Music Influences The Ecomony Essay, Research Paper

We have the chance to make a personal nickelodeon in the house and auto. This is the takeoff point for the music concern ( A Small Net Music, 34 ) . These statements by AOL Chief Executive Stephen M. Case reflect the latest tendency in the music industry for the distribution of recorded music. Progresss in engineering now allow persons to enter their ain digital transcripts of music, with its high fidelity, from legion Internet web sites. In 1999 about 100,000 music downloads were officially recorded, by 2004 these downloads are projected to make over 1.2 billion. The music industry is large concern and its actions influence the state s Gross National Product ( GNP ) . Universal Music Group had grosss of $ 3.75 billion in 1999 ( Turning Traitor, 32 ) . But that s a fraction of the $ 40 billion that the recorded music industry racks up in gross revenues ( A Little Bit of Net Music, 34 ) . The cost of making concern in the music industry is really high and the music companies are seeking to calculate out new ways to acquire their merchandises to consumers and for them to purchase them. This tendency in music ( exchanging to Internet based systems ) can act upon the economic system by altering the traditional methods of retail gross revenues and increasing the company s gross revenues and net income and by researching new methods of administering its merchandises to consumers.

The music industry maintains its control over the music it distributes by the usage of right of first publication Torahs. These Torahs allow the conceiver ( or proprietor ) of the music ( besides books, images and films ) to command its release and reproduction. Peoples and companies that want to reproduce or utilize the music must pay a fee to the proprietor of the music. When the most common manner to have a transcript of a peculiar piece of music was a vinyl record, the music industry was non overtly concerned about improper duplicate of its merchandises. Improvements in engineering have changed the format of the music that available at retail mercantile establishments ( digital recordings, Compact Disks ) and how some consumers get transcripts of that music.

Personal computing machines now have the processors, sound cards, package, and memory to record, drama, and dependably reproduce a peculiar piece of music boundlessly. One of these new progresss in package is file-sharing plans. These plans allow a individual to travel to an Internet web site and by utilizing the plan download digital transcripts of the music. These transcripts are every bit clean as the original recording and are in consequence free to the consumer. One such company that provides the package and downloading service is Napster. Napster provides a web site that allows users to derive entree to music files from other users by downloading them for their ain personal usage on their computing machine.

Music companies see these actions as pirating or copyright violation. While it s legal for music proprietors ( person who has lawfully bought a recording of the music ) to rerecord their Cadmiums for personal usage on other music formats, like cassettes, minidisks or even MP3s, giving those transcripts to others is buccaneering. ( Napster is swaying the music industry, 41 ) . Artists are spilt on each side of the contention. Some agree with the record companies while other say music should be free. & # 8220 ; I merely want my music to be out, and that & # 8217 ; s ever been the chief precedence. It was ne’er truly about acquiring paid. It was merely acquiring people to hear my music and state, & # 8216 ; Hey, I like your song. & # 8217 ; So if Napster wants to set my vocal out so people can download it or whatever, allow & # 8216 ; em do it. & # 8221 ; & # 8211 ; Billy Joe Armstrong of the set Green Day ( Reuters, 2/12/2001 ) .

The music industry through the its association Recording Industry Association of America ( RIAA ) sued Napster for $ 100 million in amendss ( Napster is swaying the music industry, 41 ) . The RIAA claims that Napster is illicitly leting persons to copy copyrighted stuffs. With the mean retail cost of a new release CD $ 17, the RIAA is claiming its members have lost 1000000s in net incomes. The losingss are non isolated to enter companies, a typical $ 17 Cadmium shows that distribution, transportation, and shop markup history for more than $ 9.50 of the retail monetary value ( Why Napster is Good News, 76 ) .

These figures begin to demo the consequence of the music industry on the GNP as a whole. When one Cadmium is non sold, many sectors of the economic system show negative effects. At the sweeping degree, the creative persons that write and record the music, companies that manufacture the Cadmiums, containers and labels, trucking companies that move the Cadmiums to music shops all lose money. At the retail degree the proprietors of the music shops and eventually their employees all lose some money when a music is distributed outside the normal distribution method ( every bit good as the proprietors and

employees of used CD shops ) . These losingss do non include the lost revenue enhancement grosss that the Federal, State and local authoritiess do non have as a consequence of these downloads, thereby cut downing the sum of money available for public undertakings.

