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Music has always been integral to the human race. The industry began almost 35,000 years ago, and now, one’s day can not end without dancing to one’s favourite tunes. The music industry mainly consists of three branches: the live music sector, the recording sector, and the sale of recorded music. But to understand this 26-billion-dollar industry, one must delve into its history. Just before the dawn of the 20th century, the music industry was solely based on live performance. A major change was seen in the 15th century when printing was introduced, and the costly handwritten copies of notations and lyrics went out of the picture. Popularly known as sheet music, such printing gained a lot of traction as new, mechanical, and more cost-efficient ways of printing were developed.

Still, the only way to listen to music was to go out, buy the sheet music, and play it oneself or find someone else to play it. A monumental shift in the industry came when sound recording was introduced in the 1850s. Musical performances could now be recorded and sold commercially. According to a study done by ResearchGate, record labels witnessed steady growth in popularity, with sales going from 4 million units per year in 1900 to 30 million in 1909 and over 100 million per year by 1920. The industry was further disrupted by the invention of radio broadcasting in the 1920s. Although opera houses and ballrooms were restricted to the wealthy, music had now become accessible to the upper-middle, middle-income, and low-income classes as well. Moreover, artists were no longer geographically bound to just one region. They were able to get popular on a nationwide and worldwide scale.

By the end of the 20th century, the digitalisation of music had come into effect. Record labels were a thing of the past, and CDs and tapes became the new normal. They allowed consumers to access a variety of music across a variety of devices. But a dark side to the music industry emerged—pirating and illegal sharing. Earlier, music was a financial product, and people had to pay for it, but some people wanted it to be a public good. According to a journal published by the University of Chicago, total music business revenues in the U.S. dropped by more than fifty percent, from a high of $14.6 billion in 1999 to $6.3 billion in 2009. An example of illegal sharing is an infamous company called Napster. Founded by Sean Parker, it allowed users to share, over the internet, electronic copies of music stored on their personal computers. Napster finally shut down in 2001 after the music industry took legal action. Finally, it was in 2003 that sharing music became legal as Apple’s iTunes came into existence.

The music industry is an integral part of a country’s economy. In addition to live performances, recording, and publishing, music makes a significant contribution to secondary markets. Music is a vital constituent of radio and television broadcasting, television films, and motion pictures, as well as games and advertisements. The principal music markets are connected to the secondary ones through music licensing. As per Soundcharts, the combined revenue across all sectors pertaining to music in the Indian context stood at $443 million in 2018.

But since music has been turned into a public good, how do artists make money?

Since music is now accessible to everyone on all platforms, theoretically, there is no economic incentive to create music. One way to tackle this problem is by way of copyrights; such intellectual property rights allow artists to exclusively ‘own their music’ and sell it to platforms of their choosing. Another way is through the mechanism of royalties; artists and music producers are entitled to receive a royalty for their content if it is played on air. But artists generate the maximum amount of revenue through live music. The live music industry is still prevalent and gaining even more traction among the current generation. Though all music is available for free, music enthusiasts still do not oppose to paying to see their favourite artists perform live for them. Music labels establish agreements whereby they are granted a portion of the money made from ticket sales. Artists frequently spend the majority of the year on the road.

One may wonder how streaming platforms make money if they have to pay artists so much. Firstly, there are premium subscriptions. Companies like Spotify let people stream music freely, but they have to go through advertisements. Instead, they can get a premium account, and for a small amount of money, they can stream music without ads. Spotify made 86% of its revenue, which comes out to around $8.3 billion, from premiums in 2021. The number of people subscribing to paid music streaming is growing exponentially, with 341 million subscriptions in 2019, 443 million in 2020, and 523 million in 2021. Though the primary way of making money is through premiums, advertisements are a secondary source of revenue. Advertisers pay for exposure, with ads being played between songs for 15-60 seconds, depending on the ad type, as in the case of Spotify. Advertisements can range from different applications to consumer products, from banking services to insurance companies; the ambit is endless.

To conclude, music is a journey that humans embarked on thousands of years ago. The digitalisation of music is the reality, and it is not just technologically driven; a socio-cultural paradigm shift is an equally important factor to be taken into consideration. The numbers say it all- the music industry is one that is here to stay. By Raj Kamal Vij


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