Will the Digital Revolution Finally Kill the Radio Star?

As the song of Crazy Frog descended with a tour de force upon the unsuspecting and old-fashioned Rock ’n Roll industry, many observers foresaw the end of the music industry. First the illegal downloading and now this annoying amphibian dominating the billboards in the western world, pushing down Oasis and Coldplay from the charts. Why should music companies spend millions of dollars to nurture musical talent if it could all be swept away by four-tone synthesiser sounds performed by a frog? Indeed, the music industry is facing more ferocious enemies than even the most musically skilled pond-dweller; strong competition, piracy, changing delivery formats, increasing costs and changing consumer needs. It seems truly very long ago since the media-moguls could rely on album sales… These days, the industry looks for money in all possible ways, ring-tones, merchandising, music rights, concerts and DVDs.

Since the end of the 1990s, the previously so important singles-chart has been in a steady decline across the whole world and some people are now seeing its imminent death. At some retailers, singles are now even stocked up before being released in limited numbers in an attempt to keep prices artificially high. Some industry commentators blame the internet and digital music channels on TV as the reasons for this free fall. Others criticise the pre-releasing of new songs and albums before proper marketing campaigns have had a chance to have any impact.  In any case, the day when a consumer went from shop to shop and flipped through rows of records in search for a special song seems to be history.

Anyone looking for a success-story in the music industry may have to look for a long time. In what seems ages ago, record companies relied heavily on A&R, which means Artists&Repertoire – signing and nurturing a talented artist over a period of time using a system based on the idea of the ‘product lifetime’ with an ‘up and coming’ start-up period, maturity and decline. The secret was, as for any business, to have several artists in different stages of development, thus securing a steady income for the record-company. In recent years however, the music industry has taken after a philosophy made especially famous by car-makers, heavy development, focus and marketing on one act; if that fails, drop it quickly to save money! This is something driven to the extreme by companies such as Hyundai and Toyota but has proven less suitable for the music industry. The result has been an endless stream of one-hit wonders costing more and more in ‘start-up’ expenses and generating less and less because the money spent does not have the time to come back as profit due the need to drop anything that doesn’t prove immediately successful and pursue another act.

People in increasing numbers have flocked to the internet to download, stream and burn copyrighted music. The digital revolution has changed the way people listen, use and get hold of music. Music company executives have been left pondering if their industry will survive at all. In 2007 alone, sales of music within the European Union (as CD or legal mp3) fell by a devastating 23%, down from a further 20% decline in 2005.

The emergence of the iPod however, showed that there might be a way out for the industry, the immensely popular iPod offered a new way to sell music digitally in a legal way that appealed to especially to young consumers. It was thought that iPod would show the way forward to a lasting compromise between, as it was said: ‘music labels who want too much and consumers who don’t want to pay at all’. However, in a mixture of greed, general incompetence and slow reaction, all the major labels managed to miss this opportunity. One might argue that they took the possibility of the legal downloading as a pretext to make up for everything they had lost during last ten years.

This is an ample example on how a company must reorganise itself for the new world that is online. Using arguments such as ‘if you don’t pay – you are very evil person’ doesn’t work because the new consumer is not listening. And they don’t have to care.

Is there then no way out of this situation? The answer might come from the ones who have the most to lose: the artists themselves. Small independent record companies run by artists and often having only one signed act – the artist running the label – has taken the download challenge in a different way. Many artist now see the market constituted by ‘downloaders’, or ‘pirates’, as vital in achieving publicity and finding distribution channels for their work. The artists running these small labels does not have the resources of large multinational labels and see the internet-culture as a vital viral marketing tool. Managing to create a buzz about a song or artist will ultimately lead to a wider mainstream and commercial appeal. Social media is used to create communities of fans who are interested in their music, giving them a gateway to videos, songs and images. It has allowed independent music producers to distribute their music to a wide audience and to build up a broad base of fans and supporters through social media platforms, notably MySpace and Facebook. Many unsigned bands have advanced websites where they display their work and offer free samples which in turn has lead to a renewed interest from consumers to purchase more music on a regular basis.

Among musicians themselves, mobile phones seem to be the up and coming method of marketing their music and channel it out to the market for distribution. Some larger brands have followed suit and the great mobility advantages might make the mobile phone the next battlefield for music with many phone-makers introducing up&download music software.

The internet is probably going to be the largest channel for distributing music through various software usable on portable computers, mp3-players (i.e the iPod) and mobile phones and the established music industry must adapt to this. As one of the founders of ‘the Pirate Bay’ (a site where thousands of songs, albums and movies may be downloaded or streamed without any money going to the owners of the copyrights) shouted as he was led away from the courtroom where he had been found guilty of infringement crimes: ‘you cannot stop this, what we have started will change your world forever’.

The Digital Revolution will, and in many cases already has, changed the way in which people buy music. In the coming years the digital ‘way of life’ will become even more common as millions of new users in China and India are picking up. Will this be the end of the record store? Will ‘Digital’ finally kill the radio star?

Sources:

This article is among other published and online resources used also based upon the research presented and discussed by Connor Carroll during a series of lectures at the Department of Marketing, University of Limerick.

Jobber, D. & Fahy, J. ‘The Global Marketing Environment 2^nd ed’, McGraw-Hill, Maidenhead, 2009.

‘Where do People Buy their Music?’ British Phonographic Institute

Image by b.cx

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