The Value of Music
Imagine a world without music. What would that world look and feel like? Imagine the following experiences without music: eating out, shopping, commuting, working, showering, weddings, movies, TV shows, commercials, video games, elevators, sports ... I could go on and on. Music clearly has value, because it makes everything better.
While music plays an important role in our lives, its monetary value has decreased significantly over the past decade. The following chart shows that since 2004, music-industry revenues have dropped by $7 billion.
*Source: 2015 Edition ifpi Recording Industry in Numbers
This represents a 50% decrease from 2004 levels. However, it gets worse: if you look back to 2000, when global music revenues were $36.9 billion higher than they were in 2014, the difference represents a 150% revenue drop.
If the recorded-music industry was a country, this would be considered a total economic collapse. In the Great Depression (1929-32), the global Gross Domestic Product (GDP) fell by an estimated 15%; unemployment in the U.S. rose to 25%, and in some countries it reached 33%. Imagine how a 150% decrease in revenues has impacted the music industry.
What happened to cause this? Popular explanations include:
File-sharing sites (such as Napster) that started to gain momentum in the late ’90s robbed the industry of billions of dollars and caused the collapse
The music industry did not adopt new technologies, such as Napster, in the late ’90s. Instead, they fought against inevitable change, and lost.
Apple, a technology company, launched iTunes and focused on selling singles rather than albums.
In reality, there were many reasons, but the number-one reason is evolution. The Internet, my friends, was the key factor. It has transformed many industries. And if you think the music industry has had a rough ride, consider the newspaper industry:
The newspaper industry has had a comparatively tougher go of it since 2004; it lost approximately 142% of its revenues. It wasn’t because of Napster, iTunes or anything else. It was simply precipitated by the arrival of the digital age.
The physical product that the music industry and the newspaper industry used to sell in droves is where the revenues are being lost. While players in both industries are focusing on increasing their digital revenues, they’re not coming close to the numbers they tallied by selling the old physical products.
The world’s economic condition is evolving. We’ve moved from the industrial age to the digital age. In the industrial age, you needed large amounts of capital to create a business or to put your product out in the world. In the digital age, anyone can do it, quickly and inexpensively.
I think the value of music is representative of today’s economic conditions. It’s the same with the newspaper industry. Why? Before the Internet, in order to write an article and distribute it to an audience, one would have had to land a job at a newspaper or magazine. You might have to work for 10 years before you got to write about something you were passionate about, or, if you were wealthy, invest large amounts of capital to start your own magazine or newspaper. Today, with an investment of a few hundred dollars – which, among other things, pays for editors on the other side of the world – anyone can launch a blog or an online magazine.
It’s the same in the music industry. Before the digital age, distributing music was very expensive. You had to find a manufacturer, distributor and marketer to sell your music. Now you can record a song in your basement and release it to the world in a matter of hours.
This is part of the reason today’s market contains an oversupply of music, just as there’s more written content than ever before. Not only are recording artists dealing with more supply, artists hoping to sell their wares must compete with new-media content such as ebooks, audio books, podcasts, YouTube videos, blogs, and much more. All of these are vying for the same viewer’s attention.
That said, music still has the ability to connect with an audience better than almost any other media, which is why many artists are still making a go of it. How are they doing it? They’re adding value to their product by connecting with their audience.
Since the music industry is still facing some challenges, the average artist has no choice but to design and implement a strategy that adds value and connects with their audience. Today, you have to offer an incredible live experience, regularly communicate with your audience through email or social media, and consistently release great music. You have to work like never before to make an impact.
In all reality, the recorded-music industry has been around for less than 100 years. Making and selling physical records was well-suited to the Industrial Age. In the digital age, people don't connect to tangible products the way they used to; now they connect to ideas, brands and visions.
Today, there are more artists, music businesses and employees than there were at the turn of the century that have to share the global music industry’s revenue pie. The economic reality being what it is, we as an industry have to do better to add value. Artists need to work harder at connecting with their audience; consumers need to start respecting the work that goes into making music (by paying for the music somehow); business owners need to compensate artists (whether it's for playing live or by paying their PRO licenses); and governments need to enact laws and standards that protect copyright and help create economic incentives to boost the music industry.