1. The Digital Millennium Chapter Two

2. How has digital technology affected the music industry?
Start Thinking . . .
How has digital technology affected the music industry?
Would you say this change has been for the better or for the worse?
Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

3. Chapter Goals
Learn about the technological paradigm shift into the digital world and the way it has altered how music is created, distributed, and consumed.
Understand the legal battleground issues in the age of digital music.
Gain awareness of how the business has changed for record companies and the implications of this new environment for recording artists.
Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

4. The Double-Edged Sword
Benefits of digital recording and distribution
to musicians
to producers
to record labels
Disadvantages
infinite copying
Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

5. CD piracy only one problem
Internet Synergy
CD piracy only one problem
Internet offered unregulated and accessible distribution channel
Digital download and streaming revenue increased
Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

6. Labels Sow Seeds of Self-Destruction
Legislation
Audio Home Recording Act of 1992
Digital Millennium Copyright Act of 1998
Litigation by RIAA
Consumers
Internet Service Providers
Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

7. Smaller, Cheaper, Faster, Better (?)
Heart of digital revolution = process of making music
Implications:
Reduced need for conventional recording studios
Reduced need for large corporation funding
Reduced need for large corporation infrastructure
Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

8. The Economics of Digital Distribution
Previously
record labels = banks
artists = sharecroppers
investment in successful recordings = profit
Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

9. The New Economic Order
Digital technology + Internet = independent artists earning money
investment in personal recording equipment and software
promotion through Internet-based services
Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

10. The New Economic Order Disadvantages Loss of industry gatekeepers
Loss of well-trained “ears”
Decline of radio as tastemaker
Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

11. The New Economic Order iTunes Arrives
Computer company brings new business model for music industry
Give and take:
Labels get royalties
Apple removes DRM code
Single songs become primary product (not albums)
Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

12. The New Economic Order Streaming
Proliferation of mobile device distribution strategies
Streaming music sees rising share
Lean-back media
Radio, Pandora
Lean-in media
Paid Interactive
Digital lockers
Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

13. “Lean-Back Listener”
Digital music is demonstrating solid growth in emerging markets in particular driven by steep growth in smartphone penetration, the expansion of both local and international digital music services, and the choice of free, 'freemium' and paid services. But having broken into the mainstream, digital music providers will need to review the way it is productized and targeted if it is to maintain the rate of service adoption. 'Lean-back listeners' with mainstream musical tastes and passive listening habits will need to be spoon-fed with compelling easy-to-eat digital music packages or 'magazines' free or at affordable price points to continue digital music's growth trajectory..
Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

14. “ Lean-in Listener”
If you were you the kind of kid who sat in front of a radio, tape deck or Victrola and devoured every sound and word of an album, you're what Pandora CEO Tim Westergren calls a "lean-in" listener. You love music, you want to engage with the music you hear and he's made an iPad app just for you.
Pandora for the iPad is an immersive experience for those who think music should be more than just what you hear — that music and information about music should be read, seen and even touched.
Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

15. The New Economic Order Consolidation
Mergers and acquisitions
Old school companies = exploiters of catalogs
The concert side
Greater efficiency
Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

16. The New Economic Order Where the Money Is Today
The concert business
Synchronous rights
Electronic dance music
Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

17. How will the music industry evolve:
The Digital Future
How will the music industry evolve:
Will it disappear?
Will it reapply itself?
Jockeying for power and money between
music service platforms
labels
artists
songwriters
publishers
Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

18. The Digital Future Streaming Versus Downloads
“Cloud” computing eclipsing downloads
New attitudes:
Music must be freely accessible
Music must be free of cost
Entrepreneurial spirit revived
Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

19. For Further Thought . . .
What other potential implications can you see digital technology bringing to the music industry?
What is your view on civil litigation? Whose responsibility is it to ensure legal downloading and file sharing: record labels, ISPs, or the consumer?
How has social networking affected the distribution of music?
Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners