To what extent do Internet enabled technogies threaten the operational logic of the global music corporations?

‘The absolute transformation of everything we ever thought about music will take place within the next ten years, and nothing is going to be able to stop it. I’m fully confident that copyright for instance, will no longer exist in ten years and authorship and intellectual property is in for a bashing. Music itself is going to become like running water or electricity… you’d better be prepared to do a lot of touring because that’s really the only unique situation that’s going to be left…’ (David Bowie in Kusek, 2005: p3). This quote can be seen as the starting point for this essay wherein

I intend to discuss the way in which Internet enabled technologies threaten the music industry, and the way in which it operates.


In order to do this it will first be necessary to look more closely at the music industry itself and the way in which it works, as well as look at the Internet, and Internet enabled technologies and the ways in which they operate, changing how consumers can access the music that they wish to both purchase and listen to. I will subsequently use this discussion to determine whether or not these new technologies pose a threat to the music industry or simply a change of operation. I believe that the main threat posed by such technologies is not to the industry as a whole but to the structure and organisation of that industry, and the way in which it depend on patterns of ownership, and how this ownership is becoming superfluous due to the advancement of technology decreasing ht value of the ‘original’. This will involve looking at the various different ways in which these new technologies are used to distribute and share music, such as the various programs and websites that are available; I will also discuss how things such as copyright and royalties will be affected. I expect to conclude that while these technologies may not prove to be a huge threat to the industry; vast amounts of change will be required on the part of the music industry if it wishes to continue to be profitable. However, I also believe that if the music industry handles the change efficiently, these new technologies could in fact prove beneficial, consequently increasing the range of products and distribution methods available to the consumer.


To understand how new technologies can affect the music industry it is beneficial, if not necessary to have an understanding of the music industry itself. According to Wall, one of the most significant facts about the music industry is the way in which the majority of its commodities are produced by five major companies or the ‘big five’. He goes on to explain that it is estimated that ‘between 70 and 80 percent of records sold in the world are produced by…AOL Time Warner, Bertelsmann, EMI, Sony and Universal’ (Wall, 2003: p69). All of these companies deal in many forms of media based entertainment and have separate music divisions within the larger organisations, for example Warner Music Group (WMG) or Universal Music. In addition to this, such companies often have smaller record labels built into their main music group, therefore ‘the identity of the major company is sometimes hidden in a complex relationship of ownership’ (Wall, 2003: p70) for example; the Epic record label is a division of Sony Music. Wall summarizes by stating that ‘control of recorded music is consolidated in the hands of a few corporations that operate in most countries of the world, and as well as the records they produce products or services in other areas of the record industry, music business, or wider world of media entertainment’ (Wall, 2003: p70).


Wall goes on to discuss the various strategies of music companies, whereby they release huge numbers of CDs, but only focus promotional techniques on a limited range of them, he states that ‘in Britain well over 100 singles are released each week, and there are thousands… more artists who would like to release one. Yet only a very small number of these releases gain a high enough media profile to achieve sales success’ (Wall, 2003: p76). Wall goes on to explain that while this may seem contradictory, it is in fact logical in the sense that the large production numbers are catering for the consumerist nature of society and the focus of promotion on a small number of releases is a response to the economical needs of the companies themselves. It is also clear from Wall’s argument that he believes that the most successful music companies are those that are ‘large, flexible, and produce hits’ (Wall, 2003: p76). Wall also explains that while monolithic companies would easily be able to afford the high costs of both producing and promoting a large number of records they would ‘not be flexible enough to know which music to record and which records to promote’ (Wall, 2003: p76) he also suggests that the company that produces the single top selling record may make more money than the one that produces a number of only reasonably successful records.


Another thing that is important to understand is the stages of production involved in producing a record; Wall then progresses from this to discuss recorded music as a commodity, where the emphasis is placed on the value of the record within an economical system ‘recorded music is commissioned, bought or sold between companies, and provided to consumers in return to payment. And of course it is used in other commodities like radio or television programs’ (Wall, 2003: p77). The classification of music into various genres (R&B, Hip Hop, Rock etc) is also discussed as genre is often seen as a marketing tool, aiding the entertainment industry when promoting and distributing their products.


