuicateu to iating the "hottest" peison between two Baivaiu
stuuents. Because it was the fiist online Baivaiu uiiectoiy with photos anu basic
infoimation, the website ieceiveu 4Su visitois anu 22,uuu photo views in its fiist houi
online.
12
Nowauays Facebook offeis much moie featuie anu notably fan pages, gioups
anu music applications incluuing games oi options to shaie the music people like among
fiienus (iLike).
NySpace was founueu in 2uuS as well by Biau uieenspan, Chiis BeWolfe, }osh Beiman
anu Tom Anueison as a iesponse to the cieation to the late Fiienustei. It was cieateu at
fiist as a uata stoiage anu shaiing website. It was latei bought by Rupeit Nuiuoch's

11
Lathiop, Teu. Tbis business of Husic Horketinq onJ Promotion. New Yoik: Billboaiu Books. 2uuS. pp. 9-19
12
Locke, Lauia. Tbe Iuture of Iocebook. Time 0nline. Retiieveu on Naich 8
th
fiom
http:¡¡www.time.com¡time¡business¡aiticle¡u,8S99,1644u4u,uu.html
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 1S
News Coipoiation (paient of Fox Bioaucasting) anu latei launcheu in the 0K (2uu6) in a
plan to tap into the 0K music scene.
1S
At that time, all NySpace hopeu foi was foi the
banus "to maiket thiough NySpace so they coulu tap into the local events scene, paities,
clubs, aitists, film makeis, television piouuceis" by integiating banus fiom NySpace into
the show CB:0SA that was about to come the 0K at that time.
Nowauays, both Facebook anu NySpace offei similai tools foi banus to piomote
themselves.
Facebook pages offei the banu to uploau songs (aftei having pioveu they aie alloweu to
piomote this banu), pictuies, anu viueos, manage a calenuai of event anu senu mass
messages to theii fans. Facebook states on theii website that "only the official
iepiesentative of an aitist, business, oi bianu may cieate a page", this gives an iuea of
legitimacy to the status of pages. Pages aie a veiy useful tool foi aitists to piomote
themselves foi the following ieasons:
• Facebook pages aie inuexeu in seaich engines. This means not only
Facebook seaich, but also uoogle, Bing, Yahoo oi whatevei seaich engine someone
wants to use. Put it anothei way, by cieating a Facebook page, banus uo not have to
stiuggle with ueveloping an online piomotion campaign, a piocess that can be
complicateu anu costly to the iookies.
• A Page can have multiple auministiatois. This can be compaieu to the
piocess of music maiketing afoiementioneu. Because a page can have multiple
auministiatoi, someone can be iesponsible of uploauing the song, anothei one foi
wiiting newsletteis (calleu "upuates"), uploauing photos, iesponuing to the fans anu
much moie
• Facebook pages allow you to analyze tiaffic once you have ieacheu a
ceitain numbei of fans. It captuies uata about its visitois: how often, what song was
listeneu to the most etc.
• Theie aie no limits to the numbei of fans a page can have. Woiu of Nouth
then has an outstanuing powei as it will exponentially inciease the numbei of fans as it

1S
Biiuge, Rowan. HySpoce looks to 0K music scene. BBC online. Retiieveu on Naich 8
th
fiom
http:¡¡news.bbc.co.uk¡2¡hi¡technology¡4642622.stm
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 14
is most likely that people will suggest the page to theii fiienus (anothei featuie of the
Pages tool)
• You can senu upuates anu message to all of youi fans at once, those
messages on the contiaiy to iegulai "fiienu-to-fiienu" inbox messages, can be eithei
foiwaiueu oi "post" to othei peoples' "walls".
14

The oppoitunities foi aitists to uo theii own piomotion aie thus veiy big.
NySpace offeis an inteiactive music playei to uistiibute songs. 0n this, aitists can
choose to allow oi foibiu uownloau of the song. 0thei featuies piesent on NySpace
incluue piofiles, comments, fiienus list, events calenuai, anu blog. Also a main featuie
that uiffeientiates NySpace fiom Facebook is the fact that NySpace allows BTNL euiting
to its pages. This means that a banu that is tech-savvy can peisonalize its NySpace page
to the fullest, uesigning anu choosing its own backgiounu, the uesign of its music playei,
anu so much moie.
NySpace has been getting much attention fiom the meuia, oiganizeu banu slams (banu
competition). The Rolling Stones Nagazine has even ieleaseu a list of the 2S most
populai banus on NySpace, asking its ieaueis to iank. 1,7uu people paiticipateu in the
suivey.
1S

0thei social meuia websites useu by banus oi labels foi piomotion incluue Twittei.
Twittei was cieateu by Evan Williams in 2uu7 as an sms-micioblogging website. The
way banus anu labels use Twittei is foi shoit messages (micioblogging) announcing
anything ieally. A banu coulu use it to announce the launch of theii new album (sales
objective) oi to tell theii fans that they aie eating apples anu uiinking beeis at that
paiticulai time. Twittei helps to cut the wall between the fans anu the aitists, the lattei
becoming moie human, moie appioachable. Eventually this leaus to a moie loyal fan
base anu inueeu a bettei exposuie. 0n Twittei it is not compulsoiy to have a foim of
iuentification that pioves you aie the official iepiesentative of the aitist but accounts
can have a clouu that says "veiifieu account".

14
Bayuon, }ohn. Facebook uioups anu Pages - Featuies, benefits anu killei tips. Retiieveu on Naich 8
th
fiom
http:¡¡johnhayuon.com¡2uu9¡u4¡facebook-gioups-pages-tips¡
1S
Rollinq Stone Beclores tbe 2S best bonJs on HySpoce. Retiieveu on Naich 8
th
fiom
http:¡¡www.iollingstone.com¡iockuaily¡inuex.php¡2uu6¡12¡22¡iolling-stone-ueclaies-the-2S-best-banus-on-
myspace¡
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 1S
See exhibits S, 4 anu S foi scieen giabs of the NySpace, Facebook anu Twittei pages of
uiffeient banus.
Zach Pentel, supeivisoi of social meuia at Naitin¡Williams Auveitising in Ninneapolis,
NN anu CE0 of 8u8 Nanagement, a consultancy fiim foi inuepenuent aitists, wiote an
aiticle calleu "S supeib social meuia tools foi musicians". In this aiticle he goes beyonu
the iegulai Facebook Page anu Twittei Account. In Facebook he uesciibes an application
calleu ReveibNation's NyBanu (see exhibit 6) that allows a bettei layout of youi page,
with the main info on the centei. It also allows uownloauing songs. Conceining Twittei,
the application Ni. Pentel uesciibes is Twituim that allows shaiing songs with youi
followeis; it allows integiating NySpace into Twittei, once again limiting the neeu to go
thiough the stiuggle of managing uiffeient websites. Auuitionally, as exhibit 7 shows, a
small bai allows the listenei to shaie the song on multiple othei social meuia websites:
Facebook, Tumbli, Stumble0pon etc.
FanBiiuge (exhibit 8) is a seivice that allows managing mailing lists. Allowing ieaching
people that aie not on Facebook, Twittei anu NySpace.
BanuCamp (exhibit 9) again is a solution alteinative to the thiee main tools
afoiementioneu. 0n BanuCamp, a banu managei can builu anu shaie a uigital album,
without neeuing to finu uistiibution thiough a iecoiu ueal. It is a complete BIY solution
foi uigital music uistiibution. Bighly customizable, it allows to basically cieate youi own
online stoie anu website foi both sales anu exposuie objectives.
Finally the last tool uesciibe by Ni. Pentei is BanuNetiics (exhibit 1u). BanuNetiics is
uesigneu only foi musicians that aie looking to estimate the success of theii e-maiketing
campaign.
16

2.2.2 WEB N0SIC 1u1
Web Nusic 1u1 is to look at the uiffeient ways the web is useu with the music. Web
Nusic uoes not necessaiily mean social meuia tools foi banus. It is eveiy single way foi
an inuiviuual to eithei shaie music he likes, uiscovei new music, piomote his banu oi
cieate himself a name in the music woilu. Those sites can be sites to shaie music but

16
Pentel, Zach. S super sociol meJio tools for musicions. Nashable, the Social Neuia uuiue 0nline. Retiieveu on Naich
9
th
fiom http:¡¡mashable.com¡2u1u¡u1¡u4¡social-meuia-tools-banus¡
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 16
also online management companies that link aitists anu venue manageis oi finally
websites that eveiybouy can use to listen to music online.
Inteinet iauios aie websites to eithei builu a playlist, listen to a specific iauio stations
eveiywheie in the woilu oi listen to ianuom songs. The most famous online iauios
(besiues iauio stations' websites) aie:
• .DKFJID^ Available only in the 0S, Panuoia allows the visitoi to cieate a
fiee account that will allow him to listen to a multituue of songs. The way it is set up is
that the visitoi will be piompt to input the name of a song oi the name of a banu he likes
anu Panuoia will then cieate a playlist baseu on similai sounus. "It's a new kinu of iauio,
the one that only plays music you like," announces the website. When someone has an
account, he is not limiteu to the numbei of songs it can listen to, without an account this
numbei is limiteu to 2u songs. 0thei featuies available on Panuoia aie the "thumbs up"
oi "thumbs uown", "thumbs up," allows to naiiow youi playlist by favoiing the genies
that you ieally like. By clicking on "thumbs uown" you tell the website you uo not want
to listen to that song anymoie. It is also possible to cieate playlists baseu on genie oi get
infoimation about the music you aie listening to (e.g. why they pickeu this one, aitist's
bio etc). The biggest auvantage with Panuoia is that it takes into account that each song
will be uiffeient anu ieally iecommenus songs anu not aitists as a whole. Playlist aie
usually calleu as a song (e.g. "Run Chicken Run" by The Felice Biotheis), putting the
emphasis on the song's style anu not the aitist's. See exhibit 11 foi a uesciiption of what
they call the "Nusic uenome Pioject" by which they iecommenu songs.
• 6DCH+;B^ A Biitish website cieateu in 2uu2, Last FN allows the visitoi to
have a peisonalizeu piofile on which he can auu as many songs as he wants, cieate
playlists anu shaie those playlists. Anothei featuie is what Last.Fm calls the
"auuiosciobblei" that will skim thiough youi poitable auuio playei, iTunes oi Winuows
Neuia Playei libiaiy anu iecommenu aitists baseu on what is out theie. 0n Last.Fm once
you have cieateu a piofile anu auueu a couple of songs, you get iecommenuations each
time you log in. You also have the possibility to uownloau NPS that weie maue available
foi fiee thiough the aitist itself. You aie also alloweu to auu "fan pics" of youi aitists.
The way it woiks foi aitists is to iegistei theii label oi aitists with Last.Fm. Registiation
as an aitist is entiiely fiee, only some optional featuies aie available foi a fee.
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 17
• (EEaEI^ Launcheu in Fiance in 2uu7, Beezei was oiiginally a fiee music
stieaming website. Put it simply one coulu listen to any song available on theii small
catalogue (only 16S,uuu Sony anu 0niveisal songs). They hau some legal issues
iegaiuing uploauing but changeu theii business mouel with the new launch in eaily
2uu9. Touay the website is iestiicteu baseu on the location of the usei, it is also
piompteu to cieate an account. Beezei now offeis monthly subsciiption fees that allows
access to a bioauei catalogue, to ietiieve one's playlist wheievei they aie with an
Inteinet collection (quite useful when associateu with they Blackbeiiy, Anuioiu anu
iPhone applications) anu allows people to cieate piofiles, giving a biggei social
netwoiking uimension to the website. It is not possible on Beezei to uploau one's song
anu uistiibute it as "any peisonal NPSs uploaueu to the site can only be accesseu by the
membei who uploaueu it"
17