The Internet has presented the music industry with both a job and a solution. With so many people utilizing the Internet to download music, whether Napster survives or non, music downloading will go on. The figure of Napster users grew from 1 million in February 2000 to over 9 million in December. Other free services provide Internet users with the same service as Napster. Hordes of Napster users are already poised to head to services like Gnutella, Freenet and Aimster which don Ts have a cardinal waiter and could be harder to close down ( Is Napster Signing Off For Good, 18 ) . Many concerns have already used the Internet to short-circuit traditional retail merchandisers. Companies such as Lands End efficaciously by base on balls the retail distribution system to pull off and sell their merchandises through catalogs and their web site. It used to be all about the ternary R wireless, retail, record companies. The Internet means you do non necessitate them every bit about every bit much ( Turning Traitor, 133 ) .

The cost to direct a vocal straight over the Net is $ 1 and dropping quickly If labels claimed merely half of that $ 9.50 themselves, they would unclutter about eight times their current net income & # 8211 ; now merely $ 0.59 per album ( Why Napster Is Good News, 76 ) . Greater net incomes can intend more growing, conversely fewer net incomes means less money to develop new endowment and merchandises. Any new engineering or thought worth its salt appears to dispute some section Similarly, webs like Napster may really be a blessing to the music industry. Indeed, studies show that Napster usage may hike Cadmium gross revenues ( Peer to Peer, 196 ) . This does non intend that music companies can merely leap over to Internet merely distribution methods. There still is a figure of Internet users that do non experience comfy about on line purchases and the narrow bandwidth of many place computing machine modems means hours to download an album. Unless you ve got rabbit-quick DSL service, downloading a vocal can take half an hr or more ( Nirvana Is Just A Click Away, 73 ) .

If music companies moved to a distribution web, which was chiefly or entirely, based on the Internet, so the bing retail gross revenues mercantile establishments, such as Sam Goody s, might respond negatively. The retail mercantile establishments could halt advancing the music companies releases or coerce them to accept all their stock list of bing Cadmium at full value. This would countervail any additions from the Internet gross revenues. The Internet gross revenues would hold to hold security so that if a gross revenues was made the download file could non be shared with person else or copied to another format. It s a batch more complicated than people know. It took American Carmakers more than decennary to accommodate to competition from more agile, higher quality Nipponese challengers ( At Atlantic, My Beef is Not Getting Paid, 118 ) .

As engineering continues to better, the music industry can travel to more Internet based administering systems that improves client satisfaction. Napster highlighted several current jobs with the music industry ( retail costs, distribution, and development ) and they reduced the music company s net incomes. Issues covering with dealing and download security are common with other industries and their solutions may hold a positive spillover consequence in the music industry. The music companies will hold accessory alterations in how creative persons and retail merchants are developed and paid. With greater net incomes, at the record company, creative persons will desire a larger portion and retail mercantile establishments will non desire to vanish from the market. Stockholders will demand increased stock monetary values in order to increase their ain worth. These tendencies in the music industry have and will go on to act upon the economic system as the music industry alterations to integrate new engineering, down to the sum of money a metropolis may necessitate to resurface its streets.

Bibliography

Ante, Spencer E. Inside Napster. Business Week. 14 August 2000: 112-118.

Berman, Denis K. Why Napster Is Good News. Business Week. 1 Aug 2000:76.

Bull, Steven V, et Al. A small Net Music Business Week. 7 Feb 2000: 34-35.

Cohen, Warner. Napster Rocks the Music Industry. US News and World Report. 6 March 2000: 41.

Farley, Christopher John. Nirvana Is Just A Click Away. Time. 14 Aug 2000: 73.

Lyons, Daniel. Turning Traitor. Forbes. 24 Jan 2000: 131-132

How Tendencies In Music Can Influence The Economy

By:

Ian Thompson

April 19, 2001

Awards Civicss 213

Time period H