The way in which music is listened to has changed greatly over the last few decades, with the ‘record’ taking a number of different forms, these include ‘metal or wax cylinders, then shellac 10 inch disks, vinyl 7inch and 12 inch discs, cassettes and open reel tapes, (compact Discs) CDs and mini discs, and most recently MP3 files’ (Wall, 2003: p203). The relatively recent emergence of the MP3 is where internet enabled technologies enter the equation. ‘The Internet is a worldwide, publicly accessible network of interconnected computer networks that transmit data by packet switching using the standard Internet Protocol (IP). It is a "network of networks" that consists of millions of smaller domestic, academic, business, and government networks, which together carry various information and services, such as electronic mail, online chat, file transfer, and the interlinked web pages and other documents of the world wide web’ (Anon, 2007a). The internet started as a very basic idea, and was a concept first thought of by J. C. R. Licklider, following the advancement of research on SAGE (Semi Automatic Ground Environment), a system that networked nationwide radar systems. Licklider enlisted the help of Roberts and Baran, who referred to a study conducted for the US Air Force recommending packet switching rather than the previously preferred circuit switching. The first example of this idea being put into practice was called Aparnet and went live in 1969. This concept gradually progressed, producing TCP/IP, the first wide area network in 1983, followed by the opening of the network to commercial interests in 1985. However at this time there were several different networks in use, it was not until the 1990’s that they all merged, continuing the use of TCP/IP, which allowed for quick and wide growth, and the term ‘internet was coined to describe a single global TCP/IP network originated around this time. A couple of years previously Berners-Lee had began creating  HTTP and HTML as a way of creating web pages and in 1991 CERN publicized the production of the World Wide Web. In 1993 the first version of web browser ‘Mosaic’ was released and a year later interest in the Internet was increasing and the concept was common place by 1996. There are estimations that during these early stages in the 1990’s the internet grew by 100% each year, this has been attributed to the non proprietary nature, and lack of central administration over the network (Anon, 2007a) and ‘as of March 10, 2007, 1.114 billion people use the Internet according to Internet World Stats’ (Anon 2007a). According to Jones ‘network technologies promise to greatly modify that discourse by altering the very artifact (like records, tapes, CDs, etc.) that ‘transport’ music to the listener, artifacts are inextricably part of the symbolic processes surrounding music’ (2000: p226).


‘MP3 is shorthand for a software algorithm that was developed to compress audio and video files for easier use in multimedia applications. This compression/ decompression algorithm, or codec, is part of an international standard known as ISO-MPEG, audio layer-3, pioneered by the German Frauenhofer Institute. The codec converts the data into an MP3 file (with a 1:10 compression) in a matter of seconds on a personal computer’ (Kusek, 2005; p4). From 1995 onwards the availability of MP3 files on the internet increased rapidly, and with the introduction of Nullsoft’s audio player ‘Winamp’, and file sharing programs such as the afore mentioned Napster, the popularity of this new way of listening to music also increased significantly. The availability and ease of peer to peer file sharing threatened the music industry slightly hence their initial reaction involving the closure of Napster, however, a number of companies have tried to embrace this new concept by charging money for consumers to be able to download specific songs, and often use other formats which are encrypted (known as Digital Rights Management) to prevent such files from being distributed further via file sharing programs and other methods (Anon, 2007b). However, as it is still incredibly easy to download music free of charge and without the digital rights management that often inhibits playback on specific devices, these online retailers are not always successful. High street retailers also suffer due to the increasing ease with which one can purchase a CD online.


According to Kusek the music industry began a transformation from analog to digital in the 1980’s with the introduction of the CD, and by the early 1990’s personal computers (PCs) were readily available equipped with CD-ROM drives and audio playing software. ‘The combination of the CD format, PCs and the internet  was true convergence of technologies that, in combination, started to tear the very heart out of the control that the music industry had over its product’ (Kusek, 2005: p4-5). The introduction of CD burning drives, and CD writing software, and the speed at which this technology became available, increased the worry for the music industry, because not only were people able to download music in the form of MP3 files and share them via the Internet, they were now able to burn the downloaded music onto CD and subsequently pass that on to several people, including those without PCs or internet access, therefore increasing the number of people to whom this ‘free music’ was available. According to Kusek ‘digital technologies have been totally and unobtrusively integrated into the lifestyle of the new generations…’ (2005: p6).


With the introduction of file sharing programs and music download sites, such as the original Napster, consumer intake of music has increased considerably; Garofolo quotes a 1999 issue of Wired magazine that stated that “about 846 million CDs were sold last year. But at least seventeen million MP3 files are downloaded from the net each day, that adds up to almost three billion in the first six months of 1999’ (in Garofolo, 2003: p32). Garofolo also discusses the advantages that exist for the consumer in opting to use such services over buying records distributed by record companies, he claims that ‘Napster and other similar services offer users a music library that cuts across categories of artists, songs and labels, an eclecticism that individual labels…cannot duplicate’ (Garofolo, 2003: p41). Garofolo also discusses the way in which consumers, generally, have no loyalty to labels, and are relatively uninterested in who their favourite artists record for, therefore the ability to download their choice of songs and compile them in a way that suits them perfectly, rather than purchasing a standardised CD produced my a record company designed to please as many people as possible, Garofolo says that ‘record companies are currently structured and cannot duplicate such a service’ (Garofolo, 2003: p41). There is also significant discussion regarding the online community within services such as Napster, within Garofolo’s argument he explains that Napster users not only share music but also share ideas, feelings and opinions about the music and often have in depth discussion and making friends, and even introduce people to new music, and what’s more, they can do all of this free of charge.


