Media, Money, and the Future

uncle-sam-bruised-economy

As we learned in our research, Americans are undoubtedly aware of the current economic struggles. And large companies aren’t oblivious to this either. The reminders pervade media forms of all kinds: newspaper headlines, popular rap song lyrics, credit card commercials, etc.

Although we focused on different American industries, we have all seen how companies of every kind are riding out the recession and applying new technologies. During these tough economic times, these new media features are especially critical tools in getting American consumers excited about spending money. Businesses in every industry – travel, food, music, sports, and movies – are aware that Americans are surfing the web, and they are more than willing to take advantage of this trend: from P2P music sharing to Burger King video contests via their official website and everywhere in between.

mass media

We are in the digital age, and the truth is, companies and organizations need to realize this if they want to survive in this suffering economy. As technology rapidly evolves and changes, so too do trends in mass media. The shift to an increase in digital media means a shift to a digital economy. Most of us can take care of our bills and banking online – now it merely seems like numbers on a computer screen rather than your life savings. But companies are relying on this in an attempt to survive. They use digital technology to advertise how easy-to-use their products are, making them more appealing to a mass audience.

As you have read, the different industries all play a vital role in the economy. While each one is individualized, it has its own niche. This example of demassification shows the fragmentation of American society and how there are varied interests among citizens. Some are music lovers, some love to travel, and some Americans just love to eat. Even though there is demassification, there are also new conceptions of community. Our separate interests allow us to join new groups where we can interact with those who share our same values and interests. Blogs allow for followers and others to share their ideas and experiences. Music lovers can use sites to talk about the newest music releases, and food lovers can write about cheap new finds. These new communities allow for convergence of media sources. YouTube has been a huge success for advertising for all industries, along with social media sites for the younger generations.

Social Media Bandwagon

Despite the distinctive qualities that separate our industries of focus, they are all united and affected by the economy and media. No matter how creative or scientific a company might be, they can never predict just where technology and economics will lead society next.

As shown in our study of media in the American economy, all of these industries seem to be hovering toward a complete switch to digital media, be it for advertising, accepting consumer response, for convenience and accessibility, or even security. Even though we cannot predict in what direction society will go next, it is clear that most industries are banking on a digital market to bring (or keep) them out of the hole.

CDs vs. Digital: The Future of the Music Industry

We’ve already seen that most music is advertised through a digital platform, such as commercials for smart-phones, MP3 players, or online subscription services. Yet you hardly see an ad for CDs anymore. Has the shift finally occurred from compact to digital?

According to the New York Times, the movement has already started with Atlantic Records:

…more than half of its music sales in the United States are now from digital products, like downloads on iTunes and ring tones for cellphones.

And because digital music sales cannot compensate for CD sales, the industry is now looking for other means of income, like concert ticket and merchandise sales (although you wouldn’t know it by the amount of ads you see for those either).

John Seabrook for The New Yorker confirms the same thing:

With the collapse of the record business, as a result of piracy […] , the business of selling live music has become the main source of revenue for the popular-music industry.

(Here is the abstract of the article, since it is a subscription service).

And the digital movement just keeps growing. According to a report from IFPI (the International Federation of the Phonographic Industry) in January 2010:

  • Global digital music trade revenues reach US$4.2 billion, up 12% in 2009
  • 400 services licensed worldwide by music companies with ISPs, mobile and other partners

So what does this mean for the American music industry? And how does this all tie into the economic recession?

Because of the digital age, many Americans now get their music online rather than in hard format because it is a cheaper alternative. To make matters worse for the industry, many of these Americans also get a fair share of their music through illegal means, causing the industry to lose a lot more money. This reduces the amount of jobs allowed by the big players in the music industry.

And the United States isn’t the only victim. In the UK,

…if current online piracy trends continue, by 2015, losses due to piracy across the EU could reach as much as 1.2 million jobs and €240 (£212) billion in retail revenue in the sectors most affected: film, TV, recorded music and software. Losses in the UK alone are projected to be over 250,000 jobs and €7.8 billion in retail revenue if tough measures are not adopted.

(via Telegraph)

Hence the proposed Digital Economy Bill, currently being considered by the House of Commons – its goal being to counter online copyright infringement. Perhaps the United states needs to step up its game? It may not be what everyone wants, but it may just be what the music industry in America has to do to survive…

P2P: Past 2 Present

It’s interesting to see how music has evolved to adapt to the changing economy. I mean, let’s be honest – it’s always been a game of money. But it’s also been about quality and convenience. P2P (peer-to-peer) networks understood all of these concepts when it came to music (among other things), which is why they provide users with free software enabling them to share whatever media they so choose.

Napster was the first of these, starting up in 1999. It didn’t start because of an economic recession, but rather to benefit those who loved music but didn’t have the means to obtain it. Napster was convenient, and best of all, free. I guess it comes as no shocker that the music industry wasn’t happy about this – so they sued. Napster argued under section 1008 of the Audio Home Recording Act, which says,

No action may be brought under this title alleging infringement of copyright based on the manufacture, importation, or distribution of a digital audio recording device, a digital audio recording medium, an analog recording device, or an analog recording medium, or based on the noncommercial use by a consumer of such a device or medium for making digital musical recordings or analog musical recordings.

But it was a no-go. The recording industry won the battle. But the lawsuit was just the beginning of P2P’s popularity, since it attracted millions of users to Napster when they found out about the possibility of free music. Irony?