• 2ACGQJ_EIP^ An inteiactive anu completely customizable Inteinet iauio
that allows the listenei to make a veiy auvanceu seaich to listen to music. uoing on the
website (see exhibit 12), the listenei can eithei look foi an aitist, go to his favoiite
songs, aitists, listen to the "hits" oi play a ianuom song. It is also possible to look foi
songs by selecting oi unselecting genies (2u uiffeient aie pioposeu), a peiiou (by
uecaues since the Sus, oi oluei than the Sus), a moou (eneigetic, positive, calm, uaik),
choose the uance of the song (tempo + oi -, uance + oi -). When eveiything is selecteu a
song shows up aligneu in a clouu of othei songs ielateu one to anothei by genie, peiiou
etc. It is then possible to "heait" oi "bioken heait" a song, to be ieuiiecteu to iTunes
Nusic Stoie, Amazon oi eBay to buy the song oi to switch song (see exhibit 1S).
0nline management websites aie sites that allow venue manageis to be put in contact
with inuepenuent aitists. Those websites play the iole of Talent Acquisition oi
Piomoteis anu sometimes offei piomotion tools foi the musicians. They can also incluue
agents, manageis anu iecoiu companies looking foi new talents.
Such a website I was intiouuceu to at a confeience on Entiepieneuiship in the Nusic
Inuustiy is calleu 3JKGQ9GFC. "SonicBius helps banus get gigs anu piomoteis book the
iight banus"
18
. A website foi piomoteis anu banus. By cieating youi piofile you can
apply (as an aitist) to uiffeient piomotei piofiles you want to listen to youi music.

17
www.ueezei.com
18
www.sonicbius.com
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 18
Piomoteis also have access to a bioau catalogue of aitists. Aitists have to cieate theii
Electionic Piess Kit (EPK) anu can tiack theii Twittei, NySpace anu Facebook stats
thiough SonicBius. Piomoteis cieate theii EPK too anu then list the gigs they aie having
foi aitists to apply to them. Bianus can also have a piofile on SonicBius to sponsoi
events such as college gigs, sponsoi aitists, get moie online auveitising etc.
To concluue, web music is eveiy single tool that aitists can use to piomote theii music
eithei voluntaiily oi not. The buzz cieateu aiounu the Inteinet is a gieat help foi banus
who can benefit fiom fiee piomotion. If people like that music they heai they will shaie
it with theii fiienus eithei using Youtube, Facebook, Twittei, Tumbli, Last.Fm,
Stumble0pon oi any single social netwoiking site one can think about that has a "shaie"
option. Bave one fiienu on it anu it is sufficient, chances aie this fiienu will shaie with
two of his fiienus who will then shaie with two of them fiienus anu so on. It spieaus like
wilu fiie. A goou example of how tiemenuous the snowball effect of online piomotion is
the Biitish banu the Aictic Nonkeys who aie the fiist banu to become famous thanks to
online BIY piomotion.
2.2.S ARCTIC N0NKEYS, AN EXANPLE 0F BREAKTBR00uB 0NLINE
PR0N0TI0N
The Aictic Nonkeys aie a Biitish banu cieateu ciica 2uu2 in Sheffielu, Englanu. The
banu consists of Alex Tuinei, }amie Cook, Nick 0'Nalley anu Natt Belueis. Besiues being
a well-known Biitish pop banu, the Aictic Nonkeys aie known in the inuustiy foi being
iesponsible foi the bieakthiough in online piomotion. In an inteiview with the banu in
2uuS, the question of theii online is being uiscusseu. Alex Tuinei, the singei, explains
that the Inteinet playeu a big pait in theii success.
It all staiteu aftei theii fiist conceits back in 2uuS when they hau alieauy iecoiueu
tiacks anu buineu CBs that they woulu uistiibute foi fiee at the enu of conceits, uoing
theii own piomotion. Because those tapes weie obviously in limiteu euitions, fans
staiteu to copy them onto theii computeis anu shaie them on the Inteinet. This know
coulu be iegaiueu as high iisk because of copyiight infiingement but the Aictic Nonkeys
uiu not know about it, weie young anu just wanteu to please theii fans. Tuinei even
saiu, "the banu uiu not minu, they nevei uiu it to make money oi anything anyway. They
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 19
weie giving them away foi fiee - it was a bettei way foi fans to listen to the songs anu
sing along at conceits"
19

Anothei ieason they iecall that helpeu a lot is two specific fans. Those two fans weie
putting up songs on the Inteinet anu cieateu a piofile on a new social meuia website
calleu NySpace. The Aictic Nonkeys themselves uiu not know about NySpace.
The Aictic Nonkeys weie the fiist example of BIY music piomotion. Accoiuing to Lauia
Baiton, a uuaiuian jouinalist, the Aictic Nonkeys aie an "Inteinet phenomenon that
alloweu the Sheffielu foui-piece to flouiish uespite not ieceiving much aiiplay"
2u
, aiiplay
tiauitionally being the key to being known. The ieason why it woikeu so well is because
the Aictic Nonkeys iesponueu to what theii fan base wanteu. It hau become even haiuei
foi unknown banu to get a iecoiu ueal without theii own piomotion anu theiefoie it
was haiu foi them to ieach a wiue base.
Bowevei by making theii song available on NySpace, the banu uiu not just allow fans to
listen but also to uownloau anu tiack theii wheieabouts thiough the most useful featuie
on NySpace: blogs. Toui uates aie announceu, comments can be left to othei "fiienus"
anu eveiybouy can "follow" what the Aictic Nonkeys aie uoing. Theii success anu fame
spieau like wilufiie aiounu Englanu anu soon became numbei one. Nowauays, the
ielease of theii fiist album "Whatevei people say I am that's what I am not" is known to
be the fastest selling uebut album in the 0K selling S6S,7SS copies in the fiist week. This
outnumbeieu the pievious iecoiu of SuS6,6S1 copies solu by the banu Beai'Say, anu it
solu moie copies on its fiist uay 118,Su1 copies, than the Top 2u albums of that week
combineu. A music ietailei fiom BNv even compaieu this success to the one of the
Beatles: "In teims of sheei impact, wheie a banu has come fiom viitual obscuiity to
achieve huge, oveinight success, we haven't seen anything quite like this since the
Beatles"
21
. Since then, the banu signeu on Bomino Recoius anu theii album Whatevei
People Say I am That's What I am Not came fifth in NNE's gieatest Biitish album poll.

19
Arctic Honkeys oren´t foolinq orounJ. Piefixmag Inteiview. Novembei 21, 2uuS. Retiieveu on Naich 8
th
on
http:¡¡www.piefixmag.com¡featuies¡aictic-monkeys¡aient-fooling-aiounu-pait-1-of-2¡12S6S¡
2u
Baiton, Lauia. Tbe µuestion: Eove tbe Arctic Honkeys cbonqeJ tbe music business?. The uuaiuian online. Retiieveu
fiom http:¡¡www.guaiuian.co.uk¡music¡2uuS¡oct¡2S¡popanuiock.aicticmonkeys on Naich 8th
21
Arctic Honkeys moke 0K cborts bistory. The uuaiuian 0nline. Retiieveu fiom
http:¡¡www.guaiuian.co.uk¡uk¡2uu6¡jan¡Su¡aits.aitsnews on Naich 8th
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 2u
The ieason behinu this success is uefinitely uue to an inciease in the use of technologies.
Stephen NcRobbie of the Pastels (a Bomino banu) suggests that:
Tbe music inJustry bos become less preJictoble os o result in tbe recent
montbs. lt is very Jifficult for mojor lobels to unJerstonJ wbot´s qoinq
on, onJ tbey never reolly unJerstooJ tbe wbole JownlooJinq
pbenomenon. Tbinqs bove qone reolly out of control, onJ it bos suiteJ
lobels tbot ore smoller onJ con reoct mucb quicker.
22

Lauia Baiton, to explain the phenomenon, coineu the teim "musical socialism" to
uesciibe the fact that "this is the beginning of a music putsch foi the majoi labels have
faileu to engage with oi piesciibe to music-loveis. The simple fact that the Inteinet
allows a fleuging banu's music to be heaiu without label assistance"
2S
.
-+, /;%0&2/%4 '$ %'(/>b3 #$()3%&>
2.S.1 C0ST0NER BASE
Eveiy inuustiy is facing a change of theii customeis' behavioi. Noie anu moie people
aie spenuing time online anu less offline. 0n Apiil 2S, 2uu7 Auveitising Age ieleaseu a
supplement to its issue calleu "Bigital Naiketing & Neuia Fact Pack". Thiough this issue
we unueistanu thanks to many statistics that the entiie business woilu is affecteu by a
uigital ievolution.
Between 2uu6 anu 2uu7, the fiist websites in majoi categoiies (see exhibit) all
incieaseu the numbei of theii visitois by an aveiage of 18.17S% with categoiies
Classifieus anu Social Netwoiking incieasing by 87.6% anu 72.S% iespectively.
Blog au spenuing in 2uuS was $16.6 million, it is estimateu to be $Suu.4 million in 2u1u.
Blogs attiact S7 million of ieaueis (S8.77% of the 0S Inteinet Population) uaily anu the
R0I on blogging was 61% in 2uu6 accoiuing to Foiiestei Reseaich.
Bownloau music is the top 11 online activity foi useis with 1S.7% iesponuing (2S.S%
inciease since 2uuS). Rauio is numbei 17 with 1u.9%.

