THE INTERNET AND ITS IMPACT ON THE MUSIC

INDUSTRY

By Mansour Shukoor

“THE ENTIRE MUSIC INDUSTRY WAS HIT BY A GLACIER. BY THE INTERNET”

- Kanye West

VS

HYPOTHESIS

The internet, specifically streaming services

and illegal file sharing are

responsible for the drastic reduction in

album sales, as well as how the music industry operates today.

WHAT IS SPOTIFY & SOUNDCLOUD?

Innovative streaming service which allows users to search their favourite artists and stream their music free of charge

2 of the largest streaming services of free music in the world

Are a streaming service which allow their users unlimited access to all music genres free of charge, however offer subscription based memberships with major advantages

Work with the worlds major record labels: EMI, Universal & Sony to have access to the music they stream.

HOW HAVE RECORD LABELS REACTED TO STREAMING SERVICES? Embraced the technological movement Established deals with their artists and the streaming

services (Shake It Off by Taylor Swift, 46.3Million Streams, equated to $280k - 390k

Artists receive 23 cents a stream. Compared to artist being given $1 of every physical album they sell

Established contracts which specify royalties/which music is available for streaming

Cited by Information Is Beautiful, http://www.informationisbeautiful.net/2010/how-much-do-music-artists-earn-online/

Cited by Time Magazine, http://time.com/3590670/spotify-calculator/

HOW HAVE ARTISTS REACTED TO STREAMING SERVICES?

Taylor Swift has taken action to have all her music removed from Spotify & SoundCloud

Rap group Wu-Tang Clan have released their limited edition album ‘Once Upon A Time In Shaolin’ to only one buyer in protest of streaming services.

Jay z took advantage and streamed 1 million copies of his album ‘Magna Carta Holy Grail’ with the Samsung Galaxy S4

HOW COLLECTIVES REACTED

Jay-Z staged a crisis meeting with industry giants; Madonna, Kanye West, Daft Punk, Coldplay, Jack White, Nicki Minaj, Beyoncé and Rihanna

Music Mogul Jay Z purchased Aspario for $56 million.

Allows artists to profit

Cited by The Daily Mail, http://www.dailymail.co.uk/news/article-2994068/Jay-Z-staged-crisis-meeting-Madonna-

Kanye-West-Daft-Punk-Coldplay-Jack-White-Nicki-Minaj-Beyonc-Rihanna-buying-56m-Swedish-music-streaming-firm-

artists-profit.html

WHAT IS ILLEGAL FILE SHARING?

Defined by distributing and uploading uploading yet to be released music to a network domain for others for free

Is considered a criminal offence Methods include: peer to peer, through file

sharing sites, and email storage Has become the main source of ‘ripping’

music from the internet onto mobile phones and MP3’s

HOW MUSIC IS ‘LEAKED’ TO THE PUBLIC AND SPREAD THROUGH FILE SHARING

An internal issue 2 main reasons for a ‘leak’:

A physical copy is taken from the artist and uploaded online to file sharing websites

Hard drive containing music is uploaded from within the studio

EXAMPLE OF A FAMOUS ALBUM LEAK: LONG.LIVE.A$AP – A$AP ROCKY Was set for release January

15, 2013 Album was illegally released

one month prior Sales projections plummeted “My mom thought that the leak

would affect the sales…. My mom downloaded the album illegally by the way”

Cited by ShowLove Blog, http://www.showlove.co.za/aap-rocky-says-his-mom-downloaded-long-live-aap-illegally/

HOW DO THESE TWO MEDIUMS AFFECT THE MUSIC INDUSTRY?

Streaming Service: Artists have little say

with how they want their music released.

Sales certifications become irrelevant.

Advertising albums/singles is no longer an artist driven concept.

