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36 Seiten, Note: 1,0
Importance of the Research Question
CHAPTER 1: HOW IT WAS
Ownership and Property Relevance
Devices of the Recording Industry
CHAPTER 2: IN PRESENT TIME
The Recording Industry & Digitisation
Internet and Music Distribution
Consumerism: Habits and Trends
Spotify: As A Business Model
Economics and Finances
International Market Competitors
Spotify Users: Data Analysis
CHAPTER 3: THE FUTURE OF ACCESS: EMPHASIS ON SPOTIFY
When Access Takes Over Ownership
Age of Access: Spotify
CHAPTER 4: CONCLUSION & RECCOMENDATIONS
Appendix 1: Music Streaming Platforms and Annual Data Findings in 2015
I would like to thank Dr. Helen Julia Minors for their advice and commitment throughout the whole writing process as a supervisor. I would also like to thank Dr. Caroline Potter for her academic support as a module leader.
Studying in London has been delightful. Kingston University London has provided an exceptional working atmosphere for me. Special thanks go out to the Music Department at Coombehurst House for its hospitality and scholarship.
Special thanks go out to my parents: Marios Papageorgiou and Daniella Dimitrova, for their ongoing support throughout my studies. Jessica Papageorgiou for her strength and determination, Paris Hadjisoteriou for broadening my mind, and pushing me to my limits, Kassandra Giragosian for her patience and punctuality and Nicholas Stavrou for his mutual self-help. My warmest thanks go out to Constantinos Tellalis - where ever you are.
The recording industry is undergoing an economic decline. The new generation needs a business model which supplements the demands of the digital age. This dissertation investigates the consumption of digital music. Rapid development in the digital music market has been led by the growth of online streaming services such as Spotify. Consumers now have the choice to obtain songs from a selection of paid and non-paid legal sources.
A perspective concerning digital natives is seen through the theory of access replacing ownership. Consumer group analysis of demands shows that ownership seems to be outdated. Spotify acts as an example to the theory of access. Access and ownership is further examined in this dissertation. These ideas are analysed alongside the economic impact of consumer behaviour in the music industry.
This dissertation uses self constructed data taken from online statistics, company revenue releases and data collected from legitimate online music sources. The self constructed data labelled: Music Streaming Platforms and Annual Data Findings in 2015 (Appendix 1) is a comparative table which analyses five streaming services in detail. These findings are cross referenced with secondary data from music sources to form an opinionated outcome which favours the theory of access.
The thesis serves as an indication to the theory of access and its economical impact with emphasis on Spotify. The music economy is governed by streaming services, which act as access models and the concept of ownership is slowly diminishing.
This dissertation is concerned with the economic impact of the theory of access replacing ownership in the digital age. Salmon (2009), a journalist from The Guardian, suggests that the world today is facing a technological revolution. Business models such as Spotify are leading the entertainment industry and access has been accepted within society by slowly replacing ownership.
This could well be the year when the wider public decides that online streaming is the best way to consume music. After all, why spend time and money on CDs or downloads, when you can instantly stream that same music for free via your computer or, increasingly, your mobile phone? And if one service is going to provide that tipping point, it's Spotify.com. (Salmon, 2009).
The quotation above implies that streaming models are trending. Music consumption via services, such as Spotify, introduce access-related marketing to the music industry, where ownership is replaced.
The Guardian ’ s journalist Salmon (2009): Spotify is a Swedish online music streaming service created in October 2008. It is a new model for the business industry and the economy, aiding in the distribution of music through the internet. Prior to Spotify, music was sold by trade on the internet. By analogy, it is similar to paying separately for every single dish ordered on the menu in a restaurant. Hitherto, with the economic model changing, it is like paying for an ‘all you can eat’ situation with one certified bill. Record sales began weakening at a 43.5% decline rate in 2008 (ifpi.org, 2015), with an opposing increase of digital downloads, thus the industry was shouting for a new model revolution. Moreover, by allowing people to listen to music infinitely, without paying or owning it, Spotify offers an alternative to piracy, a process called online streaming (Linfo.org, 2016). One disadvantage is that consumers cannot physically own tracks, unless they are purchased from 7digital (McLean, 2009), Spotify’s partnering download service. Spotify has gained more popularity than iTunes. Which factors make this application so successful?
This facility does not sell something in specific - access to music through a network with the cost of advertisements is all it takes. The following questions arise: Has owning music become old fashioned since we live in a digital age where everything is stored online? Is there a new trend for the organisational economy which leads to consuming through subscriptions, advertising and renting? Since 2006 there has been a drastic change in the market. Digitalisation has become a major factor in society. What are customers’ values and necessities? It appears that customers are in favour of accessibility.
The value of owning music is decreasing whereas the access to streaming music online is increasing.
Yet there is still a major market in both worlds. What are some dependencies that can be exhibited from society? Spotify has been one of the most successful streaming services currently existing today. It is user-friendly, simplistic and offers a vast library of accessible music. This music can be consumed for free or via paid subscription. Does this favour the striving music industry? Spotify acts as a pioneering business model in the access world. With piracy being the main issue concerning the downfall of record sales, Spotify acts as a legal alternative. It also acts as a stepping stone to digital music consumption and a follow up fashion trend to the consumption of portable music mediums. The most critical thought for this thesis statement is: the economic impact of online streaming on the music industry today supported by services propagated by Spotify.