22
NcRobbie, Stephen. RecorJ lobels, tbe Bomino Fffect. The Inuepenuent 0nline. Retiieveu on Naich 8
th
on
http:¡¡www.inuepenuent.co.uk¡aits-enteitainment¡music¡featuies¡iecoiu-labels-the-uomino-effect-S2S4u4.html
2S
Baiton, Lauia. See note 2u
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 21
We aumitteu that the biggest use of Inteinet foi music was thiough social netwoiking
websites. Accoiuing to the same Au Age iepoit, SS% to 18 to S4 yeais olu Inteinet useis
aumitteu that they woulu not be able to keep in touch with fiienus without social
netwoiks anu new technologies, showing a ieal potential foi giowth.
With Facebook Pages you can appeai in uoogle Seaich, oi 47.S% of the seaich engine
maiket shaie.
The fact is, customeis' behavioi is changing. People aie spenuing moie time on the
Inteinet anu it is now the place wheie you can get the most visibility. This is why othei
tiauitional meuia aie uecieasing anu theie is such an oppoitunity foi unknown peisons
to became Inteinet heioes. A small banu fiom Connecticut can finu itself being veiy
famous in Lyon without evei having set foot theie.
2.S.2 INP0RTANCE 0F TRABITI0NAL NEBIA AT STAKE
When we look at what is available to banus oi iecoiu labels foi piomotion it is easy to
ask how aie tiauitional meuia uoing in the miust of this ievolution. Accoiuing to Zenith
0ptimeuia (pait of Publicis), ulobal Auveitising Expenuituie since 2uuS has incieaseu
fiom $19,2SS million to $48,1S9 million foi the Inteinet alone when the oveiall 0S
auveitising expenuituie has incieaseu fiom $S99,4S1 million to $Su4,SS7. This means
that Inteinet went fiom iepiesenting 4.8% of total 0S spenuing to being 9.S% in just 4
yeais. 0n the othei hanu, newspapeis auveitising uioppeu fiom iepiesenting 29.7% in
2uuS to 26.2% in 2uu9. While television still continueu to inciease, the steepness of the
inciease cuive is much smallei than Inteinet, giowing fiom S7.8% to S8.1%, stagnating
in 2uu6 anu 2uu7. Nagazines auveitising uioppeu too to 12.1% in 2uu9 (1S.2% in
2uuS). See exhibit foi a complete oveiview of 0S auveitising spenuing between 2uuS
anu 2uu9.
What is impoitant to note heie is that moie anu moie auveitising is uone uigitally. This
means that now iecoiu labels have to be able to iesponu to this change oi they will not
be able to ieach theii taiget. As seen up above, customei behavioi is changing as well,
with moie anu moie people spenuing time on the Inteinet oi theii mobile uevices.
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 22
2.S.S BIY N0SIC PR0N0TI0N
As seen up above, the Inteinet offeis many tools foi self-piomotion. The Aictic Nonkeys
showeu it well anu websites such as SonicBius, Last.Fm oi even Youtube oi Facebook
allow an aitist to piomote himself simply anu most of the time fiee of chaige fiom
eveiywheie in the woilu. This ieflects the oveiall tienu that is tiue foi eveiy business,
technological globalization has maue the woilu flattei anu bioke uown geogiaphical
bounuaiies. When looking back at the flowchait of the stanuaiu
maiketing¡manufactuiing piocess in the music inuustiy (exhibit 1), we can ieevaluate
the impact that such a possibility has on the inuustiy. The A&R pait can be ueleteu when
an aitist can use SonicBius to get himself to the piomotei oi uo his own piomotion. All
that happens in the stoie is also easily ueleteu when the piomotion woiks so
successfully online. The iole of iecoiu labels is uiminisheu because of the BIY music
piomotion.
Bowevei, uiu new technologies uiminish the impact of iecoiu labels in teims of
uistiibution.
, ./&% %5' 1 2)3#* (#3%&#9)%#'$ /$( %40 $05
%0*4$'6'7#03
,+" (#7#%/6 (#3%&#9)%#'$
S.1.1 WBAT IS BIuITAL N0SIC ANB B0W INP0RTANT IS IT IN TBE INB0STRY
Webstei's Bictionaiy uefines uigital as: "chaiacteiizeu by electionic anu especially
computeiizeu technology". Bistiibution is the "maiketing oi meichanuising of piouucts
oi commouities"
24
. Theiefoie uigital music uistiibution is consiueieu to be the sale of
music meichanuise, that is to say songs, album oi even image, ovei the Inteinet. 0n a
financial stanupoint, any ievenue that is maue thiough such uistiibution is accounteu
foi "uigital sales" on the balance sheet, to uiffeientiate fiom "physical sales" such as
piesseu CBs in ietail stoies.

24
Webstei's Bictionaiy
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 2S
To puichase uigitally, people can "acquiie tiacks anu albums in ways inconceivable a
few yeais ago - fiom uownloau stoies, stieaming sites, subsciiption seivices, fiee-to-
usei sites, bunuleu with theii bioaubanu oi mobile phone hanuset"
2S
.
In the peiiou 2uu4-2uu9 uigital sales incieaseu by 94u% when the total music maiket
uecieaseu by Su%. It now accounts foi 27% of the entiie music ievenue (4u% in the
0S), only seconu biggest shaie aftei the gaming inuustiy whose uigital ievenue accounts
foi S2% of its total ievenue. Accoiuing to the IFPI, in 2uuS theie weie less than Su
licenseu music seivices, veisus moie than 4uu in 2uu9. The catalogue available in 2uuS
was ten times smallei than the one available now anu the inuustiy's uigital ievenue was
only $2u million (less than 1%) veisus $4.2 billion in 2uu9.
26

The oppoitunity foi consumeis now is that music is available in much moie foimat that
it useu to. In the last uecaues, an album woulu be available only in a few foimats.
Nowauays with iingtones, masteitones, waiting tones, auuio tiacks, online, offline anu
so much moie, an album can be founu in hunuieus of uiffeient foimat. As an example,
Beyoncé's l om. Sosbo Iierce is available in moie than 26u uiffeient piouucts in the 0S.
Theie aie also many uiffeient business mouels that we aie going to stuuy.
S.1.2 TBE B0SINESS N0BELS 0F BIuITAL BISTRIB0TI0N
/L?DLQDIHE FJTK?JDFC account foi the majoi ievenue stieam of uigital sales. Accoiuing
to the IFPI theie weie thiee key uevelopments in 2uu9: moie BRN-fiee seivices, giowth
in uigital album offeiings anu the intiouuction to vaiiable piicing. Nusic companies
have expanueu theii BRN-fiee catalogue which means that moie than evei consumeis
can puichase a song anu tiansfei it to as many uevices as wisheu, which useu not to be
the case as iTunes foi example limiteu the uistiibution to S uevices. vaiiable piicing
means uiscounting the catalogue ielative to the top chaiting tiacks helpeu conveit
single-tiack puichases into album sales. Also, some companies have incieaseu the
quality of theii offeiing to attiact consumeis. iTunes foi example is now offeiing iTunes
LP, a ueluxe uigital foimat that Apple uesciibes as follows:

2S
Kenneuy, }ohn. Chaiiman & Chief Executive IFPI. Husic bow, wben, wbere you wont it - but not witbout oJJressinq
pirocy. Bigital Nusic Repoit 2u1u. p.S
26
IFPI. Repoit on Bigital Nusic 2u1u. Retiieveu on Naich 9
th
fiom
http:¡¡www.ifpi.oig¡content¡libiaiy¡BNR2u1u.puf
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 24
Tbe best tbinq to boppen to fonJom.
Tbe visuol experience of tbe recorJ olbum returns witb iTunes lP. BownlooJ
select olbums onJ experience o beoutifully JesiqneJ, interoctive worlJ riqbt in
your iTunes librory on o Hoc or PC ÷ mony ore creoteJ by tbe ortists. Wbile you
listen to your fovorite sonqs, you con Jive into onimoteJ lyrics onJ liner notes,
wotcb performonce viJeos, view ortist onJ bonJ pbotos, onJ enjoy otber bonus
moteriols. AnJ become on even biqqer fon.
27

The innovation by Apple is a veiy impoitant step that peifectly iesponus to the main
ciitic maue about uigital albums: that we cannot expeiience the pleasuie linkeu to
buying a physical album anu flipping thiough the booklet oi the CB case. (See exhibit foi
a scieengiab of an iTunes LP album).
#3. DKF BJ@G?E XDIHKEICOGXC is the act of offeiing music uownloaus as a bunule with
the puichase of a mobile oi bioaubanu plan. ISP aie looking into uoing this much often
as theii maiket is satuiating anu it is becoming much moie uifficult to uiffeientiate
themselves among the competition. In oiuei to uo so they tiy to paitnei with music
companies. In Benmaik foi example, TBC's Play is a seivice offeieu by the ISP TBC that
opens theii customeis' access to a 6.1 million tiacks catalogue that can be stieameu
unlimiteuly at no auuitional cost. In the 0K, Sky Song, a seivice fiom the company Sky,
offeis to stieam ovei 4 million tiacks with packages of 1u to 1S uownloaus pei month.
2ACGQ CA@CQIGXHGJK TGHO @AKF?EF TGHO FE_GQEC is the offeiing of songs thiough the
puichase of a mobile uevice. Nokia anu Sony Eiicsson have staiteu uoing this in 2uu8. It
usually allows uownloauing of songs on the mobile uevice.
3HIEDBGKR CEI_GQEC as a business mouel is paying foi piemium seivices on stieaming
websites such as Beezei oi Spotify. 0n Spotify foi example, useis can pay t9.99 to
stieam the music on poitable hanusets anu have no auveitising. 0n Beezei, useis can
pay t4.99 pei month to iemove auveitising anu ieceive highei quality stieaming oi

27
www.apple.com What's New in iTunes. Retiieveu on Naich 9
th
fiom http:¡¡www.apple.com¡itunes¡whats-
new¡#itunes-lp
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 2S
t9.99 to auu a uesktop app anu mobile stieaming to phones such as iPhone, Blackbeiiy
oi Anuioiu.
28

