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THE INTERNET’S CHALLENGE TO THE MUSIC INDUSTRY

THE INTERNET’S CHALLENGE TO THE MUSIC INDUSTRY. THE INTERNET’S CHALLENGE TO THE MUSIC INDUSTRY.

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THE INTERNET’S CHALLENGE TO THE MUSIC INDUSTRY

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  1. THE INTERNET’S CHALLENGETO THE MUSIC INDUSTRY THE INTERNET’S CHALLENGETO THE MUSIC INDUSTRY John Perry Barlow“we are now creating a space in which people of the planet can have [a new] kind of communication relationship: I want to be able to completely interact with the consciousness that’s trying to communicate with me.” (Castells, 2OOO,386) 15.3.2OO6 GLOBALISATION AND CULTURE PRESENTED BY:BEN FORTNEY

  2. INTRODUCTION • New communication networks have enabled greater communication and information sharing. • These new networks have challenged a stagnant music industry. • Innovators are moving ahead of the curve to take full advantage of these new communication concepts. Communication decisively shapes our culture. (Castells, 2OOO:356)

  3. THEORY: SOCIOLOGICAL • Music Industry • Fordist • Hierarchical • Top-down • Planned • Controlled • Internet • Post-Fordist • Democratic • Bottom-up • Decentralized • Chaotic

  4. THEORY: NETWORKING • Laws of Networking Power • Metcalf’s Law • As powerful as the # of users • Reed’s Law • As powerful as the # of users2 But, not all users are equal Diane Stone: A network amplifies and disseminates ideas, research and information to an extent that could not be achieved by individuals or institutions alone. Moreover, a network mutually confers legitimacy and pools authority and respectability in a positive-sum manner. (Global Networks Journal, 2002:3)

  5. THEORY: NETWORKING • Manuel Castells • The Rise of the Network Society(2OOO) • Networks constitute the new social morphology of our societies, and the diffusion of networking logic substantially modifies the operation and outcomes in processes of production, experience, power, and culture. • …dramatic reorganization of power relationships. • In a broader historical perspective, the network society represents a qualitative change in the human experience.. Mike O’Donnell: …it is the information itself – knowledge building upon knowledge – that is axial to the information age. (2000:71)

  6. MUSIC INDUSTRY • Major Labels(International Federation of the Phonographic Industry) • 85% US Market • 7O% Global Market • Universal Music Group (France/USA) 25.5% • Sony BMG Music Entertainment (Japan/Germany) 21.5% • EMI Group (UK) 13.4% • Warner Music Group (USA) 11.3% • Independents 28.4% • Independents • (LA Business Journal 2OO4) % Share of US Market

  7. INTERNET MUSIC • Digital Downloading • MP3s • Downloads • iTunes: 1 billion in less than 3 years • p2p: 2-3 billion per month • The level of file-sharing has remained the same for two years despite 20,000 legal cases in 17 countries. (BBC.com) • More than 100 countries supply files (Felix Oberholzer-Gee ) • Broadband American Adults with Broadband at Home [Pew Report]

  8. INTERNET MUSIC • Slumping Sales (Sound & Vision Magazine, 2OO3)

  9. INTERNET DISTRIBUTION • Challenge to traditional • “Industrialism to Informationalism”(Castells, 2OOO:164) • Bharat Rao (Rao, 1999:288) • Challenging the traditional distribution structures • Eric Raymond (Rheingold, 2OOO:51) • Cathedral and bazaar • Robin Murray • Emphasis shifts from scale to scope. • Organisations geared to respond rather than regulate markets. • Frameworks for learning as much as instruments of control. • Allows for specialist, niche production/consumption. • The guerilla force takes over for the standing army. • (O’Donnell, 2OOO:74)

  10. VIRTUAL COMMUNITIES • Gift Society • Networks of Fans • Combining • Resources • Knowledge • Experiences • Why it works? • Richard Barbrook -Westminster University • By adding their own presence, every user is contributing something to the collective knowledge accessible to those already on-line. • Manuel Castells -Sociological Genius • …uninhibited discussion, thus allowing sincerity in the process. (Castells, 2000:389) • Marc A Smith -Microsoft Research Sociologist • …it becomes possible for more people to pool resources. And ‘more people pooling resources in new ways’ is the history of civilization seven words” (Rheingold, 2000:31)

