Research Models on Prediction of the Indie Music Industry-5.
Social media and online communities make it easier for consumers to connect with and learn about their favourite indie artists and make right choices in purchasing their music. In this way, the digital age has revolutionized the methods and lowered the cost of nearly every aspect of the indie music industry. Internet brought with it an increasing number of affordable and powerful software that made the production costs of music fall drastically in the 1990s, with new technologies making robust recording equipment available to indie musicians. As discussed in my blog Research Models on Prediction of the Indie Music Industry-4, today, there continues to be a reduction in the necessity of expensive studio time, enabling indie artists and musicians to take the DIY approach in creating music. With the invention of technology, new, generally economical recording instruments, more people can take part in the production of music than any time in recent memory.
Moving to a deeper analysis, Schultz examines the actual viability of live performance supporting the recording industry using commonplace parameters for considering new business structures. He first considers the relationship between the availability of free recordings and the demand for live concerts finding there to be a relatively weak link between the two. He attempts to draw parallels to other industries that have benefitted from a strong tie between a freely available work and a revenue-producing work. These sectors were able to benefit from a shift to revenue sharing based, complementary and bundling models. In the television industry, studios benefit from revenue sharing in advertisements by charging the broadcast networks. The live entertainment model would not fit the sharing-based structure as consumers do not need to go to concerts to get prerecorded indie music like they have to watch television broadcasts, with accompanying commercials, to view television shows. Offering the example of a software company that offers its application for free only charging for its expert customer support, Schultz notes that consumers do not need to attend concerts to enjoy recorded music, making the link relatively low. The third model, bundling, may be slightly more applicable to the music industry. In 2007, musician Prince gave away free copies of his album at his concert effectively including the price of the CD with the purchase of a ticket. Although this might work for established artists with a loyal fanbase, people will likely not purchase tickets for a more obscure musician whose work may be unknown. In order for the free album to be of value, the industry would have to find a way to protect these works, which brings back the original issue facing record companies.
Although the above models were effective in other industries, they do not prove applicable for a live entertainment-driven recording industry. Instead, Schultz suggests that the most relevant structure may be one rooted in sampling. Before the emergence of the Internet, the radio served as a sampling mechanism for the indie music business offering consumers a free preview for a more informed purchase decision. Free downloading vastly expands the variety and amount of such previews allowing more niche tastes to be served and cultivated. At the same time, this wider availability can hurt the indie music industry if it begins to displace the demand. This is where concerts may fit as a revenue driving force with the actual prerecorded indie music as a sample increasing willingness to purchase concert tickets. As discussed earlier, it has been the record companies to hold the oligopoly position for over half a century. They have traditionally reaped benefit of indie music sales quite disproportionately, while musicians have actually generated the majority of their income from sales of concert tickets.
In my next blog I am going to write more 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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