2JKEHGaGKR BACGQ _GFEJC JK?GKE means getting ievenue fiom music viueos stieaming.
In Becembei 2uu9, 0niveisal Nusic uioup anu Sony Nusic Enteitainment paitneieu
with viueo websites such as YouTube to launch vEv0 in the 0S anu Canaua. It is focuseu
on au-suppoiteu uistiibution of viueos to geneiate ievenue as iecognizeu how
impoitant the potential was. In Euiope foi example watching viueos on Youtube
accounts foi S1% of the Inteinet activity. The auvantage with vEv0 is that it uistiibutes
piofessional music viueos, in a woilu wheie quality is becoming moie anu moie
impoitant. Eveiything is maue foi the customei to have a bettei expeiience watching
viueos on vEv0, incluuing links to aitist websites, high-quality piemium playei anu
piofessionalism. Bulu, anothei viueo pioviuei alieauy offeis piemium quality conceits
anu music viueos. Recently, NySpace has launcheu NySpace Nusic viueos.
(GIEQH HJ QJKCABEI means having consumeis buying a piemium membeiship to access
an aitist's website anu ieceive piemium featuies such as blogging fiom the aitist.
S.1.S IT0NES, LEABER 0F TBE INB0STRY
All those uiffeient business mouels allow companies that woulu not have been
consiueieu in the inuustiy back in the physical age, to flouiish tiemenuously as venuois.
iTunes Nusic Stoie is nowauays consiueieu the leauei in the music inuustiy with moie
than 1u billion songs uownloaueu fiom iTunes, as announceu on Apple's official website
anu sales accounting foi 2S% of the oveiall music maiket
29
.
As announceu befoie, iTunes offeis to uownloau songs by the unit, albums, but also
iTunes LPs, music viueos, Tv shows, movies oi iPhone¡iPou apps.
What is iemaikable is that Apple is not a music company, its business mouel is not
oiiginally baseu on selling songs anu yet in less than 6 yeais (iTunes Nusic Stoie was
launcheu in 2uuS) they manageu to top the chaits anu become the most music ievenue
geneiating company in the 0S, shoitly followeu by Wal-Nait, Best Buy anu Amazon.

28
Bonanos, Paul. Beezer: Anotber stortup tbot will foce tbe music on premium streominq. Retiieveu on Naich 9
th
fiom
http:¡¡gigaom.com¡2uu9¡11¡uS¡ueezei-anothei-staitup-that-will-face-the-music-on-piemium-stieaming¡
29
IFPI. Bigital Nusic Repoit 2u1u
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 26
iTunes business mouel is baseu on à-la-caite seivices wheie consumeis can cieate an
account once anu then uownloau as many songs as they want, paying pei uownloau anu
not a bunule. The tiemenuous innovation iTunes maue on the music stoie aie BRN-fiee
songs (it useu not to be the case) anu vaiiable piicing. Now, 6 millions songs aie
available BRN-fiee at $u.69, $u.99 oi $1.29. Apple also offeis paitneiship with iTunes, it
offeis two kinus of paitneis the option of having visibility on iTunes: Content pioviueis
(iecoiu labels foi example, that can benefit fiom Apple's maiketing piogiam, but also
inuiviuuals), companies anu oiganizations (helping iTunes thiough maiketing effoits,
iTunes Coipoiate uift Caius.
By becoming an iTunes content pioviuei, an aitist has access to iTunes Piouucei, a
softwaie ueuicateu to making songs ieauy foi uistiibution on iTunes (encouing on AAC
foimat, incluuing album name, song name anu covei ait infoimation). The aitist also has
access to Bownloauable financial iepoits, available at the enu of each month anu
aichiveu thiough the last 12 months. An aitist is also entitleu to Apple uiscounts anu the
access to iTunes Label Connect, a vIP website ueuicateu to making it easy foi aitist to
sell theii songs.
iTunes then offeis BIY music uistiibution. uianteu it might be moie uifficult foi a solo
aitist oi banu to be completely successful in uistiibuting its songs on iTunes faceu to the
stiff competition of piomotion shaiks that labels aie. Bowevei it allows them to hanule
eveiything anu finu a way to sell theii songs without neeuing a iecoiu ueal. Also the
piomotion tools offeieu by iTunes foi content pioviueis such as "Tell a Fiienu" oi the
iTunes Affiliate Piogiam (allowing foi example to place bauges on the aitist's website
linking to theii iTunes page) have an impoitant place in the piomotion piocess of an
aitist.
,+- 2)3#* .#&/*>
Illegal uownloauing anu Nusic Piiacy aie two inteichangeable teims in this situation. It
is the act of getting songs on the Inteinet while violating copyiight anu intellectual
piopeity. People who uownloau illegally uo not pay foi the songs they get oi uo not go
thiough a valiu anu legal uistiibution seivice such as the ones uesciibeu above. In 1999,
iecoiu sales staiteu to uecline, a fiist aftei a steauy giowth foi ovei ten yeais. 1999 was
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 27
also the yeai Napstei was cieateu. Napstei was the fiist P2P softwaie that people woulu
use to piiate music. Both the IFPI anu the RIAA believe the uecline anu the aiiival of P2P
aie highly ielateu. It is aigueu that music piiacy uoes not huit the music inuustiy.
Inueeu even though it is pioven that it leu to significantly smallei sales, it can be aigueu
that without music piiacy anu the giowth of the Inteinet, people woulu not have access
to as much music as they uo now. Both siues aie highly confiuent in theii position but it
is yet impoitant to wonuei what aie the ieal effects of music piiacy on the music
inuustiy.
S.2.1 WBAT ARE TBE EFFECTS 0N TBE INB0STRY.
0ne can look at the financials of the music inuustiy without much knowleuge to notice
that it is in plain uecline. Between 2uu4 anu 2uu9, ievenue uecieaseu by Su%.
Accoiuing to the Institute foi Policy Innovation,
6lobol music pirocy couses $12.S billion of economic losses every yeor, 71,060
0S jobs lost, o loss of $2.7 billion in workers´ eorninqs, onJ o loss of $422
million in tox revenue, $291 million in personol income tox onJ $1S1 million
in lost corporote income onJ proJuction toxes
S0

What is impoitant to note is that in Siwek's stuuy, the Sounu Recoiuing inuustiy
compiises both piouuceis anu ietaileis. Both of those actois suffei fiom piiacy. 0ne can
imagine that ievenue loss fiom piiacy is equal to potential gain in a scenaiio wheie
piiacy woulu not exist. Anothei stuuy fiom the IPI (2uu6 ulobal Recoiuing Inuustiy in
Numbeis) concluues that a ueciease in piiacy woulu expanu piouuction. The stuuy fiist
assesses that in a no piiacy scenaiio, competition woulu not change between music
ietaileis anu piouuceis, it also assumes that highei ievenues woulu allow the piouuceis
to inciease theii spenuing in sounu iecoiuing equipment, to offei bettei quality oi moie
iecoiuings to the customeis as they face a stiff competition. Investing in highei quality,
but also bioaucasting, maiketing anu ietailing, will inciease piouuction in othei
inuustiies that aie ielateu to the goou functioning of the iecoiu inuustiy. It will also
allow piouuceis anu ietaileis to invest moie in the uiscoveiy of new aitists anu the
piomotion of those, thus offeiing a wiuei catalogue to the people.

Su
Siwek, Stephen E. Tbe True Cost of SounJ RecorJinq Pirocy to tbe 0S Fconomy. IFPI Policy Repoit. August 21, 2uu7
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 28
The opposite is theiefoie tiue, uecieasing ievenues causeu by piiacy foi the inuustiy
implies that the iecoiuing inuustiy neeus to cut costs anu has less money foi investment
in bettei quality iecoiuing oi aitists. In Fiance foi example theie has been a uiamatic
change in the intiouuction of new aitists. In the fiist half of 2uu9 foi example 1u7
Fiench iepeitoiie albums weie ieleaseu, veisus 271 foi the same peiiou in 2uuS, a 6u%
ueciease. Fiench aitists uiscoveiy has plummeteu as well, going fiom 91 in the fiist half
of 2uu2 to SS in 2uu9. 0n a piomotional stanupoint, global auveitising ievenue in the
Fiench iecoiuing inuustiy uecieaseu by 9% in the fiist 6 months of 2uu9. It is aumitteu
that 2S% of the Fiench population uses P2P netwoiks to get theii music monthly.
S1
In
Spain it is even woise wheie illegal file shaiing is an activity foi S2% of the population.
The Euiopean iate is 1S%
S2

Bigital music business mouels such as the iTunes Nusic Stoie offei to uownloau songs at
an aveiage of $u.99, a piice that is now consiueieu extiavagant by many, accoiuing to
Teemu Biunila (singei-songwiitei inteivieweu in the IFPI iepoit on Bigital Nusic). 0n
the othei hanu the IFPI estimateu that in 2uuS alone, moie than 2u billion songs weie
uownloau illegally, oi twice as much as legal uownloaus on the iTunes Nusic stoie in 6
yeais. The effect on the music inuustiy is highly costly foi the ietaileis anu the
piouuceis.
0n the othei hanu, as mentioneu above, people can aigue that music piiacy has
bioaueneu the catalogue offeieu to customeis. It is especially a stuuy fiom 0beiholzei
anu Stiumpf in 2uu6 that showeu that not only is theie is zeio impact on iecoiu sales
uue to music piiacy but also that music piiacy might boost sales. The ieflection they
follow is that music piiacy foiceu a ueciease in piice offeiing to the customei, theiefoie
boosting the inteiest of listening to new aitists. "0bseiving that people consume lots anu
lots at zeio uollai makes sense to an economist" 0beiholzei says. The iuea behinu theii
stuuy is that on an emotional stanupoint, music piiacy is helping the inuustiy
SS
. They
also aigue that the uecline in iecoiu sales is not uue to an inciease in file shaiing. Inueeu
they believe that this fall can be linkeu with "pooi macioeconomic conuitions, a

S1
}upitei Reseaich anu IFPI Bigital Nusic Repoit. 2uu9. Retiieveu on Naich 1u fiom
http:¡¡www.ifpi.oig¡content¡libiaiy¡BNR2u1u.puf page 19.
S2
IFPI
SS
0beiholzei-uee, Felix anu Stiumpf, Koleman. Tbe effect of file sborinq on recorJ soles. Baivaiu Business School.
2uu4
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 29
ieuuction in the numbei of album ieleases, giowing competition fiom othei foims of
enteitainment such as viueo games anu BvBs, a ieuuction in music vaiiety stemming
fiom the laige consoliuation in iauio along with the iise of inuepenuent piomotei fees
to gain aiiplay, anu possibly a consumei backlash against iecoiu inuustiy tactics."
Chaptei 26 of the stuuy also aigues, "a similai uiop in iecoiu sales occuiieu in the late
197us anu eaily 198us, anu that iecoiu sales in the 199us may have been abnoimally
high as inuiviuuals ieplaceu olu iecoiuings with newei foimats".
S4