This dissertation reaches to significant factors which affect society and the economy, ownership, development and possession. The rise of piracy with the invention of Napster has brought a major decline to CD sales since the early 2000s. However, access is becoming more preferable than ownership due to networking communities and social media. Furthermore, the transformations made by digitalisation concerning the rise of subscription services are shown. Additionally, how the recording industry has been affected by the digital age is examined. Will it change the concept of physically owning music?
This dissertation, with its interdisciplinary focus on music, culture and economic basis, is made up of business strategy theories focused on economics which relate to the creative industries. Only some issues can be assessed. These issues are concerned with how accessible streaming services have changed piracy. My focus is to find out whether Spotify has succeeded in overcoming the issue of piracy and whether it is more successful than its competitors. The usage of these services in relation to consumers in 2015-16 will also be assessed. The link between the consumer and the tangible or intangible format of sound consumed is governed by money. Fashion plays a role in this market as movable trends from Walkman to iPhone is following portable music consumerism. As long as there is cash-flow and not piracy, artists are gaining royalties. Some questions remain unanswered due to the complications of certain fields. Whether CDs will be marketed and whether the theory of access will be sustained in the future is unknown. The objective of this dissertation is to showcase how legitimate the economic impact of music streaming services is to the music industry today. Certain aspects in this field have been depicted to highlight and validate this theory.
The use of secondary data presented in the form of bar and line graphs was gathered from the following mediums: online statistics, news paper articles, forums and company revenue releases. Data from legitimate online music sources such as the International Federation of the Phonographic Industry (IFPI) was also gathered. The correlation between consumer trends, social media platforms, music availability, streaming service networks and accessibility in relation to age groups is analysed accordingly. These indications are examined and evaluated comprehensively and the outcomes support Spotify as a leading business model in the industry. The relationship between accessing streaming services and owning music physically is also evaluated.
By using forums and recent company revenue releases from websites, I constructed a table which compares various data findings for each streaming service company. This self constructed table (Appendix 1) labelled: Music Streaming Platforms and Annual Data Findings in 2015 analyses customer values, revenue rates, age usage findings, royalties and pays per stream. The services in the table are presented in chronological order from 2008-2015.
Furthermore, a cross referenced outcome involving both the secondary and self constructed data is outlined and evaluated. This outcome supports Spotify’s success rates over its competitors and daily consumers. These findings give an insight to the theory of access and results show a positive correlation towards the industry.
Music business models have been struggling for the past two years - former sales have decreased about one third ever since. Ownership and illegal file sharing has changed drastically. This dissertation exhibits a developing business model with an opposing method to music consumption - Spotify. A model that favours digital natives ’ and consumers’ needs. Spotify gives insight to all industries in the entertainment field which previously suffered with marketing and file sharing. The out-coming results of this thesis can be applied to the economy, as the subject touches all fields including economic trade. Businesses can gain awareness from this model, especially record labels. Access in place of ownership is an example which alters the foundations of capitalism - both in every day business and in the music industry. Access is seen as more appropriate than ownership. Digital media can be simply shared over a digital network.
This dissertation follows a time flow representing the advancement of digitalisation and ownership.The idea of ownership and possession has developed due to technological progress. This argument examines a constitutional perspective. An ongoing process of development which is examined from a recently inherited point of view. This thesis is current; thus current concerns of the subject have to take place. The development of ownership is outlined historically. Recent trends and the digitalisation progress is also stated. Digital natives - adults that were raised in the digital era that are able to shift economical rules and social behaviour - are examined.
Data taken from the study Daily Usage of Top Social Media Platforms conducted in 2015 regarding the contribution to social media platforms is outlined and evaluated. A limitation is that social media platforms are indirectly related to streaming services. They only show how often people use the internet as a networking community. The data consists of social media programmes and daily usage rates. Users imply the usage of file sharing, posting and media communication exchange.
Furthermore, graphs and collected data from the Recording Industry Association of America (RIAA) are examined. This data indicates paid subscriptions, download rates and album purchases on various streaming services. Also, line graphs with speculations of success rates of music business models such as Google Play and iTunes versus Spotify are compared. Additionally, a self constructed table (see page 8) of revenue findings is integrated to compare companies’ success rates. Survey findings showcase different perceptions concerning digital natives. Later, a prediction with different views on the subject of access proceeds. Whether Spotify can act as an access model is examined in a subsequent part of the dissertation. The theory of access replacing ownership as a sustainable model for the future is discussed. These aspects of the economy are portrayed using Spotify. A concluding chapter illustrates the principal findings and gives insight to future forecasts.
