In the past 5 years the music industry as professionals know it has changed drastically. Technology has played a large role in what some say is the end of the recording industry. Peer to peer data networks such as Napster, Limewire, and ZShare have made it possible for would be consumers to download and share copyrighted musical works illegally without paying. Record labels and the Recording Industry Association of America (RIAA) have attempted to police illegal file threatening to take legal action against any persons caught illegally downloading music. Most of the legal cases that were brought against illegal file swappers were eventually dropped resulting in no serious punishment to the defendants.
Knowing that record labels, artists, and publishers all take drastic losses when albums fail to sell, all three parties have to take measures to remain as profitable as possible. The first step in attempting to remain profitable in today’s music industry is by making hit records. Without a hit record, there’s nothing to promote and sell. For years consumers have had to buy an entire cd to learn that they only like 2 out of 14 songs. The record label got away with promoting a hit single and having the remainder of the album would consist of filler material. Consumers have complained about this for years, but the labels continued to do the same practice. With the introduction of Itunes, Wal-mart.com, and other pay music download sites, consumers are able to pay for and download as few or as many songs as they desire. This has made the business of selling albums, a business of selling singles. Once the recording industry fully embraces the technology and begins heavily promoting the sell of songs digitally as opposed to physical cd’s, they will begin to see a larger profit margin. Digital record sales eliminate many costs associated with the sell of physical cd’s including packaging, shipping, and the return of goods not sold.
The old practice of an artist doing shows to promote the sell of cd’s has changed to allowing cd’s and singles to be promotional material for live shows. This practice has made the record label construct what’s commonly known as the 360 deal in which a label gets a percentage of all revenue streams their artists produce. This includes the label getting a cut of merchandising, publishing, and performance fees. Online social networking sites are a great new way for labels and artists to promote and introduce new music. Many label a&r sit and surf various online databases searching for new talent as opposed to the old way of frequenting local bars and concert venues.