While the stuuy is wiuely uiscieuiteu anu moie papeis tiieu to counteiact theii finuings,
people can aigue that on a cultuial stanupoint, music piiacy has helpeu the inuustiy as
people hau the possibility to listen to many moie aitists because they uiu not pay foi it.
Foi aitists this has been of a tiemenuous help as the Aictic Nonkeys example shows. 0n
the othei hanu it is not ueniable that iecoiu sales have plummeteu anu that it can in pait
be uue to an inciease in file shaiing. The IFPI, the RIAA anu co-opeiatives of aitists have
iecently launcheu a backlash against illegal file shaiing, on the giounus that it attackeu
intellectual piopeity anu was leauing to a moie uifficult teiiain in the cieative
inuustiies.
S.2.2 WBAT WERE TBE RESP0NSES.
Nost iecent iesponses, accoiuing to the IFPI, aie coopeiation between labels anu ISPs.
Accoiuing to a 2uu9 stuuy by Enteitainment Neuia Reseaich, 4S% of consumeis saiu
they woulu stop uownloauing illegally if a giauuate iesponse mouel was implementeu.
The giauuate iesponse mouel is a mouel that has thiee main actois: the inuiviuual, the
ISP anu the iights holueis. An inuiviuual caught piacticing music piiacy woulu ieceive a
fiist waining by its ISP, auvising them to stop infiinging copyiight anu suggest the use of
othei legitimate mouels such as à-la-caite piogiams that iespect copyiights anu
accoiuingly iewaius the iights holuei (i.e. the aitist). If such a waining weie to be
ignoieu, an escalating seiies of waining fiom the ISP woulu be launcheu, eventually
leauing to a tempoiaiy account suspension. Biffeientiating fiom majoi lawsuits that
alieauy occuiieu anu pioveu to have no effects, the giauuate iesponse mouel woulu
piotect to anonymity of the inuiviuuals. In Fiance, a stuuy fiom IPS0S conuucteu in Nay

S4
Pollock, Rufus. P2P, 0nline Iile-Sborinq, onJ tbe music inJustry. 2(1). 2uuS. Retiieveu on Naich 1u fiom
http:¡¡www.iufuspollock.oig¡economics¡p2p_summaiy.html#iu21uuu96u
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY Su
2uu8 concluueu that 9u% of Fiench people woulu completely stop illegal file shaiing
aftei ieceiving a seconu waining fiom theii ISP. Fiance itself was an eaily champion in
implementing the giauuate iesponse mouel. In 0ctobei 2uu9, a new authoiity was
implementeu, the BAB0PI. The authoiity will iequiie ISP to senu wainings to theii
useis foi copyiight infiingement. BAB0PI will then tiansfei the files of ieciuivists (aftei
a seconu waining being ignoieu) to the ciiminal couits wheie juuges (not ISP) woulu
then ueciue on multiple sentences such as suspension of Inteinet access foi up to a yeai
anu a full iange of ciiminal penalties.
SS
Similai actions have been taken in South Koiea
anu Taiwan anu aie going to be taken in ueimany, the 0K, New Zealanu, Iielanu,
Austialia, Bong Kong, Biazil anu }apan. Conceining the 0S, the IFPI states that "piivate
ueals have been stiuck between some inuiviuual iights holueis anu ISPs that
incoipoiate a commitment by the ISP to put in place a system of giauuateu iesponse"
S6

South Koiea is a ieally goou example of goou iesponse towaius illegal uownloauing.
They passeu theii law conceining giauuate iesponse system in Apiil 2uu9. Soiibaua, an
illegal P2P website was subject to legal actions foi copyiight infiingement as eaily as
2uu7 anu then tuineu legitimate by chaiging its consumeis. Also South Koiea became
one of the fiist countiies in the woilu to iequiie P2P file-shaiing websites to completely
ban the illegal uistiibution of copyiighteu woik on iequest fiom the iight-holuei (anu
not necessaiily the iecoiu label). Also, in 2uu8, legal unlimiteu NPS subsciiption
seivices began to flouiish. Now majoi playeis like Soiibaua anu N.Net Neuia all offei
those seivices foi a fee. Thiee websites in South Koiea: Soiibaua, N.Net Neuia anu
Neowiz Bug total a numbei of 99u,uuu subsciibeis to theii seivices. }ust foi Soiibaua,
Suu,uuu of its 7uu,uuu illegal consumeis switcheu to the legal foimat, which shows a
stiong positive iesponse fiom the consumeis.
A situation that woiiies the inuustiy is the leaks piioi the ielease of an album. uiauuate
Response mouel can tackle illegal uownloauing as it is, thiough P2P but the IFPI anu the
iecoiu labels agiee that majoi actions have to be taken in teims of secuiing the ielease
of an album to avoiu pie-ielease tiacks to be available on the Inteinet. 0ne action

SS
loi N°2009-669 Ju 12 juin 2009 fovorisont lo Jistribution et lo protection Je lo creotion sur lnternet. Retiieveu on
Naich 1u fiom
http:¡¡www.legifiance.gouv.fi¡affichTexte.uo.ciuTexte=}0RFTEXTuuuu2u7SS4S2&categoiieLien=iu#}0RFARTIuuuu
2u7SS4S9
S6
IFPI. Bigital Nusic Repoit 2u1u. P. 2S
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY S1
consiueieu as an example by the inuustiy is ielateu to the ielease of Leona Lewis' album
in 2uu9. An Inteinet account at hei iecoiu company was hackeu anu hei songs weie
posteu online piioi to the ielease. Syco Recoius (hei iecoiu label) upon notification of
the fiauu calleu in the police anu investigatois anu was able to tiack back the hackei in
Noith Ameiica anu Euiope.
Even though if we see some encouiaging iesults, the battle is yet not ovei anu as }onas
Sjostiom fiom Playgiounu Nusic puts it: "Theie is now positive news but oui whole
sectoi is still at iisk".
0n anothei level, pievention seems to be the new tienu. Euucation is being
implementeu in uiffeient countiies, eithei by infoiming people about the law, but also
teaching them how to legally get music. The IFPI foi example has maue available BFC
(Bigital File Check) to infoim people on how computei useis can legally anu safely
uownloau music. The softwaie also implies to the customei both legal anu technological
iisks foi them. Bowevei a Baiiis Reseaich concluueu that incieasing familiaiity with the
law has not shown to have ieuuceu file shaiing anu that it has to be associateu with the
"caiiot" in a "caiiot anu the stick" scenaiio to entice people to go towaius legal file
shaiing seivices. To suppoit that finuing, a Euiopean 0nion 2uu7 Repoit calleu "Safei
Inteinet foi the Chiluien" ueuicates an entiie pait to illegal uownloauing. Its conclusions
aie that in the vast majoiity of the cases, chiluien know uownloauing is illegal but theii
iesponse is to minimize, ueny oi justify it. Fiequent quotes fiom the iepoit aie the
following:
• "lt´s illeqol but it Joes not look it´s illeqol" (Boys gioup, 12-14 yeais, Benmaik)
• "lt´s wronq but it´s not our foult" (uiils gioup, 12-14 yeais, Belgium)
• "People JownlooJ but it´s just for tbemselves, it is less serious tbon JownlooJinq for
burninq onJ resellinq" (Boys gioup, 12-14 yeais, Fiance)
• "l reolly Jon´t core, it´s not my problem, ortists ore ricb enouqb" (All gioups, Italy)
Also anothei conclusion at the enu of the uay is that the iisk of catching a viius on theii
computei is moie uissuasive than legal iepeicussions, as most uo not believe such a
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY S2
thing will happen but have witnesseu "fiienus having viiuses because they
uownloaueu".
S7

S.2.S WBAT ARE TBE NEXT STEPS.
Accoiuing to Sjostiom, the goou iecipe foi a stuiuiei inuustiy is a combination of usei-
fiienuly legal solutions to uownloauing anu a ueteiient iesponse to piiacy. The law
ieally has to be enfoiceu to avoiu people thinking they will nevei get caught, as it seems
to have been the case in the past. Also what is impoitant is to have highei investment
anu coopeiation fiom labels anu goveinments to allow the offeiing of a much wiuei
catalogue. Also the goveinment has to put moie piessuie on the ISPs to be suie they
implement the giauuate iesponse mouel as shoulu be. Euucation is also veiy impoitant,
people have to be awaie of how big the effects aie on the inuustiy anu that they aie
being luieu by the impiession of "fiee" piouucts. Even though people think they aie
getting fiee music anu it is fine by them, they have to know that it haims the inuustiy
not only financially but also because in the long iun much less aitists aie going to be
able to be investeu in because of a lack of subvention uue to uecieaseu ievenue which
will eventually leau to a uiamatic uecline in the inuustiy, moie "mainstieam" to sell
moie anu less choice that will satisfy the music-loveis.
,+, 0;;0*% '$ %40 &'60 '; &0*'&( 6/9063 #$ %0&23 ';
(#3%&#9)%#'$
As seen above, the new technologies have impacteu the inuustiy in many uiffeient ways.
Aitists can uistiibute themselves without neeuing a iecoiu ueal as long as they taiget
uigital sales. The cost of it is much less impoitant than to piouuce a physical album,
inueeu the only cost they encountei is the iecoiuing cost. When we look back at the flow
chait in exhibit 1, it suppiesses the neeu to piess anu package a CB, all is uone uigitally
anu a tiack can viitually be uistiibuteu to eveiy single peison on Eaith without facing a
iisk of not having enough supplies. In the same situation, the aitists oi the labels that
choose to concentiate on an all-uigital foimat uo not have to go thiough physical ietail
stoie. iTunes Nusic stoie offeis a goou solution to those who can concentiate on an all-
uigital offeiing anu this is why the iTunes Nusic stoie has benefiteu so much fiom the

