The Leon Journal of undergraduate Research in Communications ; Volvo. 1, No. 2 ; Fall 2010 Music in the Digital Age: The Emergence of Digital Music and Its Repercussions on the Music Industry Sadie A. Stafford* Senior Majoring in Broadcast and New Media Leon University Abstract The clearly ubiquitous evolution of digital music has created an apparent and drastic shift in the way consumers and producers view and use the music industry.

The presence of these music files that have been digitally compressed, thus making them easily attainable to all for a small fee or Illegally downloaded for free, has made the USIA industry reevaluate how they are to make a profit off their art form. Social media web sites have also created a visible demand from consumers for artists to maintain a consumer-artist digital relationship, making the Internet not only a promotional vehicle for artists, but also a necessity for profit.

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These new means of music distributing and marketing have not only pushed the music industry to new levels, but has created a whirlwind of changes as record labels are losing control, with artists and consumers having the upper hand. L. Introduction The inspirational Bob Marble once said, “One good thing about music, is that when it its you, you feel no pain. ” But in our current state of being In a digital age, it is the music and the people who create this music that seem to be feeling all the pain.

As the digital age encroaches on our lives, consumers are demanding the music industry to keep up with these changes, which in turn, has led to financially devastating consequences for this industry. In a world that Is full of conflict, economic despair, war and constant turbulence among nations, there Is only one entity that few can say they genuinely hate and that is music. Music is an integral art of our society as well as a part of societies throughout the world.

It is art that strives to feed the soul and paint a canopy of emotions through song. With this being said, It Is Important to note that we have reached a time when music has become so easily attainable that anyone who has a computer can potentially become an overnight phenomenon. Much of this shift can be attributed to the digital age and its undeniable presence in the music world. According to Rick Cranes, president of the Songwriters Guild of America, “Digital music has become the ubiquitous soundtrack of American 2008).

This rapid emergence of new technologies has caused huge alterations in what was once a straightforward business model for success in the music industry, causing many industry leaders to take a second look at music to be so simple that the value is diminishing? Does our obsessive Internet usage lend itself towards a shrinking level of respect for music art* Keywords: Digital Age, Music Industry, Social Networking, Interactive Music Marketing, Music Pirating and Sampling Email: Sadie. stafford45@gmail. Com Music in the Digital Age by Sadie Stafford -? 113 sits because practically anyone can become a music star?

The digital age has created both a luxury and a monster for consumers and producers alike because it has come upon us so rapidly that at times, it seems to get ahead of what we know how to handle. This article will look to analyze the introduction of new technologies in regards to music production through a literature review and expert interviews, as well as investigate the inventive marketing tools artists are now using to promote their music. But the true goal of this research is to see what repercussions this technology has on music artists and their labels and of course, what we can expect or the future of the music industry.

As technology and new media advance and improve, so do the means for marketing and promoting of anything and everything. The music industry is no exception to this ever-changing whirlwind that has scooped up artists and their music and has moved them to an entirely different level of sharing, purchasing, marketing and distributing. The pressure consumers have placed on the music industry to keep up with their demands is enormous. It is expected that record companies and independent artists develop new means of communication and distribution of their music as the Internet ND online databases explode with popularity.

In this digital age, labels are losing much of their importance and artists are more capable of promoting themselves, granting them more ownership over their own work (Halogen-Kuwaiti and Regna, 2004). II. Music Pirating and Amp’s The real growth in emerging technologies began in 1998 with the evolution of the MPH player. This allowed for a new type of audio-compression that was at the time, a revolutionary means for listening to music. What the creators of MPH files and music industry experts didn’t know was that this technology that they thought would help hem, would actually hurt them in the long run.

By developing a type of music file that is so compressed it takes up less space yet maintains the integrity of the audio quality, music personnel predicted that this technology would make it much easier to distribute and enjoy music across many outlets (computers, ‘Pods, MPH players, etc. ). But this creation actually led to the development of the infamous online file sharing sites such as Anapest and Aziza, inspiring the birth of peer-to-peer (POP) transfers of music free of charge. From the introduction of these file-sharing sites, pirated music or music downloaded illegally) skyrocketed.

In attempts to combat this music “stealing”, this inadvertently led to the development of online music stores such as tunes in 2000 (Copal, Lowercase, Marksmen & Telling, 2007). Because of these rising technologies, not only are record labels looking at new means of music distribution, online. Before all this though, it is important to look into how the digital world has made a splash in the lives of musicians and labels in terms of POP file sharing. The main concern is not “how we play the music, but where it comes from and what we do with t. ” (What’s the Controversy, hotheadedness. Com).

