The Music Industry’s dramatic business model change from physical sales to digital downloads, how much the record labels are affected by internet piracy and how to regulate it. Information Discovery, Analysis and Interpretation
1. Executive Summery 3
2. Scope of Report 4
3. Overview 5 4.1 The Definition of Internet Piracy and the Damage it causes 5 4.2 The Decline of Physical Sales and the Rise of Digital Downloads 6-7 4. Research Methodology 8 5.3 Data Collation 8 5.4 Data Interpretation and Calculation 9 5. Findings 10 6.5 Assessing Internet Piracy and comparing physical sales to digital downloads 10-11 6.6 How Much Internet Piracy Damages the Music Industry and the Economy 12 6.7 The Factors that contributed to EMI’s near demise, and savior 13-14 6.8 A Comparative View of the Entertainment industry 14-15 6. Conclusions/recommendations 16
7. Appendix 17
8. References and Acknowledgements 18
1 Executive Summary / Abstract
The music industry has been plagued by internet piracy since the birth of peer to peer programs such as Napster. These programs have caused the rapid decline in physical products and the loss of product value in the consumer market. I estimate that by 2015 there will be no physical market for CD’s as physical product sales will to drop by 52% from 2007. The record labels need to streamline their recorded assets and find more ways of generating revenue. Additionally record labels could also take larger percentage from artists touring revenue, or take the example of Dr Dre promoting his audio products in the music videos of universals artist roster. A majority of the digitalized entertainment industry is at risk from consumers undervaluing products because of a free and open black market culture on the internet. Government are at risk of damaging their own economy by not being tough enough on ISP’s or internet regulatory body’s to regulate, and if necessary, enforce the law on users. Music and films are easy and quick to download with the UK’s average download speed of 7.6Mbps, games are less affected by piracy as the file sizes are much greater, and therefore more inconvenient with time in an on demand culture.
2 Scope of Report
This report will show the decline in physical music sales and the increase in digital downloads by analysing the financial data of the record label EMI, including a collation of worldwide physical and digital downloads revenue data. The authority on the worldwide physical and digital revenue is the IFPI which I will base my statistics and financial data on. I will make some observational reports on why EMI’s business model didn’t work. I will look at the rate of change over the last decade in the music...
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