  11. INTERNET NETWORKING: BENEFITS • Established Acts • Free promotion • Radiohead ‘Kid A’ • Huge buzz with little radio or promo • Fiona Apple ‘Incredible Machine’ • Highest chart debut, almost half million sold • Prince - online albums • Build-up to concert tours • Public Enemy‘There’s a Poison Going On’ • Live and Rare Recordings • Grateful Dead, Phish, Dave Matthews • Encourage recording and swapping of live performances to expand fan-base as well as consolidate support • Beastie Boys release rare tracks via their online fan club

  12. INTERNET NETWORKING: BENEFITS • Emerging Artists • Fans can sample numerous songs • Network recommendation • Feedback loops • Intimate relationships • Labels: Fan-base already included Michael Roberston, founder MP3.com: "[w]e talk about a new middle-class of musician emerging, If a band sells 20,000 CD's now, they go hungry. But if they can do that through the Net,that's $100,000 just on CD sales. (Auslandermusic.com)

  13. NETWORKING IN ACTION • Case Study: Arctic Monkeys • Networking in Action • Promo CDs given away at shows • Fans uploaded to file-sharing programs • Myspace.com • Personal contact with fans builds loyalty • Word of mouth • Independent Smash • #1 Single in the UK • 36O,OOO albums sold, 1st week(BBC.com) • Fastest-selling British debut of all time • Most visited band site in the UK(Hitwise) • More than Oasis & Greenday

  14. NETWORKING IN ACTION

  15. THE FUTURE IS NOW • Artists • Freedom of Distribution • Total control • Schedule • Songs • Leverage • Fans • Interactive creativity • Artist-to-Artist • “musicians are working together, making friends and inspiring each other within network communities.” (Barbrook) • Grey album • Fan-to-Artist • Remixes contests

  16. BIBLIOGRPAHY • Agger, Ben (2004) The Virtual Self. Blackwell, Oxford • Auslander music (1999) Auslander Music Manifesto(http://www.auslandermusic.com/manifesto.html) [Accesssed 10.3.06] • Barbrook, Richard (200?) Cyber-Communism: how the Americans are superseding capitalism in cyberspace. University of Westminster, Hypermedia Research Center. http://www.hrc.wmin.ac.uk/theory-cybercommunism.html • BBC.com (2006) Monkeys Let the Music Do the Talking. 24.2.06 http://news.bbc.co.uk/1/hi/entertainment/4644214.stm [Accesssed 3.6.06] • Castells, Manuel (2000) The Rise of the Network Society. Blackwell, Oxford • Hitwise.com (2006) Arctic Monkeys & Viral Marketing – Update 2.1.06 http://weblogs.hitwise.com/heather-hopkins/2006/01/arctic_monkeys_viral_marketing.html[Accessed 13.3.06]

  17. BIBLIOGRPAHY • IFIP (2005) IFPI releases definitive statistics on global market for recorded music. Press Release: 8.2.05 http://www.ifpi.org/site-content/publications/rin_order.html[Accesssed 14.3.06] • O’Donnell, Mike (2000) Classical and Contemporary Sociology. Hodder & Stoughton, London • Rao, Bharat (1999) The Internet and the revolution in distribution: a cross-industry examination. Technology in Society #21, 1999. Pg. 287–306 • Rheingold, Howard (2000) Smart Mobs. Basic Books, Cambridge, MA • Simons, Andrew (2004) Digging downloads: small labels making most of audience's access to digital music files. Los Angeles Business Journal,  May 3, 2004http://www.findarticles.com/p/articles/mi_m5072/is_18_26/ai_n6036150 [Accesssed 14.3.06] • Stone, Diane (2002) Introduction. Global Networks Journal, Vol. 2 #1, 1.2002

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