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Digital transformation of the music industry

Digital transformation of the music industry

The digital transformation of the music industry has caused great upheavals in our relationship to music. The appearance of illegal downloading and streaming music has made music more accessible. It is interesting to observe how this transformation took place, and what the impact of this transformation was for the general public, as well as for the artists.

Napster, the beginning of a new era …

Digital made its appearance in the music industry in the late 20th century with the appearance of Napster in 1999. By allowing the exchange of audio files peer to peer, Napster will be the trigger.

Users now have access to a growing library of titles for free.

Many platforms offering similar services are closing and reappearing, in the face of the protest of the record companies.

The illegal download was born, and with it, a disastrous impact for artists and record companies.

Various advertising campaigns are launched to raise awareness among consumers to support artistic creation. However, this does not relaunch album sales that have been falling since Napster’s arrival.
The arrival of streaming, a new digital transformation of the music industry …

In 2006, a second digital transformation of the music industry was born: Streaming.

Spotify and YouTube are created, followed by Deezer in 2007, and a number of other platforms such as Tidal or Apple Music …

These platforms offer to consume differently: Do not buy music anymore, rent it! For 9.99 € / month you have access to over 30 million titles. An accessible way to enjoy an extraordinary diversity of titles.

Music streaming will be a great success, rising from $ 4 million in 2009, to $ 58 million 6 years later. This success is partly explained by the lack of attractiveness of the traditional offer: 1 album costs on average 10 €, and contains between 10 and 15 titles.

This one does not seem anymore adapted to our consumption, become massive today. Music is no longer a simple distraction, it accompanies us daily.

Music streaming thus boosts revenues from digital (it represents 84% ​​of the digital segment), and counterbalances the steady decline in album sales.

Thanks to the evolution of streaming, the music industry will once again experience growth in 2016, after consecutive years of decline, posting a growth of 5.6%.
Artists, big losers in the digital transformation of the music industry?

Nevertheless, it is important to note that these streaming platforms do not only have positive externalities. Indeed, streaming pays poorly artists, about 0.70 € for 1000 plays against 0.70 € when they sell an album at 10 €. Although it is not high in both cases, remuneration by streaming is less advantageous for artists.

As streaming is becoming increasingly important in the music industry, at the expense of album sales, artists’ incomes are falling steadily.

Taken between record companies (majors, labels) collecting on average 90% of revenue generated, and consumers can not afford to spend 10 € to buy 10 titles, many artists find themselves in a situation of increasing more precarious.

The digital transformation of the music industry will not stop there, however. The legitimacy of record companies can be questioned, in the face of digital tools facilitating the emancipation of artists.

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