Is Digitalization the Music Industry Killer?

Did the onset of digitalization and the spread of the Internet in the 90's pronounced the death of the music corporations?   Digital business is becoming more and more important for the recording industry. In order to minimize dependence on traditional music retail business, the industry has come up with new sources of income: merchandise, artist management, concerts and ticket sales, but also licensing and advertising... It's often been written that the music industry is nearing its demise. Digitalization and the Internet have made the old laws of the market obsolete. Instead of faithfully going to the record store to buy CDs, music has simply been copied and burned like it was going out of style. What followed was a steep yet steady decline in sales. But in how much trouble is the record industry really? Though our assessment of the situation shows a continued decrease in profits, digital business is playing an increasingly important role and breathing new life into the industry. A report shows that the Internet is becoming more and more important as a channel for the distribution of music products. Taking into account mobile communications, digital business has acquired about 7 percent of the market share in music sales. Almost 27 percent of the total revenue is already gained via digital distribution such as Internet retail, online stores, or cell phone applications. Record companies have developed other business models in addition to online music sales. They have established partnerships with cell phone and other hardware manufacturers and sell licenses for their products to social networking services like MySpace. Challenges: Music Theft and Private Copying Despite all the attempts to make legal downloads more appealing and the crackdown on music pirating, private copying remains the biggest problem that the recording industry is facing besides illegally downloaded music. "The problem of excessive private copying can only be combated in the long run by engaging in a public debate about the meaning of respect for creative services and intellectual property." As far as the success story of the digital market is concerned, the Music Association takes a very clear stance in its report: only once we manage to establish a strict copyright law for the digital world can today's digital hurdles be rewritten into a success story. O2ibm Visit this Open Forum