Illegal File Sharing: New ways music is

advertised/released have to be created

Lack of income resulting in layoffs

Artists release material inconsistently

A decline in the investment of new artists

How Album Production/Releases Has

Changed

HOW HAS ILLEGAL FILE SHARING AFFECTED THE INDUSTRY & HOW HAVE ARTISTS REACTED

In 2011 ‘Watch The Throne’ released. Sold ONLY through iTunes. No physical copy = no file sharing No recording was done in a registered

recording studio

Cited by Kanye West YouTube Channel, https://www.youtube.com/watch?v=k5bkRthqh4I

ARTISTS OPPOSING DIGITAL MUSIC

2013 saw rap artist Kanye West argue against the formula:

No physical copy = no file sharing

The artists promoted/sold his album as just a physical copy

The cover in remembrance of physical CD’s

THE STATISTICAL BREAKDOWN OF THE IMPACT OF INTERNET ON THE MUSIC INDUSTRY

Digital & streaming services = 39% of the music industries revenue

The 2 major streaming services combined have been valued at $5.3 billion.

28 million people in the world are subscribed to premium subscription services

100 million people are subscribed to the 2 major free streaming services

Cited by The International Federation Of The Phonographic Industry, http://www.ifpi.org/facts-and-stats.php

THE STATISTICAL BREAKDOWN OF THE IMPACT OF INTERNET ON THE MUSIC INDUSTRY

40 MILLION REGISTERED USERS

10 MILLION REGISTERED (PAYING) USERS

VALUE = $1.5 BILLION

60 MILLION REGISTERED USERS

15 MILLION REGISTERED (PAYING) USERS

VALUE = $4 BILLION

VS

Cited by TechCrunch.com, http://techcrunch.com/2013/10/29/soundcloud-now-reaches-250-million-listeners-in-its-quest-to-become-the-audio-platform-of-the-web/

Cited by Statista

http://www.statista.com/topics/2075/spotify

THE MUSIC INDUSTRY: PRE-INTERNET

1982 Michael Jackson, ‘Thriller’ sold 29,300,000 copies which equates to 29×Platinum

1982 saw 100 multi- platinum albums released

POST-INTERNET

2014, Taylor Swift, ‘1989’ sold 1,000,000 copies which equates to Platinum

2014 saw 1 platinum album, Taylor Swift ‘1989’

VS

Cited by The Baby Boomer Encyclopedia, http://books.google.com.pe/books?id=pQakFJFPT4YC&q=%22with+65+million+albums+sold%22#v=snippet&q=%22with%2065%20million%20albums%20sold%22&f=false

THE INTERNATIONAL FEDERATION OF THE PHONOGRAPHIC INDUSTRY (COMPILATION STUDY)

Measuring the Effect of Music Downloads on

Music Purchases – 2006 Alejandro Zentner

15,000 interviewed 30% file shared music (peer to peer)

P2P Music Sharing Networks: Why Legal Fight Against Copiers May Be Inefficient – 2005 Rochelandet and Le Guel

2,500 households 74% file share music (peer to peer)

Ups & Downs – Economic and Cultural Effects of

File Sharing on Music, Film and Games – 2009

TNO/SEO/IViR

1,500 internet users Consumers felt no need to purchase music at

all if it was available for free Industry will lose 100 million dollars each year

Impact Of Internet Music File Sharing & CD

Burning – Australian Recording Industry

Association

3.4 million Australians illegally download music a year

10.7% of all music in Australia is obtained through illegal file sharing websites

Cited by The International Federation Of The Phonographic Industry 2009, The Impact Of Illegal Downloading On Music Purchasing,

http://www.ifpi.org/content/library/The-Impact-of-

Illegal-Downloading.pdf>

RELATION TO THE PUBLIC SPHERE

Streaming - Good or bad?

Public Sphere – DigitalSpy.com Discussions posted range from 2001-2014 Perception of streaming has not changed within the time span

Cited by Digital Spy, http://forums.digitalspy.co.uk/showthread.php?t=2044048

Conclusion

THEN

NOW

REFERENCES: CORPORATION/ORGANISATION WEBSITES

Australia Recording Industry Association 2013, Impact Of Internet Music File Sharing & CD Burning, Viewed 8 March 2015, <http://www.aria.com.au/pages/news-and-press-releases-file-sharing-cd-burning.htm>.