Understandably, the record companies felt threatened and initiated the closure of Napster, however in its wake several new services came into play. For example there were new, more legitimate services that charged money to download songs, however, there were download and burn limits restricting usage, ergo such services were not widely popular. Therefore what Garofolo calls ‘Napster clones’ (UD: p43) started appearing in the form of programs such as Kazaaa and Morpheus, with over 2.5 million users collectively. According to Garofolo the success of such services is due to the fact that ‘the industry itself has engaged any number of anticompetitive practices.’ He goes on to say that ‘by inflating CD prices, demonizing the record buying public and the online community, and failing to offer a convenient, affordable method of accessing music online, the music industry have repeatedly given consumers all the incentive they need to take matter into their own hands’ (Garofolo, 2003: p43).


There has also been the recent emergence of a website called ‘Myspace’ whereby anybody can start a page devoted to their band or their own music and it can be listened to and often downloaded by anybody registered on the website, including those that have joined for reasons other than to promote their music, such as the online community and socialising. Myspace allows members view friends favourite artists as well as having notices of new artists, and on top of that allows members to input a set of search criteria, and find specific artists or artists that fit within a genre, or originate from a certain location, following this one can then view information about their shows, the band, as well as listen to a selection of songs, use them on your own profile and often download them to your computer. This is all done using the search engine shown below:



This could be seen as both negative or advantageous to the music industry, this is because although people have access to free music via Myspace, so do the record companies, allowing them to easily scout new talent, also a number of users use the music facilities within Myspace to simply try the music available before committing to buying, that is they use the music to help them decide what they buy, not as an alternative to buying.


One of the biggest issues surrounding services and websites such as Napster and Myspace is that of copyright and royalties, and the industry claims that what has been dubbed ‘file sharing ‘ and ‘community building’ is in fact theft and piracy (Garofolo, 2003: p41). As a result copyright laws have changed over the last decade meaning that the term copyright has been extended, the arena for fair use has been narrowed and new intellectual property right have been created, and according to Mike Snider when President Clinton signed into law the No Electronic Theft Act in 1997 ‘he made it a crime to possess or distribute multiple copies of online copyrighted materials’ (in Garofolo, 2003: p34). In terms of royalties several artists have said to be disapproving of such online services, including Eminem, Metallica and Dr Dre (Alderman, 2001: p114-115) and Alderman goes on to report that weeks before Eminem’s CD The Marshall Mathers LP was due to be released, several songs from the record were being shared on Napster. (2001: p14)


The advancement of internet enabled technologies will of course have an effect on the music industry, how it is affected depends on their reaction. The music industry has seen the new technological advances and the application of them as a negative thing, defending against and attacking file sharing and music downloading sites, when it should have seen it as an opportunity to expand, and subsequently embraced the technology and used it to their advantage. I believe that the advances that have been made could easily be very advantageous to the music industry if they had approached the issue carefully and if they had been prepared to make significant changes to their business models and the ways in which they operate. The industry could still take advantage of the technological advances, but only if they move quickly. However with the exception of a few examples, including Apple’s i-Tunes, the possibilities inherent in such advanced technology have been ignored largely by the music industry, and that alone is the main reason for the threat posed by it. I also believe the music industry and its artists will suffer as a result of internet enabled technologies, but simply because of the industry’s reaction to them, and not because of any genuine disadvantage they now have.



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·        Alderman, J. (2001) ‘A Star is Born’ in Sonic Boom, Napster, MP3 and the New Pioneers of Music, Cambridge MA, Perseus Press, Chapter 6, p101-129.

·        Anon (2007a) Internet (Available Online) [Accessed 21/05/2007] Wikipedia Foundation Inc.

·        Anon (2007b) MP3 (Available Online) [Accessed 22/05/2007] Wikipedia Foundation Inc.

·        Anon (2007c) Myspace Music, (Available Online), [Accessed 24/05/2007] Myspace.

·        Bennett, A. (2001) Cultures of Popular Music, Open University Press, Buckingham.

·        Facer, K. et al (2003) Screenplay: Children and Computing in the Home, Routledge Falmer, New York.

·        Garofolo, R. (UD) ‘I Want My MP3: Who Owns Internet Music?’ in Cloonan, M. and Garofolo, R. (Ed). (2003)Policing Pop, Touple University Press, Philadelphia, p30-45.

·        Jones, S. (2000) ‘Music and the Internet’ in Popular Music, Vol 19 (2): p217-229, Cambridge University Press.

·        Jones, S. and Lenhart, A. (2004) ‘Music Downloading and Listening: Findings from the Pew Internet and American Life Project’ in Popular Music and Society, Vol 27 (2): p 185-199.

·        Kusek, D. and Leonhard, G. (2005) ‘Music Like Water’ in The Future of Music: Manifesto for the Digital Music Revolution, Boston Berklee Press, MA, Chapter 1, p 1-18.

·        Livingstone, S. (2005) Young People and New Media, Sage Publications, London.

Wall, T (2003) Studying Popular Music Culture, London, Arnold.

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