Media Research
Copyright, digitalization, and the music industry
Through digital transformation, the internet has greatly changed the music industry (Li p 102012). In contemporary society, the music industry has dramatically evolved to incorporate digital platforms such as music streaming. This has prominently affected the record-label producers, artists, and consumers at large. Significantly, these changes have altered music distribution and their relative revenue generation as a result. This particular essay is a representation of the significant issues that consumers, technology companies (such as Spotify and iTunes), record labels and musicians, face with digital transformation. It critically analyzes the current situation in Canada in light of copyrights, digitalization, and the music industry. The essay is structured into four sections. Section 1 explores a contextual background of the topic and its evolution. Section 2 provides a legal framework and the issues surrounding copyrights in music. Section three focuses on the effects of digitalization on the Canadian music industry. Section four describes the current market structure, issues facing music creators and consumers, and the possible new directions the music industry might take in the future. The last section is a brief conclusion highlighting the key points as discussed in the paper.
- Contextual background of the topic
Before the digitalization era, the music industry (both at the local and international level) was structured in a vertical arrangement. The hierarchy comprises record labels, music producers, music creators (musicians, lyricists, and composers), and consumers. In this particular setting, the record labels record, fund, produce and market recorded music, selling it to consumers (commonly referred to as funs) in retail segments. Quoting Richard Caves, professor of Economics at Harvard University, publishers and record labels operated as the center of gravity in the music industry. They signed artists, managed their contracts, controlled music production, and marketing.
To this extent, these record labels bore all the risks of music production. In return, they managed the revenue generated by the consumed music, rewarding musicians some of it as their “employees.” For upcoming artists and musicians in Canada (or any other country), joining record labels was the only way out during the pre-internet music industry. By doing so, the new artist was in a position to record and sell their music or any other musical content through the record label that signed them (Tschmuck p 25). In short, these labels offered an international distribution system for contracted artists, something that unsigned bands and musicians could not access. Moreover, it is essential to note that consumers had no option other than to enjoy the music served by these record labels. By this, we mean that consumers, for instance, could not access or purchase a single track. Instead, they had to buy a whole album as released by the producers.
However, the project-managed production era by record label producers is slowly getting overtaken by digitalization. The latter has given music creators, such as musicians and lyricists, a chance to trade directly with their product consumers at the online retail platform. This has eventually demonstrated a potential shift in the music industry COG, especially after establishing new technology companies that took over music distribution, such as Apple and iTunes Store. Online marketing and display pose a threat to the power held by producers and record labels as artists and musicians are now marketing their music on online platforms. Additionally, digitalization has given rise to a new structure comprising of three diverse industries within the broad music industry. The first one is the recorded music industry that records and distributes music directly to consumers through intermediaries such as promoters and technology companies. The second segment is the live music industry that focuses on the production and promotion of live music entertainment, such as tours and concerts. The licensing industry is the third music industry segment that deals with the legal arrangements and copyright services for music creators and their distributors (Nordgård p 34).
In the music industry structure, the recorded music industry generated the largest income revenue for the record labels that rewarded musicians according to the provisions of their contract. The licensing industry was responsible for collecting license fees and ensuring that it was equitably distributed between the record labels and the lyricists. The live music industry was, and still is, the sector that generated enormous revenues in music through ticket sales. Thus, concert tours and staged live performances were some of the marketing and distribution strategies that record labels and music promoters used to market studio albums (“Leslie M Meier, Popular Music As Promotion: Music And Branding In The Digital Age” p 506). Nonetheless, the emergence of the internet in the music industry challenged and changed the entire structure, especially when it comes to marketing and music distribution. This has brought forth the dilemma of revenue generation from music, music consumption by its fans, licensing controls and copyrights, and music distribution. As a result, the music industry in Canada is characterized by rampant online piracy and uncontrolled distribution of recorded music. These factors are direct issues of concern for musicians, their record labels, consumers, and the technology companies that have taken over distribution and marketing.
- Copyright issues in Canada
Just like the other parts of the world, the economic framework in the music industry is ruled by intellectual property rights, most precisely copyrights (Zerkee p 111). Thus, music creators in Canada and around the world generate revenue through licensing their original works to prevent piracy. However, digitalization has dramatically transformed how musicians, record labels, and technology companies license their works. There is a major issue in how music creators are yearning to extract revenue from music distribution through online platforms and services. At the same time, safeguard the copyright-protected music from unlawful violations such as downloading and peer-sharing. The big question in the music industry right now is whether or not the copyright law governs, or is able, to regulate the internet in Canada and the UK. The Canadian government, for example, has suggested that the current issues raised by uncontrolled internet use can be addressed through the exercise of a few adjustments to the copyright law. However, this has not yet been achieved due to the ever-changing music listening and distribution technologies.