The International Federation Of The Phonographic Industry 2009, The Impact Of Illegal Downloading On Music Purchasing, viewed 8 March 2015, <http://www.ifpi.org/content/library/The-Impact-of-Illegal-Downloading.pdf>.

The International Federation Of The Phonographic Industry 2013, Facts and Stats, viewed 8 March 2015, <http://www.ifpi.org/facts-and-stats.php>.

Free Website Report 2015, Spotify.com, viewed 8 March 2015, <http://www.freewebsitereport.org/www.spotify.com>.

Free Website Report 2015, Soundcloud.com, viewed 8 March 2015, <http://www.freewebsitereport.org/www.soundcloud.com>.

REFERENCES: ONLINE NEWSPAPERS Michaels, S 2014, ‘Taylor Swift responsible for 22% of albums sold in the US’, The Guardian 6

November, viewed 6 March 2015 <http://www.theguardian.com/music/2014/nov/06/taylor-swift-responsible-22-per-cent-sold-us-1989>.

Davidson, J 2014, ‘Why Taylor Swift Will Lose Her Battle With Spotify’, Time Magazine, 5 November, viewed 6 March 2015, <http://time.com/money/3555391/taylor-swift-1989-spotify-losing-battle/>.

Kristobak, R 2014, ‘Taylor Swift May Have Pulled Out Of Spotify But Don't Praise Her Just Yet’, Huffington Post, 11 May, viewed 6 March 2015 <http://www.huffingtonpost.com/ryan-kristobak/taylor-swift-may-have-pulled-out-of-spotify-but-dont-praise-her-yet_b_6107702.html>.

Minsker, E 2013, ‘RIAA Changes Gold and Platinum Rules Due to Jay-Z's Magna Carta Holy Grail’, Pitchfork, 1 July, viewed 6 march 2015 <http://pitchfork.com/news/51392-riaa-changes-gold-and-platinum-rules-due-to-jay-zs-magna-carta-holy-grail/>.

Bond, P 2013, ‘Investors Flock to Music Streaming Services as Spotify's Value Tops $4 Billion’, The Hollywood Reporter, 25 November, viewed 6 March 2015, <http://www.hollywoodreporter.com/news/spotifys-value-tops-4-billion-659561>.

Johnson, D 2014, ‘See How Much Every Top Artist Makes on Spotify’, Time Magazine, 18 November, viewed 6 March 2015, < http://time.com/3590670/spotify-calculator/>.

Graaf, M 2015, ‘Jay Z staged crisis meeting with Madonna, Kanye West, Daft Punk, Coldplay, Jack White, Nicki Minaj, Beyoncé and Rihanna before buying $56m Swedish music streaming firm in which artists profit’, Daily Mail, 14 March, viewed 15 March 2015, <http://www.dailymail.co.uk/news/article-2994068/Jay-Z-staged-crisis-meeting-Madonna-Kanye-West-Daft-Punk-Coldplay-Jack-White-Nicki-Minaj-Beyonc-Rihanna-buying-56m-Swedish-music-streaming-firm-artists-profit.html>.

REFERENCES: E-BOOKS

Gitlin, M 2011, The Baby Boomer Encyclopedia, Google Books, viewed 4 March 2015, <http://books.google.com.pe/books?id=pQakFJFPT4YC&q=%22with+65+million+albums+sold%22#v=snippet&q=%22with%2065%20million%20albums%20sold%22&f=false>.

REFERENCES: IMAGES Thomas, K 2014, spotify-logo-primary-

horizontal-light-background-rgb, iinet, viewed 6 March 2015, <http://blog.iinet.net.au/what-is-music-streaming/spotify-logo-primary-horizontal-light-background-rgb/>.

Fraga, G 2015, MYSPACE VS. SOUNDCLOUD: The battle for the ears, Visual Maniac, viewed 4 March 2015, <https://visualmaniac.com/en/visualmag/tech/myspace-vs-soundcloud-the-battle-for-the-ears#.VQjW5fBK98E>.