According to Jeffery Valises of Business World, many believe that, “online music has led to illegal sharing of music files to the detriment of the industry’ (Valises, 2009). These technologies have led to a decline in cost of music for consumers as well as an increase in their knowledge of artists, which are two of the reasons why this POP file sharing has blossomed so quickly (Copal, Lowercase, Marksmen & Telling, 2007). So although services such as tunes are completely legal and actually promoted, it is what happens to the music after it lands in the hands of the purchaser that music aficionados are worried about.

Once that music leaves the hand of its owner in the form of a burned CD, on an pod player or through a flash drive, it is considered stolen music and the artist will not receive a cent of profit. The individuals downloading these music files are many times referred to as “free-riders”, who are “individuals who consume a public good without actually paying for it [which can] undermine the market efficiencies” (Copal and Patriarchates, 2006). This illegal file sharing is not a minute problem, it is one that resents an incredible concern to many musicians and labels alike.

According to the Digital Music Report 2009, “40 billion music files were illegally shared worldwide last year” (Valises, 2009). This number is of course astounding, but when one looks at the financial backlash of these downloads, it is even more devastating to the music industry. According to the Recording Industry Association of America (ARIA), two kinds of losses were attributed to piracy, “losses from street piracy- the manufacture and sale of counterfeit CDC- and losses from online piracy’ (ARIA Web Site FAQ).

ARIA also obtained a report from the Institute for Policy Innovation that does a breakdown of how drastic the economic losses have been from these forms of piracy. According to the site: Global music piracy causes $12. 5 billion of economic losses every year, 71,060 U. S. Jobs 114 -? The Leon Journal of Undergraduate Research in Communications ; Volvo. 1, No. 2 ; Fall 2010 lost, a loss of $2. 7 billion in workers’ earnings, and a loss of $422 million in tax revenues, $291 million in personal income tax and $131 million in lost corporate income and production taxes (ARIA Web Site FAQ). Ill. The Power of Music Sampling and Sharing

Due to music pirating, record companies are losing money and many artists believe that this is indirectly forcing record companies to be more hesitant to take on new talent, preferring to stick with the talent they have to dodge their losses (Valises, 2009). Research done in the Chicago Journal titled Do Artists Benefit from Online Music Sharing concluded that “consumers are more likely to sample first rather than directly purchase” (Copal and Patriarchates, 2006). This implies that sampling is the future to music sales and can be used as a “truth-revelation mechanism” to determine how a consumer values a piece of music.

It was found that the more the becomes for them. If the consumer has relatively little vested interest in the artist though, that sampling can turn into decreased revenues for that particular artist and label because of pirating. The gravity of this music stealing has forced the authorities to become involved in attempts to bring a stop to this uncontrollable theft. Organizations like the Recording Industry Association of America (ARIA), the Digital Media Association (Dime) and the National Music Publishers’ Association (AMP) are actively searching for ways to combat this threat to the music industry.

For example, in the ARIA mission statement they mention that they “work to protect intellectual property rights worldwide and the First Amendment rights of artists” (Dime Press Release, 2008). In attempts to act upon their promises, ARIA has begun to initiate lawsuits against people that are illegally downloading music. The association stresses the fact that if you steal music online, you might as well Just go to the store and steal and actual CD because the difference between these two choices is nonexistent. Another interesting aspect of music sharing and illegal downloading is how it has effected a songs survival time on the music charts.

A study done by four college professors called The Effect of Digital Sharing Technologies on Music Markets looked Into this very topic. They predicted that with the emergence of file sharing, well- known artists would decrease in popularity (which they refer to as “the dilution of the superstar effect”) and newer artists would emerge from below to produce chart hits. Nat they found was slightly different than what they expected. The study showed that sharing has relatively little effect on top albums and their survival on the charts.

Smaller, lesser-known artists on the other hand, are hurt from this sharing and experience less sales than before POP sharing was developed. Because of this, minor labels are looking for ways to use file sharing as a beneficial tool to “popularize their albums” as opposed to hurt their sales with pirated music downloads (Copal, Lowercase, Marksmen and Telling 2007). This love-hate relationship, along with artists desire to enhance their “digital relationships” with consumers is all part of the new age of music, something that is Just on the verge of being explored. IV. What the Musicians Think

Speaking of artists, it is interesting to note where they stand on this issue of illegal digital downloading because it is them who are inevitably the ones affected by this Issue. Obviously, a majority of the artists are opposed to this form of music listening because, “the more illegal downloading is taking off, the more the record companies are suffering, the more that they’re only concentrating on the big artists” (Artist Buzz, NNW. hotheadedness. Com). Bigger artists like John Legend believe that many people illegally download because consumers feel that artists as successful as

Legend, Madonna or the Battles don’t need more money so they don’t see the big deal in downloading a few of their songs free of charge. But Legend points out that ‘there’s a whole industry that thrives off of those 99 cents you pay for your download” (Artist Buzz, wmwwhatsthedownload. Com). Before all of this digital music existed, it was pretty common for children and young people to make mix tapes for their friends, but as Sarah McClellan puts it, “It’s one thing when we were kids and En made tapes for our friends of songs.

