Check some vocabulary connected with the music business before you read the article
Now read the article about changes in the music business and try this exercise.
Planning for success
What’s wrong with this business plan for success in the world of rock music?
1. Record 11 songs for a CD.
2 Give songs away for free on the internet.
3 Sell the CD in the shops.
It seems obvious that you don’t give away your product for free but this is exactly what indie rock group The Crimea did earlier this year. The band’s reasoning goes like this: more people will download the free album than would pay for it. Therefore more people will hear The Crimea’s music. These people will then pay money for concerts by the band and perhaps buy a T-shirt or other merchandise. If the band play regular concerts to crowds of two or three hundred people they can make more money than they would from sales of a CD. There will always be some people who want something they can hold in their hands so they will release the CD into the shops too – but making money through sales of their music isn’t the top priority.
The story illustrates the creative thinking going on in the music business in response to dramatic changes over the last few years in the way that people buy music. Sales of music digitally – to computers, phones and mp3 players – rose to $2 billion in 2006 – an increase of almost 100% on the previous year – yet overall record company sales are down. People are simply not buying CDs in record shops in anything like the numbers they used to.
This trend looks set to continue so the big question for the music industry is whether they can successfully manage the move to being primarily a digital industry without profits falling to unacceptable levels.
There are both positive and negative signs. On the plus side, more and more people are buying music on mobile phones. This allows people to make impulse purchases – they can buy a song as soon as they hear it. Research by the UK Mobile operator 3 suggested that 75% of 16-24 year olds wanted to buy a track they liked as soon as they heard it. With so much competition for people’s disposable income, a product that you can sell immediately is a big advantage.
The bad news for record companies, however, is the amount of music that is downloaded illegally. Piracy – usually in the form of cheaply copied CDs – has long been an issue for the music business but the internet means music can be copied and distributed freely through file-sharing sites on a larger scale than ever before.
It is this situation that leads bands to start giving away their music for free and promises to make the next few years a very interesting time in the music business.
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