In my last post I talked about music piracy’s emergence as a dominant social factor, influencing how consumers access music. I also stated my belief that artists have benefited from music downloading, generating exposure which contributes too bolstered concert and merchandise sales.
However, in life, things do not come free. With two groups benefiting from downloading, it is inevitable that someone has to feel the pinch. Record companies are the unlucky group. With artists generating such a minimal amount of revenue from record sales, it is the record companies who financed the production, hence, they require the highest portion of revenue. Because of this, the record companies have been shattered by music piracy, being basically removed from the supply chain process. Different forms of financing can be used by artists because they don’t require the same amount of marketing prowess and notoriety provided by the record companies.
With record companies becoming essentially obsolete causing a rapid shift in the music market, like you would expect, many new businesses have sought to profit from the shift. Itunes has successfully taken control of the online music market. Youtube is the most common place to sample music. Companies have recognized the opportunity of limitless exposure, ramping up their advertising efforts on the site. However, record companies have been left in the dust. In the future, I expect to see these companies finding unique ways of re-establishing a relationship with artists to regain their prominent position in the industry.