gE Blog Series: Globalization of the Media Industry Part 3 - The Global Music Industry
It can be argued that there is nothing more universal in the world than music. Music has brought people and cultures together from the beginning of time. To many people and cultures, music is an important part of life—an art form that enhances life’s appeal. Today, music is not only an art but also an extremely important industry in the global economy. Just as globalization and technology have changed the course of many other industries in the world, these two factors have both dramatically transformed the music industry for better or for worse. Consumers, artists, retailers, record labels, and businesses have all been affected by these changes. Now the question is: “Has globalization created a sustainable shift in the music industry and how have these changes affected the art of music?”
Faced with digital piracy, declining physical sales, and modern-day consumer habits, a new business model has emerged in the global music industry—instant streaming. Streaming services such as Spotify and Pandora have created major alterations in the music industry a decade after Apple modernized the music world with its iTunes store. Spotify, a company created in Sweden, already has 20 million users in 17 countries and is seen as representing the future of music consumption. However, some have argued that the meager royalties paid to the artists by streaming services are putting many artists in jeopardy. In the modern age, without strong physical and digital sales, upcoming artists may not be able to earn a living on streaming royalties alone. Is this new business model, fostered by globalization and technology, sustainable?
Despite concerns, many have answered this question with an emphatic “yes.” They argue that some music markets in the global economy have received nothing but success from streaming services and digital sales. Sweden and Norway, where streaming has become widely popular, are two markets where the music industry has grown and artists are earning a healthy source of income. Other markets just need time to adjust to this new technology. The United States is a critical proving ground for streaming companies and many believe that once the market adjusts to the new business model, the music industry will experience a strong recovery and much needed growth. This is not a new concept for globalization or for the music industry for that matter. Take for example the introduction of CDs—in major music markets, it took several years before CDs were able to capture significant market share after they were first introduced in the mid-1980s. Whether or not the music industry will recover has remained to be seen, but many are hoping this is in fact the case.
If the streaming business model successfully matures, consumption habits will undoubtedly continue to change. Global consumers have more choices now than ever when it comes to music thanks to technology and the internet. With streaming services or digital downloads, they can instantaneously choose the song they want to hear. In this day and age, digital single sales dramatically overpower albums sales. Without a question, technology in the music industry has fostered individual empowerment at the consumer level. With these new consumption habits, consumers create an undeniable demand for artists to write that hit radio-friendly single rather than a strong album. Does this mean creative, coherent albums are a thing of the past? Will music retailers and physical albums cease to exist? Luckily, music is driven by consumer demand and individual preference. And in essence, all these questions are yours to answer.