Now, after closing and opening and being bought and sold several times, Napster is back as a subscription service. But why would this be appealing at all? Going from free to having to pay does not sound like something most people would want…

Because of Napster’s vast music library. According to Music Week, Napster now has 10 million songs, 790,000 artists, and 980,000 albums available to stream online, as much as you want, for one low monthly fee. And not only does it let you stream music, but it also lets you download so many songs per month based on your subscription status. Pretty sweet, right?

And before I’m accused of it, no I am not advertising for Napster. But I think what they are doing is good. They have gone from illegally helping provide the public with copyright music for free to a good model for getting the music you want for a low price – lower than iTunes’ 99 cents per song. You gotta make money somehow in this economy! And regardless of where you download your music, you can still play it on the go.

That’s not to say that P2P doesn’t still exist; in fact, it is probably more popular than ever. But cheap, legal subscriptions are also a good option.

Oh the times, they are a changin’…

Cashing in on Convergence: Apple is a Winner

As the music industry struggles with CD sales, file sharing, etc., one company has seemed to overcome all obstacles to keep its sales in the black. Who could it be?

Surprise surprise, Apple has managed to create such a successful product, it actually does a lot of the work in selling the rest of Apple’s products. I, of course, am referring to the iPod.

While the iPod is nothing new, it has gone under significant improvements and in many different directions, offering something for everyone. There is now the Classic, Nano, Video, Shuffle, and the latest addition to the family: Touch, which might as well be an iPhone. Apple’s major marketing campaign began with and is being held up by the iPod. Why? Because there’s an iPod for everyone.

With prices as low as $59 for the cheapest one, almost anyone can afford to own one. But that’s not the point I’m trying to make. iPods are making it so easy for Apple to converge all of their devices together. All of them are compatible with each other, as well as Microsoft software. iPods can even be integrated with your shoes. iPods are everywhere! Their convergence with all of Apple’s other products makes things seem so simple.

And iPods, as well as the iTunes music store, are helping convert PC users to Apple. According to Arik Hesseldahl of BusinessWeek,

Perhaps the iPod’s biggest benefit to Apple these days is in helping it sell Macintosh computers. People who use PCs with Microsoft’s (MSFT) Windows operating system tend to be more likely to switch to Macs after they use one of Apple’s music players, a phenomenon that has been called the iPod Halo Effect.

So while other companies in the music business are trying to stay afloat in this tough economy, Apple can sit back and let its iPod lead the way. Thanks to convergence, Apple has made itself stand out not only for its roles as a music giant and computer empire; it has secured its safety during this recession.

The (Mis)behavior of Music Consumers

p2p-governance_id3929961_size480It’s unlikely to hear of music consumers who have never downloaded at least one song illegally. Whether through P2P networks such as the old Napster or Kazaa, through bit-torrent programs, or from some random website hosting download-able mp3s.

However, there are those few who are still loyal to the bands they hear. But even so, there is still free music out there, online. And it is legal. Streaming music has become highly popular over the last decade. With almost any song available for free on-demand, how can one resist listening?

In a tough economy, people must choose their luxuries carefully. And when free alternatives present themselves, especially those of the legal variety, people are bound to respond, and in a big way. Consumers have jumped on the streaming music bandwagon like it’s their job, myself included. Websites such as MySpace and the newly created Grooveshark are just a couple of the countless websites that offer free online streaming of millions of songs. Why do they offer this? Consumer traffic. While they don’t make money from music sales, they receive ad revenues from companies trying to benefit from all the traffic the websites generate.

The response: making subscription services more appealing. Not just to the music listener, but to the site hosting the music as well. According to Anthony Bruno of Billboard,

…expect to see the music industry increase its efforts to make paid services more compelling than free ones. The high rates charged today for ad-supported music are designed to make it less compelling for the service provider.

As for illegally downloading music, the debate is still heated on whether it hurts the music industry or not. While the RIAA estimated a loss of 4.2 billion dollars a year in music sales due to piracy, Chia-chen Wang et al. state,

…file sharing does not have a significant effect on music sales from an economical perspective… more than half the people who have listened to pirated music would buy licensed CDs. Therefore, downloading serves as a means of sampling before purchase.

I’ll let you be the judge…

Digital-to-go: Savior of the Entertainment Industry?

Can one really throw out entertainment as an “unnecessary expense”? I doubt it, but in this time of economic hardship in America, many are having to cut back on movie nights, buying the latest CD from some popular artist, and other luxury entertainment sources.

So with all of this cutting back, how can the entertainment industry of America survive? In this difficult economic time in America, companies are working harder than ever to promote their products, trying to stay above the red line. Due to the recession, however, entertainment companies have less and less freedom to spend money left and right on advertising.

One of the most obvious solutions the industry has come up with is utilizing the digital world. While this is certainly not a new development, its usage has skyrocketed from entertainment companies, specifically the access of mobile technology – the ability to always be connected, anywhere in the world. As Digital Stores CEO Russel Coultart stated in a recent Music Week article,

“The artists that understand it’s about being everywhere are the ones who are going to succeed…”

Take music for example. On almost any phone commercial today, the company will advertise the phone, but as an addition to both show off the phone and a particular hit song, the company will have the phone play that song and show it for several seconds. With the rise of mp3 players (thank you Apple), music now has the capability to be with us all the time, anywhere. Advertising music with a phone or other mobile device slips in perfectly to the convenience of mobile technology. Just check out this commercial for the new Droid smart phone from Verizon.