The Breakdown of the Physical Music Distribution System

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  • Topic: Digital audio player, MP3, ITunes Store
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  • Published : March 7, 2011
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The breakdown of the physical music distribution system
Over the last 15 to 20 years, the most significant events taking place in the music industry that led to the breakdown of the physical music distribution system are summarized in the table at Appendix 1.

1 More detail of the breakdown

The music industry has seen unprecedented change during the last 15 to 20 years. Initially the pop music business exploded in numerous directions. So many different and new innovative distribution channels opened up, such as compact discs, video and music channels like MTV.

A record year for record sales was experienced in the mid 90’s. The biggest percentage gain since 1920 occurred and industry revenues skyrocketed 20%. In 1994, $12 billion was the worth of yearly shipments of music videos and pre-recorded music. Only three years later in 1997, a smaller retail foundation and the expansion of particular market movement, consisting of record clubs, mail order, and non-music retailers, endangered the industry. A 6.5% decrease in the U.S. in overall net shipments was reported compared with 1996. The response was at the retail level with record companies introducing tougher inventory controls, so products were delivered much faster for onward sale to customers.

That said, the consequences of these advances have been somewhat minor in relation to the impacts on the music industry compared to the evolutions in technologies which started a decade or so ago and are still evolving today.

2 Music is made available free on the internet

The creation of MP3 (a program which reduces the size of digital audio files into a compressed format,) greatly enhanced and expanded the distribution of music files on the internet due to the fact that they are easier to spread as their smaller size makes them quicker and easier to store. Earlier formats needed specific sound reproduction equipment to allow the consumer to listen to the music however with...
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