NY Mag 2008, RIAA Logo, NY Mag, viewed 5 March 2015, <http://nymag.com/images/2/daily/entertainment/08/02/29_riaa_lgl.jpg>.

Fugitive Sounds 2013, RIAA Logo, Fugitive Sounds, viewed 5 March 2015, <http://www.fugitivesounds.org/wp-content/uploads/2013/05/riaa-logo.png>.

Elite Daily 2013, YEEZUS, Elite Daily, viewed 5 March 2015, <http://cdn29.elitedaily.com/wp-content/uploads/2013/05/YEEZUS-800x400.jpg>.

Griffin, M 2014, YEEZUS COVER, Tumblr, viewed 6 March 2015, <https://griffinmiller47.files.wordpress.com/2014/08/tumblr_moelxko29e1qjo50co1_1371248265_cover.jpg>.

Rolling Stone, 2013, A$AP Rocky Album Review, Rolling Stone, viewed 6 March 2015, <http://assets.rollingstone.com/assets/images/album_review/asap-rocky-long-live-asap1-1357143907.jpg>.

6ana 2010, Then & Now, 6ana, viewed 6 March 2015, <http://www.ilsul6ana.com/wp-content/uploads/2010/04/technology_then_now.jpg>.

Ddotmen 2011, Watch The Throne Cover, Ddotmen, viewed 7 March 2015, <http://www.ddotomen.com/WTT-DDotOmen.jpg>.

Classic Rock Reviews 2012, Thriller Cover, Classic Rock Reviews, viewed 7 March 2015, <http://www.classicrockreview.com/wp-content/uploads/2012/03/1982_MichaelJackson-Thriller1.jpg>.

E Online 2014, 1989 Cover, E Online, viewed 7 March 2015, <http://au.eonline.com/eol_images/Entire_Site/2014913/rs_600x600-141013064401-600.Taylor-Swift-1989-JR-101314_copy.jpg>.

REFERENCES: VIDEOS

Jay Z’s Life + Times 2012, A$AP Rocky - The Truth With Elliott Wilson, YouTube, viewed 8 March 2015, <https://www.youtube.com/watch?v=BcH34fiQHf4>.

Kanye West 2011, JAY-Z KANYE WEST WATCH THE THRONE on iTunes Aug. 8th!, YouTube, viewed 8 March 2015, <https://www.youtube.com/watch?v=k5bkRthqh4I>.

REFERENCES: WEBSITES Statista 2014, Statistics and facts on Spotify, viewed 10 March 2015, <

http://www.statista.com/topics/2075/spotify/>. Dillet, R (TechCrunch) 2013, SoundCloud Now Reaches 250 Million Visitors In

Its Quest To Become The Audio Platform Of The Web, viewed 10 March 2015, <http://techcrunch.com/2013/10/29/soundcloud-now-reaches-250-million-listeners-in-its-quest-to-become-the-audio-platform-of-the-web/>.

Adkins, A (Demand Media, posted on Chron.com) 2009, How Does Illegally Downloading Music Impact the Music Industry?, viewed 10 March 2015, <http://smallbusiness.chron.com/illegally-downloading-music-impact-music-industry-27748.html>.

Information Is Beautiful 2010, How Much Do Music Artists Earn Online?, viewed 10 March 2015, <http://www.informationisbeautiful.net/2010/how-much-do-music-artists-earn-online/>.

Scluzay 2014, ONCE UPON A TIME IN SHAOLIN..., viewed 10 March 2015, <http://scluzay.com/eighteight>.

Digital Spy, 2015, Streaming - Good or bad?, viewed 10 March 2015 <http://forums.digitalspy.co.uk/showthread.php?t=2044048>.

REFERENCES: BLOGS

Forbes, S 2013, ‘A$AP Rocky Says His Mom Downloaded “Long.Live.A$AP” Illegally’, ShowLove Blog, 7 February, viewed 12 March 2015, <http://www.showlove.co.za/aap-rocky-says-his-mom-downloaded-long-live-aap-illegally/>.

THANKYOU