Marketing involves determining which products or services are likely to be consumed by customers. In any business, marketing is a way of increasing sales and consequently revenue. The music industry is part of the wider entertainment industry that includes movies, and other forms of contemporary art. Technological developments in the 20th century have influenced several aspects of the entertainment industry as a whole.
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Some of these include the quality of image and sound, special effects, the impact on the plot, and democratization of filmmaking among others (Burnett, 1996, p. 48). Marketing of the industry’s products has also been greatly affected by technological developments. This paper discusses specifically how technological developments affect the marketing of music with a mention of the broader entertainment industry as a whole. Amongst the areas covered are the advancements in the 20th century, and their counter benefits. Although technological developments, in the music industry have led to serious challenges in marketing, the benefits outweigh the obstacles faced by stakeholders.
The music industry encompasses both recorded and published music in addition to the entire process of transferring music from the artists to the listeners (Artists & Repertoire or A&R). Production companies identify talents that can either sing or act. These people then compose and record their work which is marketed and sold as licensed copyrighted material. Currently, music is sold in various forms such as Compact Discs (CDs), mini discs, cassettes, and vinyl.
Logistics for retail purposes are also handled by the production firms (Fink, 1989). According to a survey by Merrill Lynch in 2000, the music industry was estimated to have a global market of about $47.7 billion. $41.1 billion of this amount is from music recording while the remainder is from publishing. Piracy is estimated to take 1/3 of the total market share (Boehlert, 2001)
History of the music industry
The music industry has adjusted considerably in the 20th century through changes to using minidisks and DVDs in the 1990s. However, it is the internet and digital technology that have significantly revolutionize how music is produced, distributed, and marketed. Previous technological advancements in formats of offering music had increased the sales figures and improved the industry’s earnings. The digitized media has significantly increased piracy although it is viewed to have the potential for future growth and open many markets. This is enhanced by the mode of access and related manipulation abilities that are on offer, for instance, customization of music to suit particular customers’ wishes.
The music market expanded largely due to the introduction of cassettes and then CDs which facilitated the ease of music distribution. On the contrary global economic downturn in the 1980s shrank the market. Music is a form of entertainment that falls under leisure. During economic hardship, leisurely activities are first dropped for fundamentals of survival such as food. In recent years, several factors have contributed to the decline in the rate of growth in sales.
These are economic slowdown, increased online piracy, changes in the taste of music by different generations that record labels have not adjusted to, and penetration of conventional retailer’s markets by mass markets retailers such as online websites that sell the same product, among other market-based reasons ( Vogel, 2001). A study by the British Phonographic Industry suggested the sale of music CDs in the UK between the years 1996 and 2000. The popularity of DJ-ing has also led to increased sales of CDs. This can also be attributed to consumer behavior which is greatly influenced by economic prosperity (Vogel, 2001, p.73).
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Marketing and promotion of music is key to improving the sale of music just like in any other business. In the music industry, this is done by the record labels (producing companies) that also have distribution rights and indeed it is a basic necessity for those companies to be competent. Artists’ exposure is promoted through the radio, television companies, the press, through the media, and personal appearance as a way of improving sales.
The invention of the internet and its easy worldwide availability has increased concentration on narrow target segments substantially. Since consumers are constantly continuing to use sophisticated gadgets for their music due to electronic advancements, it is imperative for marketers to likewise get more sophisticated to match the change to live up to standards. The use of the internet as a media for promotion is an increasing trend that new entrants in the record labeling industry significantly engage in. The older companies that have been in the market also embrace this development. It is better to internalize the channels of distribution of music and technological developments in the music industry to understand the marketing concepts and how technology has changed them
Channels of distribution
Record labeling companies do manufacture the music and sometimes outsource the pressing facilities from other independent companies. They also pack and do the artwork for sleeves if they do not outsource any outside help. In the distribution of the music, major labels have established channels for doing this by themselves. The majority though settle for independent distribution firms who operate either as wholesalers or retailers or both to distribute their music. The entire activity entails getting the music from the company to the consumer for utilization. Some of the retail channels of distribution include radio and television stations and private independent retailers (Sanjek, 1983).
Radio and TV stations
Radio stations play a significant role in the promotion of music that is newly produced. Record labeling companies give their music to the stations as a marketing gimmick. Once the particular music gains airtime and is popularized, sales in the market increase. This is because people buy more popular music than those that they hardly come by. The existence of several FM stations worldwide has helped in multiplying the industry’s revenues locally and internationally (Sanjek, 1983, p.181).
The invention of VCDs and DVDs has made this principle to be transferred to television channels. In the past, television stations concentrated more on showing movies, and other related programs in addition to news. Music was not a serious contender of television airtime. Today, there are televisions channels dedicated strictly to music and tremendously promote sales.
Retailers are the actual conventional shops where consumers walk to and buy the desired music. It is in this area that computers and the internet have vastly changed ways of operation. For instance, years ago, people had to walk into a shop and buy the actual CDs for the music they like and then play them on their music players. It is more convenient currently to pay and download music on the internet and then play it on the same computer. Prices of computers and internet costs over the years have been on a downward trend and more people, especially in the developing countries, find themselves able to afford them.
Technological advancements in the music industry
Several technological developments have changed how the music industry operates in the 20th century. Amongst the areas in which adjustments have been made as partly aforementioned are: the channels of distribution, ways of intellectual property protection, different revenue collection methods, and cheap electronic gadgets for playing music among others (Fink, 1989).