S7
Sofer lnternet for tbe CbilJren. 2uu7. Euiopean 0nion Repoit. Retiieveu on Naich 1u fiom
http:¡¡ec.euiopa.eu¡public_opinion¡quali¡ql_safei_inteinet_summaiy.puf
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY SS
inciease in uigital sales anu is likely to be iesponsible foi this inciease. New
technologies have alloweu people to get a quickei access to music anu also a much wiuei
access. 0n the tiauitional foimat of uistiibution, a CB woulu not have been offeieu in a
maiket if the uemanu weie not heie. 0n the uigital foimat of uistiibution the uemanu is
limitless anu theie is viitually only one maiket: the online maiket. Anothei auvantage of
the uigital foimat is being able to offei the puichase of single tiacks, the à-la-caite
foimat. To uo so, tiauitional uistiibution systems weie ieleasing "Singles" baseu on
populaiity, thus ieuucing the capacity of a iecoiu labels to iesponu to the entiie uemanu
anu being accuseu of being too mainstieam.
0n the othei hanu it has been shown that new technologies have not successfully been
contiolleu anu leu to a uiamatic thieat foi the inuustiy that is piiacy. This bauly huit the
inuustiy as show the statistics pioving a ueciease in ievenue, it has also foiceu music
inuustiy playeis to stait piosecute its own customeis, not being the best customei-
fiienuly inuustiy theie is.
Foitunately, measuies aie being taken to save the inuustiy anu the aitists' intellectual
piopeity. Boing so is a much-neeueu action to sustain the cieative inuustiy.
: ./&% %4&00 1 %40 &'60 '; &0*'&( 6/9063 /% 3%/<0
:+" 2)3#* .#&/*> #3 $'% &03.'$3#960 ;'& %40 6/%0 ;/66 '; %40
#$()3%&>
It is a fact; the music inuustiy has suffeieu iecently. Its ievenue uecieaseu by Su% in S
yeais aftei a steauy giowth ovei a uecaue. The ieleases pei yeai aie shiinking as the
Fiench example shows anu some might even say that the quality uecieaseu as well, this
piobably uue to less money anu theiefoie less possibility to invest in new aitists anu
impiovement in iecoiuing, piomotion anu uistiibution quality. Bowevei we have seen
that ievenue fiom uigital sales has incieaseu by 94u% anu is now accounting foi 2S% of
the total ievenue of the inuustiy in the 0niteu States of Ameiica anu foi little less than
1u% in othei main countiies (Fiance, ueimany, the 0niteu Kinguom anu }apan as shown
in the Intiouuction).
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY S4
Nost piofessionals will aigue that this is uue to the new technologies anu the pike in
music piiacy but also an inciease in BIY music cieation, piomotion anu uistiibution.
0theis will say it is an oveiall tienu foi the enteitainment inuustiy that ielates to a
geneial economic uowntuin.
4.1.1 LESS N0NEY = LESS SPENT 0N ENTERTAINNENT
It is wiuely accepteu that in the scenaiio of an economic uowntuin, people will stait
saving money on theii enteitainment expenses. When the inuustiy ueclineu in the late
7us anu eaily 8us, this was uue to two economic shocks. In the 0S alone the uBP in 1982
ueclineu by 1.82% compaieu to 1981. In the 9us, when the inuustiy iecoiueu a steauy
giowth, the uBP giowth hau an aveiage inciease of S% pei yeai anu even peakeu at
4.SS% in 97. Bowevei, the uBP giowth iate of the 0S since 2uu4 has been in uecline
with inciease by S.6S% in 2uu4 but then only S.u8%, 2.87%, 2% anu 1.1% in 2uu8. In
2uu9 alone it uecieaseu by 2.4%
S8
. The tienu is similai foi Fiance, which iegisteis a
2.1% ueciease in 2uu9, ueimany with a S% ueciease oi the 0K with a 4.S% ueciease.
Exhibit shows the oveiall tienu between the S main playeis in the inuustiy: }apan,
ueimany, Fiance, the 0S anu the 0K, with iespect to the oveiall woilu's tienu.
A stuuy ieleaseu by Nielsen on Febiuaiy 22, 2u1u shows that buying CBs, NPSs oi othei
foims of music only iepiesents 2.8% of the global spenuing on enteitainment by the
aveiage Ameiican householu. If the uBP is uecieasing anu people have less money it is
likely that the iecoiuing inuustiy is going to suffei fiom it as less people will have the
financial capability to spenu as much as they useu to in the 9us.
As an example, the 0S Bepaitment of Laboi ieleaseu a stuuy concluuing that
enteitainment spenuing was about 4% in the 19Sus anu 196us, then incieaseu to 8.6%
in 1972 (a iecoiu high) to finally uiop at a level of S% since 1984.
S9
Anothei tienu
showeu by the Consumei Expenuituie Suivey is that since 1999 annual spenuing foi the
Inteinet soaieu, implementing an expense than most people uiu not have ten yeais fiom
touay. In 1999 the aveiage annual spenuing foi Inteinet access was $49, it is now $222.

S8
CIA Woilu Factbook.
S9
Buieau of Laboi Statistics. Tbe Consumer FxpenJiture Survey. Retiieveu on Naich 11 fiom
http:¡¡www.bls.gov¡cex¡cetuinsthiity.htm. 2uu9
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY SS
Compaiatively, newspapeis anu magazine spenuing went fiom $97 to less than $61.
4u

When we know that consumei spenuing on newspapeis anu magazines is 1.2S times
highei than iecoiueu music
41
, it is easy to iealize how two factois leu to a ueciease in
consumei spenuing on iecoiueu music: highei spenuing on the Inteinet, but also
housing, peisonal insuiance, healthcaie
42
anu a weakening economy.
4.1.2 INCAPACITY F0R TBE INB0STRY T0 REACT T0 TBE CBANuE IN
C0NS0NER BEBAvI0R
When we look at the ievenue stieams of the music inuustiy, besiues noticing that the
ievenue is in a steauy uecline since 2uuS, we notice that uigital sales have uiamatically
iocketeu to an inciease of 94u%. What this numbei shows is that the iecoiuing inuustiy
is not suffeiing per se, it shows that physical sales aie suffeiing. People aie buying less
anu less CBs, iathei they buy online, they subsciibe to websites such as Beezei oi
Last.fm to listen to music, they uo not give theii money to 0niveisal oi Wainei to get a
CB. The ieason behinu this is that consumei behavioi changeu anu labels uiu not notice
it, oi ueciueu to ignoie it. In a Business Week aiticle fiom Naich 6, 2uu9 we can heai the
voice of a San Fiancisco-baseu giaphic uesignei who explains that he useu to pay $1uu
pei month on CBs to iefill his iPou. Now he pays less than $1u pei month but listens to
much moie music than he useu to. The ieason is not because he staiteu to uownloau
illegally, the ieason is because he gets almost all of his music fiom seivices such as
Last.Fm wheie he can listen to any music he wants anywheie he has Inteinet. When
someone has mobile uevices such as the iPhone oi the Blackbeiiy, "anywheie" viitually
means "eveiywheie". Senioi vice-Piesiuent anu geneial counsel foi the National Nusic
Publisheis Association }ay Rosenthal iecognizes the pioblem that people uo not neeu to
own music anymoie when they can listen to it on the Inteinet.
4S
The uemanu that
boosteu the sales 1S yeais ago anu Su yeais ago is not heie anymoie. Tiuth is theie was
a boost in the 9us uue to people ieplacing theii olu foimats with CBs, but in oui uigital

4u
Buieau of Laboi Statistics. Consumer FxpenJiture Survey. SpenJinq on newspopers onJ moqozines sliJes os spenJinq
on lnternet occess soors. Retiieveu on Naich 11 fiom http:¡¡www.bls.gov¡cex¡newspapeis.htm. 2uu9
41
The Nielsen Company. 0S EousebolJ Fntertoinment BuJqet As o percent of SpenJinq on RecorJeJ Husic. See Exhibit.
42
Buieau of Laboi Statistics, by Flowing Bata. Retiieveu on Naich 11 fiom
http:¡¡piojects.flowinguata.com¡ameiica¡spenuing¡
4S
NacNillian, Bouglas. Tbe Husic lnJustry´s New lnternet Problem. Business Week, Naich 6 2uu9, ietiieveu on Naich
11 2u1u fiom http:¡¡www.businessweek.com¡technology¡content¡mai2uu9¡tc2uu9uSS_uuu194.htm
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY S6
age, people uo not neeu to ieplace theii CBs with NPSs because they can alieauy uploau
theii CBs, buy single songs oi even listen to music eveiywheie they have Inteinet.
Labels tiieu to use this oppoitunity as a way to make moie sales, thinking that those
websites woulu seive as catalysts to launch sales; that people woulu want to buy what
they listen to if they like it. Bowevei this is not how it woikeu out. Accoiuing to the same
Business Week aiticle, ieseaicheis anu inuustiy consultants concluueu that online
music sites aie being useu by a giowing numbei of listeneis not as a catalyst but as a
substitute. Nost of the time the ieason why someone woulu buy a CB is because they
cannot finu theii music online.
The pioblem theiefoie is not music piiacy but simply that people aie migiating away
fiom the physical foimat of songs anu that labels uo not know yet how to ieact to this
change that might as well be the most uiamatic one foi the inuustiy. If they uo so is
because spenuing on enteitainment has become less extiavagant in a woilu wheie
people can now get as much at viitually no cost.
:+- 4'5 $05 %0*4$'6'7#03 406.0( %40 #$()3%&>
Nost of the liteiatuie on the uigitalizeu iecoiuing inuustiy accuses new technologies of
killing the inuustiy. We have a lot of uata to back up this assumption that financially it
has been a bau tuin. 0n the othei hanu a qualitative analysis has to be uone that can
concluue the goou it uiu to the inuustiy, both foi the customeis anu the actois.
4.2.1 BEvEL0PNENT 0F NEW LABELS
The two fiist paits of this thesis showeu us that it is possible foi an aitist to uistiibute
anu piomote itself without a iecoiu ueal. Bowevei, foi easiei iepiesentation anu
iegistiation, aitists who uo not get iecoiu ueals because they eithei uo not want to oi
simply uo not finu any can associate themselves oi cieate theii own iecoiu labels. It is
common piactice in this inuustiy anu one can iemembei the Beatles cieating Apple
Recoius oi Elton }ohn cieating Rocket. Those labels by uefinition aie inuepenuent labels
as inuepenuent labels aie labels opeiating without the funuing of oi outsiue the
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY S7
oiganizations of majoi iecoiu labels, iepiesenting less than S% of the ievenue of the
inuustiy
44
.
Because BIY music is moie than evei possible thanks to new technologies, aitists less
neeu the help of iecoiu ueals to iecoiu, play anu uistiibute music. The othei ieason why
aitists tenu to go inuepenuent, is also uue to the financial uecline of the inuustiy.
Because ievenues aie shiinking, labels will tenu to cut costs to inciease theii piofits.
Anu by cutting costs they mean cutting the aitists' shaie of the pie. As soon as in 2uuu,
Couitney Love (singei anu wiuow of Kuit Cobain) wiote a pamphlet accusing the majoi
iecoiu labels to be the ones uoing music piiacy, not the inuiviuuals uownloauing the
music. To expiess hei thought she uoes the math of wheie the money goes with a majoi
label contiact foi an aitist. What she explains is that eveiy cost of piomotion, touiing
anu uistiibution is being iecoupeu thanks to the banu's shaie of the piofit, this in an
ultimate goal to stabilize the label's ievenue. In a scenaiio wheie sales aie going uown
but costs aie staying the same it is foiecasteu that the piofit will be uecieasing in the
aitists' pockets
4S
. Foi this ieason theie is much moie incentive foi a banu to go
inuepenuent wheie they hanule all the financials anu get full piofit of what they make if
it is possible. Anu uigitalization makes it possible. What the Inteinet is uoing to the
inuustiy is basically shifting the balance of powei fiom the labels to the aitists.
Anothei ieason why BIY labels - oi inuepenuent labels - aie so populai is because they
know how to iesponu to the Inteinet. They know that to get money whethei they aie
inuie oi majoi, they neeu to communicate, they know that people aie iaiely enticeu to
pay to expeiiment, which means to pay foi a CB they uo not even know if they will like.
The entiie music inuustiy's success is baseu on communication because that is what
music uoes, it communicates things to people anu this is why people like music. }ohn
Lennon saiu it "Hy role in society, or ony ortist's or poet's role, is to try onJ express wbot
we oll feel. Not to tell people bow to feel. Not os o preocber, not os o leoJer, but os o
reflection of us oll." So foi an inuustiy baseu on communication, the iesponse to Inteinet
has been pietty bau. Insteau of using this meuium as a way to be moie effective, they tiy
to accuse it of uestioying them when it cleaily is uoing the opposite.