But it went to five people and now it goes to Music in the Digital Age by Sadie Stafford -? 115 Artist Buzz, wmwwhatsthedownload. Com). So the concern is not that people are sharing one song with a few people; the problem is that once music files get online, there are an endless number of people who can access them, which is Just what people do. The ARIA clearly states on their Web site that, “we have embraced the technological advances that have allowed millions upon millions of people around the world to enjoy the music we create.

We want fans to enjoy their ‘Pods, CD burners, and other devices, but we want them to do so responsibly, respectfully, and Nothing the law. ” Surprisingly enough, there are also artists who feel that this illegal downloading is somewhat of a good thing and are completely supportive of the digital era of music. Piracy acts as promotion for an artist because once the consumer has downloaded an unknown song, it is said that they are more likely to purchase something from that artist in the future (Copal and Patriarchates, 2006).

The Black Eyed Peas for example believe that downloading music is a good way for newer artists to get their music out there if they don’t have a big record company backing them. The band feels that if people download a portion of an unknown bands music and enjoy it, they will eventually purchase the whole CD or download their music legally to further enjoy it. Jason Mrs. also shares this same appreciation for illegal downloading in the sense that he can see some of the benefits it serves. “l can’t yet complain about downloading because of my fan base,” says Mrs.. L would probably say half of my fan base that comes to our concerts, heard about me because of illegal downloading” (Artist Buzz, wry. hotheadedness. Com). V’. The Digital Epidemic It is also interesting to note who the most frequent perpetrators of music piracy are cause once those individuals and motives behind why people steal music are discovered, it makes the industry that much closer to putting an end to this epidemic. Ere Chicago Journal did an in-depth study of online music sharing and looked into these statistics.

They found that the people least likely to illegally download music are females, older people and “individuals with an ethical predisposition toward legal lustier” (Copal and Patriarchates, 2006). It was also found that an individual’s income has a relatively insignificant effect on whether they decide to illegally download music. Many believed that a lower income individual would be more likely to steal music than one more well off because they lacked the superfluous funds for purchasing that particular song or CD.

But according to research, it suggested that the true value of the music is solely established by the listener and how much loyalty they have to that artist. In turn, this directly affects how much money they are willing to spend on that artist. This is beneficial research because now the industries are charged with ways to target those specific demographics when looking for ways to encourage legal music purchasing. The goal of the music industry is to simply “make buying music easier than stealing music” (Copal and Patriarchates, 2006), which is something that is far from solved.

The only hypothesis that industry experts have is music as well as subsequent music from an artist. “This has major implications for the music industry, in that the industry can potentially reverse the effects of online audio piracy by providing more legal and efficient sampling techniques that consumers could use” (Copal and Patriarchates, 2006). The Internet can be a Needful tool if the music industry could Just learn how to maximize their profits via USIA sampling because that is where the bulk of music is now being obtained.

As of 2008, Atlantic Records was the first major record company to have over half of their income attributed to digital sales (51% of sales). This was a huge milestone for the company, which is owned by Warner Music Group, because it made them realize that the digital world is rapidly taking over the familiar world of CDC. This is something that newspapers and television stations have already noticed in the sense that much of their viewers look at their content via the Web, as opposed to on TV or in the papers. Now the music industry is realizing that they are no exception to this digital transition.

It was originally believed that when digital sales surpassed the sale of CDC, that revenue would make up for lost revenue in stores. But according to Forrester Research, music sales are expected to fall from $10. 1 billion in 2008 to $9. 2 billion in 2013, implying that digital sales will be incapable of making up for this deficit in CD sales (Arrange, 2008). 116 -? The Leon Journal of Undergraduate Research in Communications ; Volvo. 1, No. 2 VI. Social Networking Influences and the Role of Music Labels Music piracy and illegal unloading are not the only challenges that the digital age has brought upon music artists and their labels.