Music production and reproduction is the major copyright issue in the Canadian music industry today (“Patrik Wikstrӧm, The Music Industry: Music in the Cloud” p 89). While copyright law provides copyright owners with the sole right to produce and reproduce their original works, the internet and technology companies have enabled the infringement of these rights by consumers and music pirates. For instance, the availability of new music on download sites allows listeners to access, download directly, and share it without any legal regulations. Unlike in the pre-internet era, musicians and record labels do not have control of music distribution as they did during the CD era.
Secondly, internet browsing in Canada raises a predominantly controversial copyright issue when it comes to music views. Ironically, no law can control the processing of intangible music copies on the internet. In this sector, even the technology companies offering these services are in a fix. The controversy in this scenario is the fact that technology companies, such as iTunes Store and Spotify, are using their music browsing and downloading sites as an income-generating platform. The large amounts of revenue generated through such browsing services make these companies reluctant to control the trend. However, music and copyright owners in Canada are continuously calling on the government to control browsing. The big issue is, and has always been, how will it be controlled?
Several copyright infringement cases have already been filed in Canada, precisely in the categories of music works, software, and text. For instance, a lot of song lyrics are readily available on websites and fans’ home pages. The question of whether they are posted under license or not have not been answered despite efforts by music entertainment incorporations to control the trend. In all these scenarios, internet companies are benefiting at the expense of music creators and their record labels since internet browsing has shifted the market structure and changed the key players in music distribution. On the other hand, the music consumers are having a walk in the pack and enjoying themselves with cheap and easily accessible new music. In the 19th Century, for example, a fan had to wait until a whole music album is out for sale to access and buy a copy. Today, the same fan can access a new song just minutes after its release, irrespective of whether it is the musician’s first song.
In Canada, copyright issues are quite complicated, and their compliance is expensive. This creates room for infringement as copyright owners have to humble down for their music to be distributed and marketed on all possible platforms. The internet has been the latest and most effective platform to do so, even though it has rendered copyright law ineffective. Before the internet and the establishment of technology companies, copyright holders held numerous rights and control in their single tracks. The only means of product transfer was the creator-consumer retail channel. Thus, it was easy to safeguard these rights as CDs were manufactured as read-only files that could rarely be copied. Things have since then changed, and consumers only need to download a track and make as many copies on the internet. Significantly, a fan is now in a position to view a song on the internet, listen to it, and leave the site without downloading the file, but with access to the same musical work next time.
Due to the easy and ready access to music on online platforms, technology companies such as Spotify and Apple have ripped big fortunes out of the streaming and downloading services. For instance, musicians in Canada and the United Kingdom have rallied complaints against the infringement of their copyrights by these technology companies, especially when it comes to the share of generated revenue. Allegedly, musicians receive only 10 to 20 percent from Spotify in royalties after access-based music services to consumers. The company pockets a large sum of 80 percent from online music views and downloads. As one Canadian producer puts it, technology companies distribute music as though it were their work.
To some extent, this is a violation of music creators’ rights to ownership and revenue. In my opinion, these companies have ripped off the distribution and marketing rights of musicians and their record labels. They are currently operating like monopolies unless the government amends the copyright law to regulate this technology trend.
- Digitalization and its resultant issues
Digitalization is literary the modernized process of converting sound and information into a digital format that changes the whole music experience (Kico et al. p 72). On a reflective note, it is the process that combines illegal online file sharing and access-based services to make music readily and easily available to everyone, everywhere, all the time. Before the internet days, recorded music was scarce and expensive, and fans chose thoughtfully what music to buy. Similarly, it was equally expensive to record a single track, and so only talented artists found their way into the music industry. In this perspective, the tremendous development in technology has changed these minor aspects of the music industry as it has paved the way for more artists and more consumers. As Michael King, a music producer in Canada, puts it, the digitalization process is continuously diluting music and art.
Even though the process came in with lots of production advances and revenue advantages to producers, musicians, and technology companies, it also deemed them less relevant. For instance, digital distribution has downgraded record labels as the renowned music industry identity markers. In the recent digital era, a musician does not necessarily need to sign a contract with a record label for their music to be recorded, distributed, or played. Technology and the internet have created easily accessible online platforms for these services. Thus, most artists are readily willing to forfeit their copyright and original ownership rights to technology companies for services equivalent to the 19th Century record-label productions.
