Challenges facing the music industry


By IRENE SAVAREE

MUSIC is a dominant commercial art form, involving a wide network of people and industries. In the age of globalisation, music is a universal tool for communication that transcends age and generation gaps, doubling as a lucrative export commodity.  

Gone are the days when you had to save money to buy the latest song on vinyl or cassette. Compact discs, digital audio, the Internet, SDMI and MP3 all render distribution of music on the world wide web as the latest way to access music on demand at broadband speed. 

Music and technology industry leaders are scrambling to meet demand as consumer interest and ability, to purchase and hear music in digital form, widens. But they need to face new challenges of shifting business models and piracy concerns too.  

Expanded publicity via pay-per-view live concerts, previews of new music videos, free trials of a hit song are the norm, when launches of new albums are simultaneously covered on the Web – all this in addition to selling the new CD! 

Sony, BMG, Warner and EMI, have embraced Internet technology to reach music fans worldwide with an unprecedented combined total of 5,000 music videos, 100,000 singles, over 100 complete albums and more than 500,000 music reviews. Over a hundred industry leaders worked together to support and create the SDMI (Secure Digital Music Initiative), a framework that promotes broad distribution of music while protecting artistes’ rights. 

SDMI’s failure was due in part to the industry’s challenge to the public to crack what it thought was an impenetrable code – the code was cracked in 30 hours by a student. 

Concern over the protection of intellectual property continues to plague the industry, in view of the ability to store and distribute music in digital form. 

The question on the broadband technologies front, is whether CDNs (Content Distribution Network) do provide for a secure future in the broadband market and whether content or access based systems represent the best proposition. 

Traditional content distributors, music companies in particular, found the transition to the online market extremely difficult and, initiatives like Napster and Kazaa exploited the interim all too easily.  

Since July last year, the RIAA has served more than 1,200 subpoenas to colleges and ISPs (Internet Service Providers), seeking identities of home users accused of copyright infringement. 

There are many challenges in copyright enforcement. They include changes in the way consumers want their music delivered. Traditional anti-piracy methods no longer work and this is where technology plays a part. 

The experience of ISPs in developing and using online business models, together with the sought-after products of music producers is the kind of synergy that benefit all players in the online market. 

Even as ISPs increasingly find themselves in a position to provide “value added” content services, increased accessibility of audio content with watermarking technologies (i.e. Audible Magic) allowing ISPs and music industry partners to better control content travelling across their networks, makes it conducive for partnerships to form. 

EMI’s 180,000 tracks catalogue, recently available via two partners and the launch of Apple I-tunes that availed the five major record labels’ catalogues, for downloading and burning for 99 cents (RM3.75) per track: these are promising strategies to counter digital music piracy. 

With digital piracy still rampant and uncompensated downloads creating challenges for the recording industry world-wide, mobile content derived from music titles and artistes continues to be one of the most popular and profitable forms of wireless data services and mobile multimedia for consumers. 

Phone manufacturers have begun to offer next-generation handsets with playback capability comparable to or near CDS/MP3 quality. 

Driven by the exponential growth of ringtone sales, a US$3bil (RM11.4b) global industry in 2002, mobile music content has the potential to be the greatest boon to the bottom line of artists and labels since the invention of the CD³. 

Wireless industry analysts predict the expansion of this business, with three-quarters of consumers aged 18-25 years expected to own a mobile phone by 2006. 

Unlike other interactive media, mobile-based music services payment and delivery models are tightly controlled by the security, billing and payment systems of mobile carriers – the music industry is understandably excited at the piracy-free prospect of delivering music through a secure distribution channel with a built-in payment mechanism. 

People are prepared to pay a not inconsiderable fee of 99 cents (RM3.75) up to US$2.50 (RM9.50) for a 15-second ring tone, to personalise their ring tones. 

Although real music is more desirable, it may be presumptuous to assume more money can be made from real music since delivery costs will be higher due to much bigger files, as well as the rights of those involved in recording, composing and performing. 

The Malaysian creative industry comprises of activities originating from individual creativity, skill and talent that have potential for wealth and job creation through the generation and commercialisation of intellectual property for film, television and radio, interactive software, online publishing, advertising, music and education and training. 

The Malaysian music industry sector, however, is fairly small and sale of local music is limited to local audiences and popular only among individual ethnic backgrounds. But there are encouraging signs that the government is moving towards a more liberal and open approach.  

 

Points for thought and action 

  • That key industry leaders view efficient management of copyright and digital rights, in addition to all other rights, as a cornerstone in the evolution of new methods of music distribution. 

  • Publishing is a good business model for the online environment – marketing and distribution is still evolving, due to increasing technical challenges to deliver the product, giving rise to higher costs and more challenges. 

  • Industry to view digital music distribution as a service instead of a product 

  • With the music industry closing ranks to protect itself against copyright infringement, music piracy and depleting sales, it is time for the government to step in.  

    The government must:  

  • Be fully aware of the music industry’s annual contribution to its economy; the size of the music industry’s work force; and the industry’s influence on other associated sectors i.e. media, film etc 

  • Establish proper enforcement of rights, including digital (cyber) rights, affording greater protection of intellectual property 

  • Support new technologies and the creation of new products 

  • Emphasise education in the creative arts to ensure that musicians have a level playing field to compete with the rest of the world 

  • Promote local music and musicians by increasing the frequency of radio/TV quota and club performances, to strengthen the position of local artistes and give them requisite access to new audiences 

  • Encourage export of local music regionally and internationally, to tap into new areas of growth. 

    Music is a universal language, understood and appreciated by the masses regardless of ethnicity, age and socio-economic background. Therefore, as a people, as a nation and as a government, we must do our part to nurture, protect and support musicians and the overall music industries that they may continue to be inspired to create, perform, and produce the music all savour. 

    Irene Savaree is President, CEO of International College of Music 

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