44
Souice: Association of Inuepenuent Nusic (AIN)
4S
Love, Couitney. Courtney love Joes tbe motb. }une 14, 2uuu. Retiieveu on Naich 11 fiom
http:¡¡uii.salon.com¡stoiy¡tech¡featuie¡2uuu¡u6¡14¡love¡inuex.html
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY S8
0n the othei hanu, eveiything "out theie" helps inuie labels to get moie coveiage anu
that might as well be what the inuustiy - also known as the majoi labels, the RIAA, the
IFPI (oi theii equivalent) anu the money-getteis - uislikes cuiiently.
4.2.2 F0R TBE C0ST0NERS
The tienu might as well be similai foi the customeis. Because inuie labels anu aitists
have taken the oppoitunity to be on the Inteinet anu majoi labels hau no choice but to
follow the tienu (by making theii catalogue available on stieaming websites, à-la-caite
seivices anu online iauios) , customeis fiom eveiywheie in the woilu now have access
to music fiom eveiywheie in the woilu.
The most compelling aigument backing up the assumption that the uigital woilu helpeu
the inuustiy is the fact that the customei base is enoimous compaieu to what it was a
few uecaues ago. 0nce again to quote Thomas Fiieuman, the woilu is flattei thanks to
globalization anu cultuial globalization might as well be the best example.
Culturol qlobolizotion "refers to worlJwiJe culturol stonJorJizotion - os in
´Coco Colonizotion´ onJ ´HcBonolJizotion´ - os well os to postcoloniol cultures,
culturol plurolism, onJ ´bybriJizotion.´ Tbe vorious ospects of qlobolizotion tbot
bove promoteJ qrowinq contocts between Jifferent cultures, leoJinq portly to
qreoter unJerstonJinq onJ cooperotion onJ portly to tbe emerqence of
tronsnotionol communities onJ bybriJ iJentities"
46

0n a musical point of view, what it means is that cultuies aiounu the woilu aie moie
open to being shaieu globally anu eventually be absoibeu by the local cultuie.
Bigitalization has maue it possible foi Buima to listen to Biitish pop music anu foi
Austialia to listen to Chilean music.
What it also changeu foi the customeis is the impiession of owneiship. As the Euiopean
0nion Sofer lnternet for tbe CbilJren uesciibeu it (see p. ) chiluien blinuly assume that
because it is on the Inteinet, it is not illegal, oi that because eveiybouy uoes it they can
uo it too. As much as that might huit the inuustiy (financially) it also spuis shaiing, anu
by spuiiing shaiing, it spuis piomotion of the music. Facebook has moie than 4uu

46
Noghauam, v.N. (2uuS). 6lobolizinq women: Tronsnotionol feminist networks. Baltimoie, NB: The }ohns Bopkins
0niveisity Piess.
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY S9
million active useis
47
, which means that potentially, a banu cieating its page on
Facebook can have up to 4uu million fans. Anothei statistic fiom Facebook is that a usei
has an aveiage of 1Su fiienus, which can tianslate into the fact that when one Facebook
usei becomes fan of a page (at the aveiage of 4 pages pei month), 1Su othei people aie
awaie of it. Those people heai about the banu fiom Facebook, check them out on
NySpace, talk about it on Twittei, buy theii songs on iTunes, listens to fiee stieaming on
Last.Fm anu go to conceits they have heaiu of fiom many othei platfoims. Because they
contiol theii uiscoveiy anu expeiiencing of the music so tightly, they aie moie likely to
appieciate this piocess anu tiy to look foi similai aitists because it is so easy to uo so.
Conceining uistiibution, the uigital woilu has uevelopeu many new oppoitunities to
uelivei music to the customeis. Now to get music, someone uoes not necessaiily neeu to
puichase a CB, oi even a single tiack, but they can listen to it once oi many moie times
online, uownloau a iing tone foi theii phone, heai it on the iauio, in a viueo game oi in a
movie, see it live oi else. It is veiy uifficult not to finu a music we aie looking foi as we
will be able to get live veisions (as bauly iecoiueu as they might be) on YouTube, type in
the lyiics on uoogle anu get the name oi use an application foi iPhone like Shazam that
will tell us "who sings that" anu then eventually give us a link to puichase it online.
The impact of new technologies foi the customeis is tiemenuous; it openeu up new
hoiizons that no one might have thought of uecaues ago. The success of Napstei in 1999
is an example of how the inuustiy misseu an oppoitunity to unueistanu its customeis.
Nusic loveis voiceu how they wanteu to get music anu why they wanteu it this way anu
insteau of ciafting on this, the inuustiy unsuccessfully tiieu to tackle it. Customeis hau
alieauy been accustomeu to this new way of getting music anu on this uevelopeu many
othei mouels that leu to the situation of the inuustiy now.
In a way, Napstei might as well have been the best thing to evei happen to the inuustiy.
:+, 540&0 (#( #% /66 7' 5&'$7c
As much as we can now be ceitain that new technologies have helpeu the inuustiy, we
have to be cautious anu aumit that this is only ephemeial. As it is similai to any othei

47
Facebook Piess Room. Retiieveu on Naich 11 fiom http:¡¡www.facebook.com¡piess¡info.php.statistics
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 4u
tienu, the uigitalization has a life cycle anu the pioblem is that the inuustiy jumpeu
onboaiu too late to benefit fiom it to the fullest. Also the inuustiy's iesponse to the
aiiival of Napstei in 1999 (tiying to shut it uown) shows us that the only ieason why
the inuustiy is now onboaiu is because they uiu not have a choice when the
stiategically-wise move woulu have been to iuentify the oppoitunities anu tuin them
into a competitive auvantage.
4.S.1 WBY BIB TBEY FAIL T0 RESP0NB T0 NAPSTER.
Quickly looking back at why the inuustiy ueclineu, we have to iemembei one thing:
Physical sales plummeteu because of consumeis' piefeience foi low-piofit-maigin
uigital single tiacks ovei full, haiu to stock, albums. Consumeis changeu, the inuustiy
iesponueu too late anu suffeieu fiom it. When something was going wiong foi the
inuustiy, the manageis of the big six anu then big foui useu to think they neeueu a big
hit anu it woulu make it all go away. A few yeais latei, when the ciisis was still going on
they iealizeu they hau to uo something else because no hit woulu help them. Now we
have foui big majois insteau of six in 1998, 2,7uu iecoiu stoies have closeu in the 0S
between 2uuS anu 2uu7
48
anu veiy few of those top executives aie still heaus of the
companies.
The iesponse came late but eventually labels accepteu to ielease theii catalogue to the
stieaming websites that we love, hoping we woulu pay foi the songs if we like them, a
move that woulu have been unthinkable a few yeais befoie.
So what went wiong with the way the inuustiy uealt with Napstei. Accoiuing to Simon
Wiight (CE0 of viigin Enteitainment uioup) anu }eff Kwatinetz (CE0 of the
management company The Fiim)
49
theie was a gieat oppoitunity theie but the inuustiy
uiu not see it. The iesponse was suing Napstei, leaving billions of billions of uollais on
the table anu not accepting to "jump off of a cliff" anu tiansfoim Napstei into a
subsciiption-baseu stieaming seivice wheie they coulu have ieacheu the alieauy
existing 4u millions of useis. The iesponse of those useis when Napstei shut uown in
2uu1 was to go to the hunuieu otheis file-shaiing websites that weie cieateu when the

48
Almighty Institute foi Nusic Retail
49
Wiight, Simon anu Kwatinetz, }eff in Rolling Stone Nagazine. Tbe RecorJ lnJustry´s Becline. Retiieveu on Naich 1S
fiom http:¡¡www.iollingstone.com¡news¡stoiy¡1S1S7S81¡the_iecoiu_inuustiys_uecline¡piint
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 41
inuustiy was too busy suing Napstei. They hau Su to 4u millions of people listening to
the same station, going onto the same website, uoing the same thing anu hau billions of
uollais of oppoitunities aheau of them. 0n the othei hanu they hau ietail stoie piessing
them not to sell cheapei online anu aitists asking them not to cut uown theii piofit
(again), cannibalization was neeueu anu the uinosauis of the inuustiy uiu not see it as a
solution.
The ultimate pioblem was waiting foi such a long time befoie licensing the iTunes Nusic
Stoie. Befoie 2uuS, seivices weie cieateu jointly between labels but they faileu to be
successful. Why iTunes uiu not. Because iTunes was offeiing a usei-fiienuly
enviionment anu was integiating eveiything neeueu to make it easy to not uownloau
illegally. With the iTunes Nusic Stoie you woulu buy youi song on the stoie, uiiectly
fiom the softwaie you use to listen to the music (iTunes) anu you can put it on any NPS
playei you have. The seivices offeieu by the labels such as PiessPlay anu NusicNet weie
too expensive anu uiu not woik on eveiy mpS playei. Also the hassle was biggei: people
hau to go on the website, buy the song, impoit in the meuia playei they weie using, all
these steps fiom S uiffeient places, when they weie not yet that tech-savvy. Bilaiy
Rosen, foimei CE0 of the RIAA aumits that the peiiou 2uu1-2uuS (Napstei shut uown -
iTunes licenseu) was the woist uownfall evei foi the inuustiy:
Tbot´s wben we lost tbe users. Peer-to-peer took bolJ. Tbot´s wben we went from
music bovinq o reol volue in people´s minJs to music bovinq no economic volue,
just emotionol volue.
Su

As long as it changeu in people's minus, it might be iiieveisible. People aie listening to
moie music than evei but sales aie plummeting. Also the conceit inuustiy is thiiving, it
eaineu a iecoiu $4S7 million in 2uu6. The pioblem the inuustiy is facing is to tuin that
inteiest into money if they want to be sustainable as an inuustiy. 0n the othei hanu will
it huit the aitists if they cannot. Well they can uo theii music themselves, aie getting
moie piofit by being inuepenuent anu can uistiibute themselves without a iecoiu ueal
so I am guessing not. The cuiient mouel is just wiong.

