The music industry or music business sells compositions, recordings and performances of music. Among the many individuals and organizations that operate within the industry are: the musicians who compose and perform the music; the companies and professionals who create and sell recorded music, those that present live music performances, and others.
For centuries man had dreamed of capturing the sounds and music of his environment. Many had attempted it but no one had succeeded until Thomas Alva Edison discovered a method of recording and playing back sound. What had started out as an apparatus intended as part of an improved telephone led to the development of an instrument which would change the world.
While experimenting with a new telegraph device in 1877, Thomas Edison stumbled upon the beginnings of recorded sound. He noticed a speech-like noise as he accidentally runs indented tin foil under the telegraph stylus. By the end of the year, he recorded "Mary Had A Little Lamb" on the first working phonograph, becoming the first inventor to successfully record the human voice (although the speaker was forced to shout to produce an audible playback).
The music industry started its journey into the 'digital age' a long time ago, during the 1970s, when digital technologies were introduced in the areas of music production and recording. During the 1980s, primarily due to the introduction of the compact disk, the use of these technologies expanded to music distribution. Lastly, during the late 1990s and early 2000s Internet technologies were the most important drivers of change, and ultimately brought every remaining part of the music business, including promotion and talent development, into the realm of digital technology.
The two biggest changes in music in the last ten years are the rise of digital distribution and the rise of digital production. In 1998 most records with any cultural impact (pop, jazz, classical, experimental, whatever) were recorded in professional recording studios and distributed on CD by record labels. Now, most music is recorded at home on computers at equal or better than 1998 studio quality and distributed through some form of the internet.
For the last few years, most of the music industry – in all its forms, from record labels to artist managers, from music publishers to concert promoters – has been railing against illegal downloading, arguing that such activity is bringing the business to its knees, and pursuing those engaged in it, whether websites like The Pirate Bay or individuals, for every penny they believe they are owed. In March this year, for instance, the RIAA – the Recording Industry Association of America – and a group of thirteen record labels went to court in New York in pursuit of a case filed against Limewire in 2006 for copyright infringement. The money owed to them – the labels involved included Sony, Warner Brothers and BMG Music – could be, they argued, as much as $75 trillion.
After years of suing thousands of people for allegedly stealing music via the Internet, the recording industry is set to drop its legal assault as it searches for more effective ways to combat online music piracy. The decision represents an abrupt shift of strategy for the industry, which has opened legal proceedings against about 35,000 people since 2003. Critics say the legal offensive ultimately did little to stem the tide of illegally downloaded music.
All successful record labels rely on the four fronts of the music industry. These include artist development (developing your music and building a solid business foundation for your career) and product development (developing a way to record, manufacture, and sell music), as well as promotion, publicity, and performance (getting music heard, talked about, and experienced live).
With its historical association with youthful purchasers – though their value as a consumer group is not as significant as it once was – the music industry is particularly vulnerable to shifts in the relative size of the younger age cohort and their loss of spending power in the recent period of high youth unemployment world-wide. The cultural industries are also engaged in competition for advertising revenue, consumption time, and skilled labor.
Music's convergence with the Internet began to unravel the music industry in the 2000s, and it became the precedent for upheavals in every other media industry as more content – movies, TV shows, books – found distribution over the Internet. The changes in the music industry were set in motion about two decades ago with the proliferation of Internet use and the development of a new digital file format.
After another year of plunging music sales, record company executives are starting to contemplate the unthinkable: The digital music business, held out as the future of the industry, may already be as big as it is going to get. The International Federation of the Phonographic Industry, a trade group based in London, said last week that sales of music in digital form had risen only 6 percent worldwide in 2010, even as the overall music market had shrunk 8 percent or 9 percent, extending a decade-long decline.