The explosive popularity of social networking sites has made huge splash in the lives of musicians and has greatly altered the way marketing teams work towards promoting artists. In a time where terms like Backbone and Namespace are everyday lingo, social media and online marketing have never been so ‘ITIL. Olivia Tortilla, the Executive Vice President of Marketing at Atlantic Records says that although they once viewed the Internet as a “promotional vehicle to highlight ewe artists and albums, they now see artist sites as a way to generate online advertising revenues and sell tickets, t-shirts and even music” (Holman, 2008).

The online pre-sale of music is becoming a huge source of revenue for companies like Atlantic Records because fans know now to go straight to the artists personal Web page to get their music first, sometimes before it is even out in stores. Ere success of an artist is no longer measured in how much money they make on their albums or during a tour. Today, artists are expected to have not only a presence in the real world but in the online world as well. Fans are now demanding relationships with their favorite bands because of these social networking sites.

The goal that labels and artists now have in tackling the new means of marketing “is embracing the use of technologies to brand and reach out to potential customers” (Shih Ray UK, 2002). Today, labels are beginning to lose their importance, as artists are able to promote themselves online. Because of this increased artist power, “there is reduced ownership of music copyrights by labels and more by the Ere old model for the music industry was to allow the artists to make the music and hen pass that music off to their respective label to promote them and distribute their work to the masses.

But as artists become more technologically savvy and recording studios can be purchased for a small fee via your Mac computer, are labels really going to be necessary in the future? Before the development of social media sites, there were really only a few different ways to discover new artists as well as follow artists that you were already a fan of. Music was discovered through the radio, through television such as MET and VHF, or your friends and family would inform you f a new band or artist they thought you might like and you could then borrow a CD or pick up a copy of your own at the nearest Best Buy.

But now with social media sites, discovering new music is easier than ever. There are four basic ways in which music can be discovered and artists and labels alike are beginning to realize the potential these methods of artist promotion could have in the future of their success. One way consumers are discovering an artist is through simply browsing on the Internet and finding artists through links or genre categories that sort out popular artists. Then there is the “stumble-upon” method of discovering an artist, which simply means you accidentally encounter an artist you like via the Internet and the sites you visit.

Of course there is also the peer-to-peer way of discovering music in Inch a friend can send you music suggestions that they perhaps received through other friends. And lastly, there are the social media and networking sites that open up endless possibilities for sharing, blobbing and promoting of favorite artists or bands to anyone and everyone on the Web. These four different options for discovering music provide countless opportunities or artists to capitalize on if they are intelligent and know how to use the Internet to their advantage.

What artists and labels are beginning to see as the most beneficial means of promotion is in establishing a community around the artist through drawing in listeners and fans via popular social media sites (Peters, 2008). With sites like upcoming. Org, last. FM, Namespace. Com and Backbone. Com, artists have an unlimited number of fans they can reach out to and pull in without ever leaving their computers for a performance. The ease that these networks have created for artists o share their music with anyone who is willing to listen is incredible.

Not only are the artists and labels promoting their music, but fans are also promoting artists through user-generated content. Once a fan posts a link to a video on their Backbone page, blob, Namespace, or whatever social media site they choose, that automatically generates content and directly promotes the artist without that artist or label spending a penny. There is also the creation of sites such as Namespace Music, which Nas created in 2008 in partnership with three of the top labels, Sony BMW, Universal Music Group, and Warner Music Group as a new way to combine music labels with social media sites.

The goals of this partnership was to create an outlet for the artists represented by these labels as well as generate ad revenue on the artist’s home page. This makes it a win-win situation for Namespace and the labels that are both capitalizing on the deal. “The idea behind Music in the Digital Age by Sadie Stafford -? 117 around an album’s release” (Holman, 2008). But although this revenue is expected to help the continuing deficit of CD sales by bringing in an estimated $1 billion in venue by 2012, the anticipated monetary loss from CD sales at that point is expected to be at $3 billion a year.

This means that although digital sales will help the revenue generated from music sales, they still won’t make up for the revenue lost from the CD sale deficit. This ease in marketing and promotion does not come Introit a cost. Because it is now so easy to put your work out there for millions to see, the competition in the music industry is tougher than ever. Although labels are beginning to lose their importance, they haven’t disappeared quite yet because once o are signed to that label, the chances of your band “making it” generally increases greatly.

