I thoroughly enjoyed reading your blog about the music industry, and how it has been affected by online file-sharing. Yesterday, SonyBMG released its predicted net income for the 2007 fiscal year. Although the major media conglomerate managed to gain $3.7billion, digital sales saw SonyBMG down 4 per cent, failing to offset the decline in the CD market (Blair, G, 2008).
Over the past year, Sony BMG, as one of the largest ‘dinosaurs’ remaining, has undergone radical changes to avoid extinction. In January 2008, Sony BMG announced they were going to drop digital rights management (DRM) and compete against Apple for valuable downloadable revenues (Holahan, 2008). Sony BMG is the last of the four major record labels to do so (the others being Warner Music Group, EMI and Vivendi [Universial Music Group]). DRM software was an attempt to stop illegal peer-to-peer sharing of music, though the principal analyst of a technology research company, Enderle (cited in Holahan, 2008) claims, “it (DRM) was hurting folks who were trying to follow the rules more than the folks who were pirating the music.”
On April 3, 2008, Sony BMG along with Warner Music and Universal Music signed a joint venture with MySpace Music. “We think of ourselves as undergoing a very fundamental transformation from being a CD company to a multirevenue stream, multibusiness company," says Thomas Hesse, president of Sony BMG's global digital business (Holahan, 2008).
With CD sales decreasing, major record companies are attempting to make money online through advertising, promotion and selling items such as concert tickets and T-shirts (Holahan, 2008). It is evident both from your blog and the actions of SonyBMG that, although the traditional music industry is far from dead, drastic measures are being taken to ensure the music lives forever... in the pockets of record companies.
References
Blair, G. 2008. Sony sees net income up 192%. May 14. THR.com. http://www.hollywoodreporter.com/hr/content_display/world/news/e3i9808673cbfb6ec1f5fd9eb117a2a0837(Accessed May 15, 2008).
Holahan, C. 2008. Sony BMG Plans to Drop DRM. January 4. Business Week. http://www.businessweek.com/technology/content/jan2008/tc2008013_398775.htm (Accessed May 15, 2008)
Holahan, C. 2008. The Record Labels’ Digital Future. April 4. Business Week. http://www.businessweek.com/technology/content/apr2008/tc2008043_871448.htm?campaign_id=technology_AK (Accessed May 15, 2008).
2 comments:
This was a very interesting follow up to my blog on "Digital Distribution of Music." The lengths major record companies are going to in order to stay with this "online environment" is extreme. The figures you have presented in your blog are really representative of this unfortunate decline in record label’s sales over the past few years.
As stated in my blog, “Record companies should focus on understanding the Net better and on harnessing its potential. For starters, less rigid rules would help propel the record companies into the online music business” (Brull, 1999). This advice is definitely something they must take onboard if they have any hope of conquering the online distribution of music. As you stated, Sony MBG, Warner Music and Universal Music have all signed a joint venture with MySpace Music. This is an effective way in reaching out to the younger audience, who are the most prominent users of peer to peer sharing, and also the most frequent users of such online network environments such as MySpace and Facebook.
All in all, I believe online distribution can only be achieved by some artists. For others, this option is not representative of how they want to showcase their talents and reach their audiences, therefore not appropriate for them. So in some sense, major record labels can relax, because this "new and better way" isn't essentially the way for everyone. But, I agree with you Natalie - there is definitely room for improvement in this diminishing music industry.
References
Brull, S. (1999). “Are music companies blinded by fright?” Business Week Online. June28. 1999 Issue. http://www.businessweek.com/1999/99_26/b3635140.htm (accessed 11 May, 2008).
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