ECON214 WSC Assignment

The Impact of the Internet on the Music Industry

   
If the toy industry is said to be an industry just about designing, manufacturing and selling toys, isn’t the music industry about composing, recording and selling albums? In fact, the music industry is much more complicated. It is because the music industry is closely related to the teenage culture as well as other industries like TV broadcasting, movie and advertisement at where the singers may also appear. These fields are interdependent and can greatly affect one another. As a result, the impacts that the Internet has on the music industry become much wider in coverage since there would be chain effects. Unlike most other products or services supplier, the Internet does not only have impacts on areas like the platforms of advertisement and logistics, but also on some more specific aspects. Here, I would like to focus on three specific impacts Internet has on the music industry, namely, the intensified customer communication, evolution of product development and the diversification of business opportunities.

The widely use of the Internet have improved customer communication within the music industry. Before the advent of the Internet, people could only get information about music, artists from televisions, radios, newspapers and magazines. This gain of information more or less was like a one way communication in which customers had few channels to give their feedbacks. Since the introduction of the Internet, one can always have access to artists’ official web sites or personal homepages easily. There are also many channels on the net which allow people to access information about the music market, like online newspapers, magazines, forums. Consequently, customers of the music industry nowadays can participate more within the operation of the whole business and the industry becomes more interactive. For example, people can vote for their favorite songs and artists or voice out their opinions through the Internet. In return, music companies can be more aware of customers’ taste and preferences and keep track on that.

Another impact that the internet has on the music industry is the revolution of its product development. Before there was the Internet, people could only listen to music by watching TV, listening to the radio or purchasing CD albums. As the availability of music was quite limited, the music industry at that time did pay most of their attention on the music itself. However, as a result of the improved technology as well as the popularity of the internet, computer users are now able to download songs through files sharing techniques. Most are illegal and free of charge. It greatly affects the albums sales volume of the recording companies. In other to maintain the sales volume of music albums, recording companies have to put lot of emphases on the packages as well as special offers of the albums. For instance, they may enclose a lot of pictures of the artists, gift packs like cosmetic samples, little toys, shopping coupons, etc. Some recording companies may choose to produce different versions of a CD so as to attract more buyers. These tactics are commonly used by recording companies to counteract illegal files sharing and to maintain sales.

The last impact of the Internet on the music industry to be focused here is the diversification of business opportunities. Before the Internet was widely used, what the music industry focused most was the sales of music albums. As mentioned in the previous paragraph, the sales volume is greatly reduced because of the illegal MP3 files sharing. It is not difficult to understand that the music companies have to be more diversified in term of business opportunities in order to survive. For example, boosting the karaoke industry and thus receiving patent, getting their artists performing in various functions and concerts, even in advertisements and movies. Therefore, revenues of music companies no longer merely rely on the sales of albums.

Obviously, the most negative effect that the Internet has on the music industry is the illegal music sharing. People thereby have lower desire to purchase CDs as there are enormous MP3 music files on the net. However, we should realize that people actually have more contact with the market as they can now access to this information much more easily through forums, homepages, online newspapers and magazines. As a result, idols and songs are still very appealing to the targeted customers. The Music Industry should not be harmed from the Internet much as long as it knows how to shift its focus of business opportunities from just selling music albums to greater varieties of possibilities.