The financial backing and publicity you receive through a label deal are still highly valuable in this cut-throat market and will continue to be until someone comes Jp with an alternative way to make yourself known to the public. Ill. Interactive Music Marketing Ninth that being said, it is not too far from the time when other artists will act as a type of “label” for newer, up and coming artists. We are already seeing this type of promotional model with mentors and third party promoters forming a partnership. Is means that an “established, already famous artist can provide the newcomer Ninth exposure and funds” (Halogen-Kuwaiti and Regna, 2004). In doing this, there is no record company that owns the copyright privileges to the newer artist and the more established artist is like a sort of “venture capitalist” investing in an artist they believe in. There are also services such as the one developed by Clear Channel Radio and Front Line Management called artist personal experience radio or a. P. E.

This service allows individual artists to create a radio channel that features close to 1,000 ones of their choice, which are then mixed with their commentary and personal stories. This type of radio station is intended to be a marketing tool for both the artist themselves and the music that they are in a way, endorsing by putting on their personal playbills (Reuters, 2009). These types of marketing are only the beginning of what we are starting to see in attempts to get coverage of an artist.

Through an interview with Rob Beauty, Product Development Coordinator in the Digital Media Department at Atlantic Records, Online presence is key in the digital age. Artist placement on the Internet is a cornerstone to heir success in the music industry. For example, blob placement is a major factor in online marketing of artists as well as the different viral placements of contests and competitions that exist online for each artist. Consumers will register for contest after contest to get entered in a chance to win free concert tickets, backstage passes, t- shirts and anything else you can imagine.

Once they enter that contest, the record company or marketing department has that individuals email address and will begin sending them email after email promoting that artist, or any other similar artists for hat matter. So labels and artists use these contests to promote their music and draw in more listeners to their fan base. The newest forefront of music in the digital age is interactive music. We have all heard of interactive media and seen the rapid growth of this form of marketing in the past few years, but music is Just now becoming a part then enjoyed by the listener.

But now we are beginning to see the listener becoming involved in the actual music because of interactive technologies such as Romper. This cell phone application allows listeners to rearrange their favorite songs by taking retain parts of the song apart and then rearranging those pieces to their liking to create a whole new piece of music. Then they are able to share their new creation Ninth friends, inadvertently stirring up publicity and promotion for that band. “Fans can now connect to artists’ music in a whole new personal way by creating their own ‘erosion of a song and being part of the creative process”(Biotech Business Week, 2009).

Bands such as Radioed are aggressively tackling this type of interactivity and are being recognized for it throughout the media, giving them even more publicity. What Radioed did was similar to Romper in that they created a remix competition with their single “Nude”. They began by selling five different parts of ‘Nude” on tunes for . 99 cents, vocals, guitar, bass, strings/fix and drums. Then listeners could mix each part of that song however they wanted to create their own remix of the song via radiochemical. Com.

After their personal mix was created and uploaded, other users could then listen to those remixes and vote for their favorite one, which in turn, allowed fans to be involved with their music on a whole other level. What this did was give listeners a greater appreciation for the music production process, which is thought to possibly reduce levels of piracy and encourage fans to purchase their music instead of stealing it. Radioed is also flourishing in the 118 -? The Leon Journal of Undergraduate Research in Communications ; Volvo. 1, No. ; Fall 2010 digital age because they released their most recent album on tunes with “pay what you want” deal, as well as allowed fans to create a music video from a song of their choice and then submit it for a competition. All of these new media approaches are things that are Just being explored by labels and artists together. But at times, the inventiveness of each new outlet is overwhelming for producers who cling to the old music business model. It is quite apparent that we live in a society that cherishes their new technology, constantly searching for and stumbling upon new and improved ways to do even the simplest things.

We also are a culture that values our music and are surrounded by this medium in our everyday lives. The challenge that we now face is how to combine these two deep loves in a way that compliments one another as opposed to impairing the success of each other. This is a difficult forefront that music artists and record labels must aggressively tackle, because if they ignore these technological advances, the music industry could end up in a detrimental place. Unfortunately, our culture is one that values one thing above all else and that thing is money.

Although many say that money is not the end all and be all, it cannot be argued that money plays a huge role in the decisions that corporate America as well as all other people of this nation make. Because of this, it is important to understand how technology is effecting the music world so we can continue to allow this art form to thrive the artists, there would be no music. Bottom line, there exists a constant battle between consumer and producer; the consumer wants their purchase to be cheap but the producer needs to make a profit.

So this tug-a-war creates the very familiar cycle that we see on a daily basis, all of which goes back to the basic principle of capitalism. So what will music do next? Will we reach an age where live concerts no longer exist because we can simply watch a live feed of them on our computers while En have a discussion board open on our screen? Will CDC be the equivalent to vinyl records in that they are a collector’s item because they are an item of the past? And Inhere will the bulk of an artist’s revenue come from five, ten years down the road?