Scholars’ Prediction of the Indie Music Industry.
The “annihilation hypothesis” has been evaluated looking at a number of demand factors, aside from piracy, which could contribute to the decline in sales. Before turning to time series aggregate data from 1973-2002, researchers observed some of the underlying trends in the industry that may provide alternate explanations for the downward movement. While many scholars predicted a complete collapse for the record companies, several argued that these assumptions might have been somewhat premature. They forecast that, “the established business model in the industry may indeed have a relatively short life span”. However, they also note that the entertainment sector has generally preferred “technological stability,” but ultimately benefitted from advancements. As discussed in my blog The Current Landscape of the Indie Music Industry, scholars then turn to other factors that may help explain changes in sales over the observed time period. These include price and income, copying using cassettes, portability, impact of substitutes, general interest in music and changes in audience. After finding price and income largely insignificant, they turn to copying using cassettes, the most historically analogous scenario to file sharing.
As people are able to listen to music on the move, new consumption opportunities are created and consumers are willing to spend more time and money listening to music. This contention is supported by the all-time high in album sales reached during the rise of sales in portable players. Yet, there appears to be little relationship between changes in format and the 2000-2002 dip, leaving the decline of sales in indie music and music in general still unexplained. Another common theory relates to the effect of substitute entertainment products such as movies, DVDs and videogames. The concurrent rise of these two products from 1972-1999 provides evidence against this hypothesis. Considering the amount of time it takes to consume these products also suggests different demand schedules. Interest in music at a certain time may also contribute to changes in sales for indie musician’s work. Interestingly, in attempting to use the concert industry as a proxy for interest in music, scholars find that the years 2000 and 2001 had the largest real increase in concert revenues—the same time the record industry was experiencing unusually large decreases in revenue. As I have written in my blog The Evolution of Indie Music, independent music or Indie music has been known as music produced by an individual, a group or a commercial record label independently, where the recording and publishing is done by the individual, the group or the brand at a smaller and less commercially complicated level. Historically, Indie music used to be defined as something that was not published by the big four players in music publishing, namely Universal, Sony, Warner, and EMI. However, growing and being noticed without the support of a label, in times when there was no internet, was difficult and therefore, most Indie bands of those days went unnoticed. Hence, when casual use of internet spread like fire and by the mid-90s personal computers were becoming a household thing, the changes in the industry affected sales of indie music as well.
With widespread use of internet, introduction of a new format called the MP3, as a product of the European Union project related to MPEG-1 video, led to the possibility of compressing audio files and making them easily transferable through the internet and fit on personal computers. In 1995, the first MP3 player ‘Winplay3’ was introduced with the ability to decompress and playback digital MP3 files simultaneously and automatically. The WinAmp MP3 Player followed the WinPlay in 1997 and boasted improved functionality and an intuitive user interface. Finally, scholars analyzed possible changes in audience that could contribute to a drop in sales finding that people ages 15-24 lowered their purchases by a disproportionate amount starting in 1995, but that the post-Napster era showed a smaller decline than did the previous period. Completing his process of elimination, scholars come to the conclusion that harm has likely been done by MP3 downloads but that there was not enough data at the time to confirm this possibility.
In my next blog I am going to write about the impact of internet on indie music business as a whole. Please share your experiences and I will add them to my future blogs.
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