In 2003, when the MP3 file type was introduced with its small 'lossy compression' file size alongside the consumer availability of intercontinental internet and the development of personal, unregulated peer-to-peer networking, this was the beginning of a pirate revolution where the majority of, once paying, consumers became pirates that stole millions of sales from the industry.
Ever since this dramatic turn of events, the music industry has taken a huge financial blow that has forced scores of independent labels into closure. In fact, we recently witnessed EMI, a once major record label, being absorbed by Universal Music Group. However, in a business which still sees 61% of the content uploaded to the internet by P2P sites as illegal, many music industry analysts are currently holding a 50/50 belief that the end is nigh for the majors.
Whilst the notorious 'Billboard' music magazine denounces these beliefs, stating that 'reports of the death of major record labels are greatly exaggerated', it is granted that the music industries finances are turbulent and fiercely competitive. It is also a definite fact that 'Digital Rights Management' (DRM) is not be winning on its own alongside the attempts of gimmick packaging seen to be embedded within the independent ethos that 'this is how to sell a physical record' and make profit in the current climate.
Where this once was the method which record labels used to generate large profits, the future stability of the industry is to be generated via streaming platforms that either charge a fee to use or use cookie related target placement advertising to generate revenue. The evidence in this comes down to the sheer amount of money that has been invested in the development of these platforms and the direct correlation of their availability and consumer use to an increased yield of profits.
If we go on the word of those industry analysis's who speculate that there will be a forthcoming demise of the majors, then this would really be old news. If this was to be the case then the majors would be loosing more money but instead they are gaining more, year after year, since 2008. If we add to this the knowledge that, on average, only 10% of the artists on a record labels roster makes any profit then we would forever be in a sinking pit but the reason why it continues is people need music in their lives. More money is being invested from the major record labels in Artist and Repertoire' (A&R) to fuel the demand and notice the genre/artist trends. As 'Billboard' points out, all three majors in the first half-year of 2012 made $256 million in profit from $6.26 billion of revenue. Noticing that the second half of the year is almost always the most profitable, then the majors (Universal Music Group, Sony Music Entertainment and Warner Music Group.) would have an operating profit of $1 billion; much more than last year. In addition this year we have seen more asset sales because there is value in these areas where profit does not just include music sales. Personally I believe that the majors are perfectly fine and will strive to survive and use their past experiences to react faster to consumer trends and pitfalls which loose money whilst attempting.
In 2003, when the MP3 file type was introduced with its small 'lossy compression' file size alongside the consumer availability of intercontinental internet and the development of personal, unregulated peer-to-peer...