Su
Rosen, Bilaiy in Rolling Stone Nagazine. Tbe recorJ inJustry´s Jecline.
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 42
4.S.2 N0SIC IS ANTI-CAPITALIST
This shoulu be the name of oui geneiation of file-shaieis. Exactly as Rosen put it, in
people's minus, music stoppeu having an economic value with the aiiival of Napstei.
The inuustiy, as eveiy foi piofit oiganization woulu iesponu, uiu not accept this anu as
fai as 1u yeais latei have yet not accepteu it. But the tiuth is heie; people uo not want to
pay foi music. People aigue it woulu be a iight to have access to music anu since it is
possible to get it foi fiee why shoulu they bothei buying CBs that they uo not have the
space to stock when they can just get one song they like on the Inteinet anu stock it on
theii haiu uiive oi iPou. Also they aie alieauy paying foi Inteinet access anu this allows
them to get music legally anu at no auuitional cost, so why bothei. 0n the aitists' siue,
foi once talent makes it all. 0n the back of the book Tbis business of music morketinq onJ
promotion by Teu Lathiop it says "because music is not only about talent", the book was
wiitten in 2uuS. We aie now in 2u1u anu we have much moie tools thanks to the
Inteinet to use oui talent to cieate the best piouuct, anu at the enu of the uay, because
we have so much choice online, the ones we iemembei aie the talenteu ones, not the
easiest ones to finu, not the fiee ones (because they all aie) but the most talenteu, the
ones who caught oui emotions.
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The ievolution of the uigital woilu has hau many impacts on oui society. It is even moie
tiue when associateu with globalization anu the cuiient situation conceining
infoimation. We aie now able to have access to much moie infoimation than we useu to,
we can get this infoimation much quickei anu at baiely no cost thanks to the main
example of uigitalization: the Inteinet. New technologies have also helpeu us innovate in
many ways anu uevelop tools that aie now bioauly useu such as computeis, anu moie
piecisely foi the music inuustiy: NPS ieaueis anu mobile uevices. People have access to
the Inteinet pietty much eveiywheie anu oui ueneiation B (foi uigital) spenus so much
time linkeu to a computei oi some foim of technology that it begins to iaise conceins.
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 4S
Noie specifically, we have seen that the Inteinet openeu up a bianu new maiket in
teims of piomotion anu it affecteu tiauitional meuia gieatly as we see a ueciease in
theii use foi piomotional puiposes. Foi the same ieason that infoimation is caiiieu
quickei by the use of the Inteinet, this platfoim is becoming a ciucial element in an
auveitising campaign, if not the most piominent one. If this helpeu companies to extenu
theii customei base, it also helpeu the inuiviuuals who now can exist on the Inteinet
with websites such as Facebook oi NySpace oi even Twittei. 0n anothei level it helpeu
the aitists anu the labels to uo a biggei piomotion of the aits without extia costs. Foi
inuepenuent labels anu aitists it showeu to be the tool to use to completely cut
maiketing costs.
The Inteinet anu oui mobile uevices such as the iPhone has also helpeu to uevelop a
bianu new kinu of uistiibution: a uigital uistiibution. Not only can we get most of oui
piouucts thanks to the Inteinet, we can now get some of oui piouucts in a non-physical
way such as NPSs oi ebooks. With the help of the Inteinet anu its giowing piesence
woiluwiue, we aie now able to stoie this infoimation in the clouus, not having to own
them anymoie, because we aie able to access them eveiywheie with websites such as
Last.FN oi Beezei oi even Panuoia. Anu with the exception of some of those, it is
viitually fiee to uo so pioviuing that we have Inteinet.
Those innovations aie ievolutionaiy in the infoimation inuustiy, anu so aie they in the
music inuustiy. Aitists get moie iecognition anu customeis get moie choice. But it is
tiue that at the enu of the uay people still think music has no economic value anu this
leu to a majoi ueciease in the inuustiy's ievenues. If the new technologies helpeu the
inuustiy it is in a non-monetizeu way, it helpeu piomoting the ait of music anu making it
available to moie people, it helpeu the aitists anu it helpeu the music loveis.
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The only fault we can accuse the new technologies of is that it killeu the inuustiy as a
piofitable one. People uo not see the music as an economic goou anymoie anu hence uo
not see the neeu to pay foi it. New business mouels have been implementeu, showing
that the tienu is ieveisible, pioviuing that the offei is still goou foi the customei;
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 44
customeis will agiee to pay a flat iate if they can access pietty much the entiie music
catalogue of the woilu. People aie not buying CBs anymoie. 0n the othei hanu
attenuance to conceits has incieaseu anu the ievenue fiom touiing is still stiong.
Because of the BIY piomotion anu uistiibution, anu because customeis aie much moie
eagei to expeiiment anu consume anu consume anu consume again anu again as long as
it is fiee, theie is a ieal oppoitunity foi inuie aitists to get a giowing fan base iapiuly. 0n
the othei hanu because ievenues aie uecieasing, majoi labels aie not capable to invest
in new aitists as they useu to, it is getting haiuei foi an aitist to get a majoi iecoiu ueal
if the label uo not see it as mainstieam anu theiefoie big piofits mateiial. In such a
position, aitists who neeu the suppoit of labels foi iepiesentation ieasons aie moie
likely to coopeiate anu cieate oi join inuepenuent labels. Because those inuepenuent
labels have fewei aitists to manage anu aie moie likely to cut costs, they aie capable of
moving anu ieacting much fastei than the big coipoiations, wheie the iisks aie much
highei. Foi this ieason I believe that inuie labels have not suffeieu fiom music piiacy as
much the majoi labels have. Anu foi this ieason they coulu anu will benefit fiom it much
moie.
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Nowauays eveiything pioves that the inuustiy is going completely uigital, physical sales
aie going to steauily uecline anu uigital sales to steauily inciease. What the labels have
to accept is to move on because what the last ten yeais have pioveu is that by tiying to
holu on to the past anu pievent changes they weie ciusheu. Foitunately enough the
iecoiueu music inuustiy is not close to uying. Anu this because the incentives have
nevei been paiticulaily high compaieu to othei inuustiies. As much as we can call the
majoi labels "shaiks" oi "capitalist pigs" they aie people who love music anu who iecoiu
music foi them too.
0theiwise they woulu go woik foi uoluman Sachs wheie the big money is. The futuie of
the music inuustiy is ieally haiu to foiecast, it will only uepenu on the uecision that
majoi labels take. When they iealize, anu accept, that consumeis aie always going to go
foi the most convenient anu less expensive way to get theii piouuct, maybe they will be
able to pievent a new kinu of piiacy, foi the ieason that they will be the one
}. uAvIuNET - TBE INPACT 0F NEW TECBN0L0uIES 0N TBE REC0RBINu INB0STRY 4S
implementing this "piiacy", except that this time it will please eveiybouy. If Napstei uiu
one thing goou to the inuustiy, it uiu it to the music itself. Nusic became available,
affoiuable anu now people aie auuicteu to it. People have an unpieceuenteu appetite foi
music anu they aie only waiting foi the big ones to figuie it out. The futuie that lies
aheau can only be the peak of an ait, music as its zenith anu with this all the
oppoitunities that come aiounu. Anu if it is someone's to lose, it is uefinitely not the
aitists', not the music-loveis', just the coipoiations who will not accept to face the
change.

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W0RK CITEB
1
Sanjek, Russell. !"#$%&'( *+,-.'$ /-0%& '(1 230 4-0%(#005 67# 8%$03 8+-$ 9-(1$#1 :#'$0;
<+.-"# 222; 8$+" =>?? 3+ =>@A. New Yoik: 0xfoiu 0niveisity Piess, 1988.
2
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IFPI. Bigital Nusic Repoit 2u1u
Su
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IFPI
SS
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IFPI. Bigital Nusic Repoit 2u1u. P. 2S
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CIA Woilu Factbook.
S9
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http:¡¡www.bls.gov¡cex¡cetuinsthiity.htm. 2uu9
4u
Buieau of Laboi Statistics. K+(0-"#$ H`,#(1%3-$# D-$M#EF D,#(1%(I +( (#W0,',#$0 '(1
"'I'Y%(#0 0.%1#0 '0 0,#(1%(I +( 2(3#$(#3 '&&#00 0+'$0F Retiieveu on Naich 11 fiom http:¡¡
www.bls.gov¡cex¡newspapeis.htm. 2uu9
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The Nielsen Company. JD 9+-0#7+.1 H(3#$3'%("#(3 4-1I#3 !0 ' ,#$&#(3 +G D,#(1%(I +(
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42
Buieau of Laboi Statistics, by Flowing Bata. Retiieveu on Naich 11 fiom http:¡¡
piojects.flowinguata.com¡ameiica¡spenuing¡
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mai2uu9¡tc2uu9uSS_uuu194.htm
44
Souice: Association of Inuepenuent Nusic (AIN)
4S
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46
Noghauam, v.N. (2uuS). a.+N'.%Y%(I W+"#(5 6$'(0('3%+('. G#"%(%03 (#3W+$C0F Baltimoie,
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Almighty Institute foi Nusic Retail
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Wiight, Simon anu Kwatinetz, }eff in Rolling Stone Nagazine. 67# B#&+$1 2(1-03$ES0 P#&.%(#F
Retiieveu on Naich 1S fiom http:¡¡www.iollingstone.com¡news¡stoiy¡1S1S7S81¡
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Rosen, Bilaiy in Rolling Stone Nagazine. 67# $#&+$1 %(1-03$ES0 1#&.%(#F

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