Digital downloads are one way in which music is currently distributed to consumers that did not exist before. Although significant revenues are not raised from this method of distribution, it is viewed in the industry to have potential as a way of the future. The practice is abused by illegal downloads from those unwilling to buy legitimate versions of the product. Online auctioning of tracks in live concerts is another trend that is envisioned to be a viable means of music distribution and marketing. The younger generation finds this form of music distribution more acceptable than conventional buying of the physical product. In the United States, over 70% of university students get their music through this method by the turn of the millennium (Paxton, 2001, p.84).
The modes of payments in the music industry have also changed due to how sales are made. Currently, payments for music are mostly through credit and debit cards for online materials. There are also mobile phone-based methods of payments that are done in conjunction with the subscriber providers for the sale of music used majorly for mobile phone ringtone or listened to. Marketers, therefore, have to devise ways of attracting these kinds of players to promoted their businesses and sell more music.
Modern gadgets for playing music such as i-phones, mp3, and mp4 players all need the music to be in a form that can be directly loaded into them. Marketing companies therefore cannot stick to the traditional sale of music on compact disks which are not compatible with the gadgets. In essence, as more people adapt to this technology, the sale of physical CDs goes down and that of downloadable online materials go up (Fink, 1989). Companies that market music has to adjust to this reality and make the necessary changes to adapt or be phased out of the market. New entrants also get an opportunity to capitalize on and competitively join the market. They can provide the services that the older companies have not adjusted to and technically increase their stake of customers (Levin, 1978).
Computers and modern gadgets have also increased the amounts of music that people can store and listen to. Some of the equipment have large hard drives which allow for storage of many songs by an individual hence people can buy more tracks for themselves and easily store and access them. Mobile phones have external memory cards so do external computer hard disks which although are small in size, can store huge amounts of music (Paxton, 2001). Their portability is another factor that encourages buying of music and hence increases sales. This is because there is more time to listen to the music of your choice: while walking, jogging, in the car, mowing the lawns at home, or even working in the office. Before the development, time for listening to music on huge stereos that were fixed at home was quite limited. This mobility translates a culture of listening to more music a move that helps with the sale of music.
Some of the recordings that have incorporated technology to a greater extent are discuses below and the effect of such technologies in the world of music
Case 1: The Grey Album
The Grey Album was a compilation of tracks in Jay-Z’s Black album and Beatles White album and hence the name. February 24, 2004, is remembered in the music world as ‘Grey Tuesday’ due to the mass protests that were staged by over three hundred music blogs and websites in North America in solidarity with the creation of this album by Brian Burton, a.k.a DJ Danger Mouse (Werde, 2004). The remix was the work of digital production software such as Acid but violated copyright laws. It had gained popularity and was selling in all major music selling online sites. The ease with which Danger managed to produce and distribute the music is credited to technology but portrays another negative side of these developments; piracy. Before such technology, there would be no such incidences.
Case 2: Akon’s Lonely CD single
Computers have played a major role in the production of music in determining the quality of sound and pictures that are produced. American-Senegalese singer Akon’s popular song Lonely is an example of how the quality of sound can be manipulated to suit individuals’ desires through current technology. The song has a very high-pitched voice that is not humanly possible (Bull, 2000). This yet helped in liking of the song and sales hit over $8 million in just a couple of months.
Case 3: the movie Avatar
Although this paper has so far been focused entirely on music, it is had to go without mention of Avatar when technology is a key subject involved. The 3D movie produced by James Cameron involved the latest technology available in the industry and was an instant success. It surpassed Titanic to become the world’s ever most sold movie with over $2 billion within months of production. In the United States for instance, since, the movie was been shown in 3D, and moviegoers had to part with an extra $3 above the normal ticket rates to view the production. This was one way of increasing revenue from the movie.
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Negative effects of technological development in the industry
The developments above have some counter beneficial effects in the industry that are undesirable. Piracy has increased due to the ease with which this can be done. Digital Rights Management has become more difficult with copyright-infringing files downloaded every day in millions of numbers. Secure delivery and safeguarding of intellectual property rights are cumbersome. Another problem is created by ‘ripping’ of CDs or CD ‘burning’ at home which threatens the sale of the legitimately manufactured industrial products (Mansfield, 1983).
Technological changes can erode existing markets and complete structure a new one. This promotes the entry of new players since the infrastructure requisite is the same for them and existing market players. Marketing firms need to be innovative and dynamic to survive in the versatile environment created by technology. Competition is also enhanced and hence good service delivery. Technological developments, therefore, are good for the music industry.
Boehlert, E. 2001. The music industry in the pits!. Salon. p. 6.
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Levin, R. 1978. Technical Change, Barriers to Entry, and Market Structure, Economica, 45, 347-361.
Mansfield, E.1983. Technological Change and Market Structure: An Empirical Study, American Economic Review, 73, 205-209.
Paxton, M. 2001. Hard disks drives move beyond the PC: Pockets of storage emerge in the home. California, US: Cahners.
Sanjek, R.1983. From Print to Plastic: Publishing and Promoting America’s Popular Music, Brooklyn: Institute for Studies in American Music.
Vogel, H. 2001. Entertainment industry economics. 5th ed. New York: CUP.
Werde, B. Defiant Downloads Rise from Underground. New York Times. 2004, sec. E: 3.