Exchanging property in the market is a capitalist economy trademark. This is the how the modern age works. The word market is derived from 12th century England, where people had a space designated for buyers and sellers to trade goods (Harrington, 2002). In the 18th century the term was used to portray the action of buying and selling (Agnew, 1988). The term service is used to describe an activity that offers intangible significance to a consumer at the same time it is produced (Harrington, 2002). These services are not considered property as they can not be obtained physically. In the economy of services, it is human time that is being used and not items and places. Property is less valuable today due to this shift from goods to services. ‘The Coming of Post-industrial Society’ supports the metamorphosis from goods to services:
The post- industrial society is defined by the quality of life as measured by the services and amenities - health, education, recreation, and the arts - which are now deemed desirable (Bell, 2008, p.127).
Bell’s (2008) statement suggests that prior to the Digital Age, the economy revolved around industrial reproduction and information goods. Nowadays this differs due to the acceptance of services. Services allow people to value information instead of own it. Education has become more valuable. People have begun to rent properties instead of investing in buying them. Services allow this generation to access anything via rent or subscription. Ownership value is diminishing as access allows society to invest in other fields of study and entertainment.
In order to comprehend the changes in the music industry, the purposes of ownership and property are examined. Music distribution is assessed in the chapter two. Production and distribution are two main roles the recording industry has. Album sales are what record labels make profit from. However, album sales are a strategic risk as labels assume that earnings from sales surpass the initiatory investment. A label relies on about 10% of its releases in order to cover all of the artists’ costs and profit from sales. This is because nine out of ten records do not compensate the cost (Rothenbuhler and McCourt, 2004, p.221).
A standardised procedure for most labels is the copyright transfer from artist to label. This prevents the artist from selling and reproducing copies without the label’s permission. This investment is protected by copyright law and is an essential tool for the financial strategy of the industry. Hull (2011, p.24) argues that copyright is the way the recording industry runs. He states that copyright is a fixed representation of the rights to sound recordings that are reproduced and distributed to consumers in the music business. However, I suppose some limitations of copyright may include plagiarism and expiration.
There has always been a form of hierarchical power. Four international conglomerates known as ‘The Big Four’ were in charge of 75% of recorded music market in the United States in the year 2000. These conglomerates are: Universal Music Group, Warner Music Group, EMI and Sony Music Entertainment (Hull, 2011, p.27). Parenting companies overpower these firms as they obtain a large range of commercial interests. These conglomerates in the entertainment industry deal with many entertainment fields including film production and music. Major record companies own most records. After a musician makes a record via the major label, these records are shipped to a distributor. The distributor acts as a wholesale manager by selling the records to stores and digital services. Sales are enhanced by marketing strategies such as promotion and advertising which the company manages.
These distribution networks are all related to major companies, distributors and record companies.
Independent labels which administer records via independent distributors are also in the scene (Passman, 2012, p.74).
The record is very significant to the music industry. The term record signifies a type of device such as a vinyl, CD or a tape. From a contractual perspective, a record can only be audio or audio-visual. An example of this may be a DVD or a videocassette. As technology has evolved, the term record refers to other devices that have the ability to communicate sound or audio-visual. Likewise, any kind of music that benefits consumers too. This includes the internet and all its services in relation to the industry (Passman, 2012, p.78). In the early 1950s the 78 RPM device was the first record created. These recordings were divided into small sections of about three minutes, could not be edited and were cut onto wax discs. In the 1960s-70s, plastic substituted shellac and vinyls were made on 7-inch disc with 45 revelations per minute (RPM). The music industry was affected drastically (Gronow, 1999, p. 97). Stereo sound was spreading and the invention of the tape was also successful. Cassettes had dramatic consequences following the discovery of piracy. Copying cassettes permission was easy, and people had access to music by doing something relatively simple. Due to this, record companies began to see a decline in sales and entered a crisis. Prior to the CD, most legitimate records were sold in cassette form (Gronow, 1999, p. 182). During the 1980s, a technological outbreak occurred. Record and tape were pioneering the analogue technological field. With the use of magnetic recording tape, sound was preserved on a gramophone mechanically, whilst contrastingly the tape captured sound magnetically.
In the United States, in the year 1986, the music industry broke through with the invention of the CD (compact disk). Together with LPs, the compact disk was selling about 130 million copies per year (Gronow, 1999, p. 190). Vinyls and cassettes were starting to vanish as they were replaced by LPs and CDs. The implementation of new devices created a revolution in the industry. Ownership led the entertainment business during this decade. Technological advancements influenced sales with the invention of new devices.
Consumerism in the musical economy was directed by technological advancements. No matter the decade, consumers follow a wearable technology fashion trend. The flow chart below shows the relationship between digital natives and technological advancements in wearable technology from 1975-2015. As technology advanced, the medium of stored music changed but the concept of portable music stayed.
Figure 1: Relationship Between Digital Natives and Technological Advancements
illustration not visible in this excerpt
The flow chart indicates that musical technology has always been present. Humans continue to innovate and change the ways that music is consumed. The dominating way to consume music in 2010 onwards is online streaming via computers and smart phones. Accessing music through online streaming services has taken over the concept of physically owning CDs. Spotify continues to follow the fashion of consumption as streaming dominates the market. Lifestyle is introduced into products such as headphones. I presume colour and design bring character into music consumption. This shows that Spotify pioneers in fashion and design trends, supplementing consumers’ demands as well as innovating the streaming market.
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