Another primary concern of digitalizing music is the fact that it is slowly losing the value and meaning it had in the pre-internet days. What do we mean here? In the 1970s, 80s, and early 90s, having a music album was a privilege. Fans would love their music collection and protect it with all their might because it had value. Thus, the more albums you had, or the larger your music library, the bigger the privilege as a fan. People literary archived their purchased music records and discs. In contemporary society, consumers have lost this sense of value and prestige in the music they listen to since it is easily and readily liable. Consumers no longer have the urge to preserve or store their music because the context-based online services allow them to access music and do more things with it, such as peer-sharing. The big question in this perspective is not whether consumers access their favorite music, but what exactly they do with it after their retrieval. In short, millions of online viewers and music consumers do not even store the music they like; they just stream it live, download it and later on delete the files if need be (“{TOC}” p 1). This is a direct blow to the efforts of music creators and composers as their music does not last long enough on the consumers’ favorite list as more music is readily available in no time.
Digitalization has relatively increased rivalry and unfair competition in the music industry (Khajeheian et al. p 9). Borrowing a leaf from history, the CD was the first medium of storing digital music. Years later, the CD was overtaken by creating the mp3 format that compressed music files to smaller sizes without changing the original quality. This innovation dramatically led to a drastic fall in revenue suffered by CD-manufacturing companies in the music industry. Significantly, it meant some loss for musicians and producers who mainly relied on CDs and had to shift to mp3 compilations to match the competition. While many companies such as those dealing with the production of iPods were doing quite well at the time, the iTunes Store came in with stiff competition. The iTunes Stores invented and established Advanced Audio Coding (ACC) music formats ranked higher in consumer preferences than mp3 audios. In the current status of the music industry, consumers are listening to music from their smartphones as well as streaming live on internet platforms and websites such as tubidy.com. Most precisely, the launch of the Apple iTunes Music Store changed the whole game of music distribution by enhancing digital deliveries directly to consumers with effortless access to the internet.
- The current situation in the Canadian music industry
The Digital revolution has dramatically affected the music industry in Canada, just like it has done all the other cultural content industries. Interestingly, the sale of compact discs (CDs) in the Canadian music market has drastically dropped due to the easily accessible musical content on digital platforms. On the contrary, there has been a continuous increase in the revenue generated from online streaming services and digital downloads. However, this revenue is not sufficient to make up for the declining revenues from CD sales. Therefore, musicians and record labels suffer a reduced income, even though they are not counting losses.
The second issue facing this industry is the fact that many players are facing lots of challenges trying to adapt to the new digital milieu. Some of the music stakeholders largely affected include concert and festival promoters, live music promoters, record labels and companies, physical music distributors, producers, performers, and music composers.
The Canadian music industry contributes approximately 3 billion dollars to the country’s economy (“The Transnational Music Industry” p 492). According to a study at the Department of Canadian Heritage and a report filed by Jean-Francois Bernier, the Director-General of Cultural Industries. The industry has over 30,000 musicians and songwriters, employing more than 10,000 Canadian natives. Similarly, the sector has been reported to indirectly affect other economic sectors, including tourism and the advertising industry.
According to Bernier, there was an increase in domestic album sales from 15% to 25% between 2000 and 2012. Significantly, the performance of Canadian music in other countries has also increased by 43 percent. This is an estimated 15 million dollars increase in accumulated revenues. Nonetheless, the digital revolution in Canada has significantly altered music production, distribution, and consumption from the year 2012 onwards. The government has failed to control music streaming effectively as it did the mp3 technology to curb piracy. This has led to a reduction in revenues generated from the industry due to illegal online viewing and uncontrolled digital downloads. To address the issue, the Canadian government is working on possible direct and indirect measures that will safeguard the rights of music creators, producers, and record label entrepreneurs in the future. The legislature is working on a motion to amend the copyright law to regulate online music streaming services.
If the future of the Canadian music industry goes as planned, we might see the music industry in Canada take another direction where the government might enact policies and laws to regulate music distribution and access. This can solely be achieved by monitoring live music streaming and download services such as iTunes. Moreover, music licensing and control might turn to a new direction where the government can choose to extend the private copying tax to digital audios. Also, the government can monitor digital services by regulating the quality of Canadian music content. This way, they will regulate the revenue generated by content that makes its way to these online platforms for consumers.
Conclusion
In summary, digitalization in the music industry has raised very many issues to the consumers, technology companies (such as Spotify, iTunes, and Apple), record labels, and musicians. It has dramatically changed the entire process of producing, distributing, and marketing musical works of composers. Though the revenue generation from music downloads and live streaming is relatively high in Canada, the creators of these musical works are not enjoying the fruits of their labor. Technology companies and other online music platforms have taken monopoly control of the entire industry. It is thus upon the government to enact policies and laws that will regulate the uncontrolled digital music streaming and downloads.