Reminder: Guilds “ An association of people in the same trade, formed to protect interests and standards” (Dictionary.com) Modern guilds: IEEE W3C RIAA MPAA Reminder: Killer Apps “ New good or service that establishes an entirely new category and subsequently dominates and transforms existing industries, and redefines marketplaces.” Examples: Model T, Compass, Cotton gin, Steam engine Computer, Internet, email, P2P, CD RW drive
CD sales Recording artists as contract help, no benefits In most cases, record companies own the songs
China 95% of CD sales are pirated copies Average price of these CDs: 5 yuan (about a $1) Neither artist nor record company receive revenue from sale of these CDs China, cont. Piracy caused “fundamental shifts” in the way their music industry operates No longer possible to have a “Top 40”, as it was based on sales Forced stars to “change the way they live, work, and play” (source: Int. Herald Tribune “ Pop stars learn to live with pirates ”) Albums as promotional tools What to do? Artists sell their own pirated CDs at concerts Product endorsements Driven by institutional sponsorship, rather than consumer preference “ Stars need to look elsewhere to finance the rock-star lifestyle.” -- Warner Music Asia / Pacific executive
China, cont. Institutional sponsorship Bottled water: huge in China Bottled water is huge in China, as only 13.8% of water used for drinking there is actually potable. As such, China is the largest bottler water market in all of Asia, and 10th in the world. Quick Facts: The lack of potable water in China has created an enormous demand for bottled water . Bottled water sales in China have been increasing overall alongside increasing incomes and greater awareness of health issues. Opportunities Bottled water consumption in China is expected to grow from 6.4 billion litres in 2001 to 8.5 billion litres in 2002. Market growth is expected to continue in the coming years, with consumption rates reaching 14 billion litres by 2005. Source: http://atn-riae.agr.ca/asia/e3324.htm One artist’s big break was getting a bottled water product endorsement.
Wang Lee Hom: What to do? Promotional appearances: “ Until they pirate my body, I can rely on personal appearances” Born As: Alexander Wang Li Hong Date of Birth: May 17th, 1976 Place of Birth: Rochester, NY, USA Education: Williams College, MA Major in Music, Minor in Asian Studies; Diploma Candidate in Professional Musician Berklee College of Music, MA
Han Hong Best female artist at China Music Awards What to do? Touring “ In China, we have to give so many concerts we do not have time to rest our voices” “ You cannot fight piracy, so there is no point in even getting angry” “ We must adapt to our environment” In China, the Chinese equivalent of Ticket Master is bigger and more powerful than the Chinese equivalent of the “Big 5” record labels. This is the exact opposite here in the U.S. -- for the time-being.
Ukraine Similar to China 95% pirated CDs 70 million pirated CDs annually “ Pirate CDs are hitting streets even before the legitimate versions are released.” $200 million annual loss to U.S. Pirates of Kiev In the Ukraine, you can buy a “greatest hits” compilation album featuring both Brittney Spears and Christina Aguilera on the same CD, for about $4 U.S. This, of course, is pirated material as these two artists are represented by different record companies.
South Korea Same story Rampant music piracy, mainly due to P2P 95% of retail CD stores failed in last five years (8,000 then, 400 now) Domestic CD sales down 50% South Korea, cont. Why is this happening? S. Korean broadband penetration rate is 3x that of U.S., 5x that of Europe Youth culture grown accustomed to using sophisticated computer and audio gadgets; CDs seen as being “quaint”, “old-school” Music store owners attempting to compen-sate by stocking more “gadgets”: MP3 players, PDAs, Cell phones Cell phone ringtones regularly outsell CDs
South Korea, cont. Recording industry in S. Korea involved in numerous lawsuits against P2P, since 2002 Unclear if lawsuits have helped Recording industry also attempting to gen-erate revenue via streaming music services How does this help S. Korean retail music stores? [It doesn’t] South Korea, cont. “ Before then, if our customers liked the songs from our sound system, they used to buy the CDs here… Since about two years ago, most of them just ask the title of the song and walk out, then download it later on the Internet.” “ Online shopping malls offered totally predatory pricing below cost just to establish their customer base, and they succeeded.” “ It seems like brick-and-wood music stores like us are nearly doomed, unless the government comes up with some financial measures to help us stay alive.” “ It may soon be the end of an era for us.” Reuters: South Korean Downloaders Push Music Stores to Brink “The fundamental problem is that the music industry has totally failed to come up with a new marketing strategy to meet the changing demands of music consumers.” “ They just sit back and complain about illegal downloading sites, while offering few alternatives for music fans to get music online.”
Source Wired magazine, 10/2003, page 58 And BusinessWeek, http://www.businessweek.com/print/technology/content/feb2003/tc20030213_9095_tc078.htm?chan=tc&
Piracy est. at $1 billion loss to recording industry; no end in sight CD reaching the end of its life cycle, much like LP, cassette, and 8-track tape did Source Wired magazine, 10/2003, page 58 For information on the 7 stages in the life cycle of a technology, see Kurzweil’s Future of Libraries article, part 1, at: http://www.kurzweilai.net/meme/frame.html?main=/articles/art0262.html?m%3D10
A new approach CD burning / bootlegging encouraged Main revenue: Touring Merchandise, web site
“ In addition to performing, the band set up a tent where fans could make their own free custom mix CD of live Phish tracks w/ iTunes. The tent ran at full capacity, with lines outside until 4AM each night.” NYTimes article “A Musical Themepark for 60,000” August 7,2003 A Phish tent with 23 burn-enabled iMacs offered more than 150 live Phish tracks in iTunes. Each visitor to the tent received a Phish blank CD-R, instructions for iTunes and personal staff escort to get them started — all free.
Harvey Danger Seattle-based group New album released for free (MP3) via web site Intended as promotional tool to increase interest in band, tour, CD, etc.
“ e-labels” Record companies that produce no physical media Artists release 3-4 songs at a time, retain ownership Songs made available on various commercial digital download services Ex: Warner / INgrooves
Prince Madonna Radiohead Trent Reznor U2 (rumored) The Eagles Paul McCartney
Technology / Int. music industry Bottom line: fewer “big” artists, less money Technology as Killer App / Volti’s “great destroyer” of music industry jobs More of one, loss of another
Technology / Int. music industry Bottom line: fewer “big” artists, less money Technology as Killer App / Volti’s “great destroyer” of music industry jobs More of one, loss of another
Technology / Int. music industry Bottom line: fewer “big” artists, less money Technology as Killer App / Volti’s “great destroyer” of music industry jobs More of one, loss of another
Technology / Int. music industry Bottom line: fewer “big” artists, less money Technology as Killer App / Volti’s “great destroyer” of music industry jobs More of one, loss of another
Technology / Int. music industry Bottom line: fewer “big” artists, less money Technology as Killer App / Volti’s “great destroyer” of music industry jobs More of one, loss of another
Technology / Int. music industry Bottom line: fewer “big” artists, less money Technology as Killer App / Volti’s “great destroyer” of music industry jobs More of one, loss of another
Technology / Int. music industry Bottom line: fewer “big” artists, less money Technology as Killer App / Volti’s “great destroyer” of music industry jobs More of one, loss of another
Technology / Int. music industry Bottom line: fewer “big” artists, less money Technology as Killer App / Volti’s “great destroyer” of music industry jobs More of one, loss of another
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