Napster to Blame?

Up until the introduction of Napster record companies in the USA were expecting a huge growth in record sales. Sales figures from 1997-99 showed ever increasing demand for music and gross profit was high. David Blackburn discusses how music sales have declined ever since the introduction of MPEG's audio file (Mp3) and the creation of Napster.

The Figures

From this graph alone, I can see straight away the impact that Napster seems to have had on Record Sales. Napster is the only thing, technology wise, that was new in 1999 that allowed music sharing across the Internet.

I have know doubt from this report that file sharing and piracy have caused this decline in record sales. iTunes didn't come into being until 2

003 and there was a gap of 4 years where there was a demand but no company to fill it.

Is File Sharing All Bad?

I agree with Blackburn's statement that some unknown artists can benefit from the exposure of pirate music.

"Artists who are unknown can benefit from the awareness created by the spread of their music to a greater extent than ex ante well-known artists can, and similarly are less likely to lose sales to downloads, as they start with less sales."

This is very true. We cannot just dismiss the Internet as bad for business. Some artists do benefit.

References:

Blackburn, D. (2004). Online piracy and record music sales. Retrieved March 24, 2011, from http://74.125.155.132/scholar?q=cache:Uf80rgj9dnQJ:scholar.google.com/+Online+piracy+and+record+music+sales+blackburn&hl=en&as_sdt=0,5

Have Record Labels Sunk Their Own Ship?

Record Labels themselves may have contributed to their own dip in sales as the Internet reduces production margins and companies don't respond with a drop in price. Record Labels that are not prepared to accept the new method of purchase may dwindle in the sight of iTunes and online piracy. Robert Easley writes of the issues that face a Record Label when tackling online sales and piracy and I think the information is valuable for it explores whether crushing internet sales will damage Record Labels in the long run.

The Introduction of Mp3

The Motion Picture Expert Group (MPEG) landed on the computer scene by creating a way of reducing the size of a picture file, making it easier to share online. When the audio version, Mp3, came out it allowed music to be uploaded to the internet and shared globally with easy on any internet connection.

Companies now had the opportunity of reducing production margins to virtually 0 dollars. Now, without CDs or packaging, it was cheaper to share music. "Clearly this puts pressure on the consumer's expectations of a  reasonable product price" (Easley).

This stands true with me. If I purchase a CD at $20 and I'm still expected to pay the same price when the Record Label hasn't any production margins I'm not going to buy online.

The Connection With Piracy

"They think the brand name sheilds them," (Easley) from dropping prices. However, through consumers burning their own CDs, they have learnt that the cost of production is extremely small and that most of the money they spend is profit.

Easley's work shows us this downfall for the Record Labels. Customers became aware that they were being exploited and then became content to source music illegally for no cost at all. I know many who would think that way. If it costs nothing to produce why pay anything at all? Piracy becomes a popular option.

Apple Online

One thing that I failed to see is how Easley says people still wish to buy online. If the expense online is too much and therefore promoting piracy, why does he still say their is a market for online sales. If the cost is the same as a CD then the customer, you would think, would want the CD than pay the price for just the files.

Apple has opened that market buy allowing customers to buy a single track at USD$0.99, allowing someone to have the song they want without the rest of the tracks on the album. This offers "Savings to the consumers," (Easley) and is proof of what Easley says about Record Labels pricing themselves out of the game.

References:

Easley, R. F. (2005). Ethical issues in the Music Industries response to innovation and piracy. Journel of Business Ethics, 62, 163-168. Retrieved March 24, 2011, from Jstor database.

Ch-Ch-Changes Over The Years

Record stores have noticed the change in sales over the years due to the advent of the Internet. The Internet has caused noticeable damage, yet has lead to some benefits over the years. Downloading music from online stores such as iTunes has left some record stores without business. On the other hand, the Internet has given the power to expose a record store. Many customers are now turning to the Internet to locate record stores with search engines like Google. This has ultimately lead to the revival of vinyl and the survival of obscure bands and music.

Evan Chern is a long time business partner of the record store Yesterday & Today Records, a long established record shop in Miami, America. In interview with Goldmine, Evan was asked of the changes he has noticed in the music industry, and with over 20 years of experience in the music trade his opinion is valued.

The Exposure of New Music

The advent of the Internet has had effect on the "mom-and-pop" bands, the independent record sales. More bands have found the limelight since Internet has made their music more accessible. Old bands are now being stocked in digital, online fashion that have previously been too unpopular to warrant a CD version of their original vinyl LPs.

The Power of the Search Engine

While online record sales are up from the attractive easy of the transaction, Yesterday & Today Records have seen new customers who find the store through online search engines. Evan comments at how many of the new faces he sees have found his store online through Google, giving him the ability to advertise to more clients who still value a hard vinyl copy of music and the beauty of analogue sound. Depends much upon the area and how people view the purchase of music.

The Survival of the Record Store

The survival of Evan's store he puts down to his location. His advice to new record store owners is to "research location" as it is important to start a store in an area that has enough like-minded customers. With the tobacco and adult stores surrounding his shop, Evan says people are more inclined to visit his store with "sex, drugs and rock 'n' roll all in the same block".


References:

Chern, E. (2010). For the record: Yesterday & Today Records. Goldmine Magazine. 36(3), 16. Retrieved March 21, 2010, from International Index for Music Periodicals database.

Why the Blog?

This blog has been set up to be ground 0 for my research into what part the Internet has played in music piracy and music sales. The Internet, music piracy and record sales, I believe, are all closely related to each other. They all affect each other. How and why, though, I would like to find out. Stay with me as I research this new hot topic.

Steve.