Supply of Music after the Introduction of Internet Marketing Essay Example for Free

Supply of Music after the Introduction of Internet Marketing Essay Internet allows the labels to make the distribution directly to the customers bypassing the retailers. Internet eliminates the necessity of the retailers and by this way the recording companies are able to add the amounts payable to the retailers to their own revenues. Since the retailers were to be paid a considerable portion of the total revenue generated the recording companies always finds ways to eliminate the retailers and garner the additional revenues. 1. Another impact internet had on the music industry is the reduction in revenues as a result of piracies and illegal copying of the music products. Though the proportion of such illegal copying is very less in the past with the advancements in the technology with ‘compression protocols and high-speed internet connections’ have resulted in a large manifestation of this issue especially in the college campuses. The websites like Napster that provide free software and central website to download the required songs, have proliferated the problem of illegal copying. In the post-web period that is after the introduction of the internet marketing of the music products, the music industry has been subjected to the threat of a wide spread piracy which has the effect of affecting the sale of the original products. These piracies take the form of piracy of Compact Discs, private burning of the CDs and the peer-to-peer swapping of music files online through the internet. Out of these the biggest threat to the music industry is the peer-to-peer (P2P) supply networks facilitated by the internet. In the P2P networks the exchange of music takes place by the swapping of music files through the internet. Under P2P there is an utter disregard of the labels of the records and P2P bypasses any restrictions and allows the swapping of music files by the consumers without the payment of any money to the record company. P2P also enables the artists to supply the music without the knowledge and control of the record companies. The introduction of MP3 technology along with the possibility of file sharing has enabled the supply of music over the internet much easier and directly to the consumers on their personal computers. As a technical advancement the easy accessibility of music in the personal computers facilitated the proliferation of other portable audio devices that enable the MP3 files to be transferred to these portable devices after downloading from the personal computer. These portable devices could easily be carried around by the consumers. The portable audio devices have the distinct advantage of being small and easy to carry along. These devices enable the consumer to listen to the music while moving around, travelling or while doing exercises. The advent of these smaller audio devices has in effect enhanced the demand for music over the internet as it is possible to transfer the music to these devices from the personal computers where the music is already downloaded via internet. As shown in the figure below the role of internet has increased significantly during the recent periods in the supply of music. So long as the consumers download the music that carries a copyright, in a legitimate way after making payment to the online trading organizations the position of the record companies can be considered safe. In fact internet offers a wide scope to the music industry as the newly emerging digital technologies offers music to large groups of people and enables the audience to have access to their favorite artistes. The internet also offers the possibility of accessing old, new and unusual music at very competitive and affordable prices. (Gerard F. Lewis et al 2005) On the darker side of the internet, it offers scope for music piracies. There is nothing new about the piracy in the music industry. But according to Hammersley, (2002) the scale and ease with which the music piracy is attempted in the internet is really frightening. Source: Parikh (1999) With the advancement in the technology now it is possible to download any piece of music from the internet without paying the charges or cost to the online trading company. This amounts to the pirating of the music piece. Napster, the American company is the famous promoter of such technology for downloading the music from the internet without payment. Thus the new technologies have broken the control of the record company owning the rights for the content form preventing such unauthorized downloads. It made the record companies to realize that they have underestimated the threat to the industry from the piracy and have been very sluggish in reacting to protect their interests. The protection of their rights from illegal trespass would involve the registration and protection of their copyrights more strongly. (Gerard F. Lewis et al 2005) One of the basic business models of the music industry is to make music stars. A music star is made when the music created by the musicians fits into a well defined set of factors that can stimulate the demand of a majority of consumers universally. Here what comes into fore is the music consumers’ needs and preferences. There are certain variables that initialize the customers’ needs and preferences. Rosen (1983) observes musicians with lesser talent are easily substituted by those with more talents. It is also quite possible in the present day context of the availability modern communication technologies like internet and television to reach an audience of unlimited magnitude. Because of this trend there is always the possibility that the musicians with greater talent will always prevail over the musicians with comparatively lesser talent. Using the economic theory advocated by the renowned economist Marshall (1920) it can be pointed out that the technological advancement is the key factor in determining the music industry’s demand. But in addition the ‘talent’ can also be regarded as the deciding factor for the demand. But the only issue with talent is that it cannot be measured. The influence of social pressure also plays a key role in the determination of the need and preferences of the customer. The influence of peer group also changes the customers’ preferences as per the study conducted by Johnstone and Katz (1957) In this case attendance to concerts by music celebrities or listening to their works is considered as a necessity to form a basis of communicating with each other in any peer group. But social pressure is also another variable that cannot be measures as in the case of talent. Hence it may not be precisely possible to identify the extent of the impact of these variables on the customers’ preferences. The other variables that influence the online music consumers’ preferences are the individual tastes, knowledge about music, communication possibilities and the portion of the income that is apportioned by the consumer for music related expenses. Crain and Tollison (1997) identified that the amount of income reserved for music determines the quality and taste of the music as with lesser cost the consumer can listen to the music by non-stars than spending more to listen to music by celebrity stars. The last but not the least criteria is the ‘music time’ denoting the time that can be undividedly distributable for listening to music. This also determines the customers’ needs and preferences over the music online.