In the recorded music sector, the era of the majors is unlikely to suddenly end; rather what we may see is an enhanced pluralisation of the market for recorded music, which while not being a radical reordering, nevertheless suggests some interesting shifts in the way we enjoy music. In the past the music industry has reacted to, rather than led, its customer base. If this continues then it is difficult to imagine the recorded music industry surviving in its current form much beyond the death of the generation who originally set out to purchase popular music in bulk during the 1950s and after. Younger consumers are assailed by other demands on their spending power, from computer games to mobile phones, from Second Life to DVDs.
The possible decline of the ‘majors’ as intermediaries may allow us once again to more often capture the joy of direct communication; the hairs on the back of your neck tingling when the emotional connection sparks. Although the construction of modern music to successful templates has often driven innovation to the margins, this has never managed to kill off creativity and the enjoyment of organic musical development. A partial collapse of the oligopoly of reproduction may free us, at least some of the time, from the industrialisation of music and encourage artists and listeners to (re)construct the direct relationship upon which music has always thrived. The one-hundred year hiatus, when the global music industry interposed itself between creators and audience may soon be over, and although the industry is likely to survive in one form or another, there is also a clear aesthetic benefit to re-establishing a community of creative interaction, most obviously evident in live performance.
It is this other sphere that represents not so much a challenge to the mainstream music industry (although it is often perceived as such), but rather establishes a two tier market for music: one casual, the relatively uncommitted and volatile tier, served by the established companies, and a smaller, although lively tier of enthusiasts and artist led enterprise. However, it is important to note that this is not a romantic notion of the real artist(s) and compromised popular performers; specific performances may appear on either (or at different times both) sides of this analytical distinction. The question is not what music is being consumed or enjoyed, but rather the organisational process which link its production and use/consumption.
Moreover, the assumption of the fragmentation of music consumption having a significant impact on the recorded music sector has appeared before, as David Hesmondhalgh (1996: 481-485) discussed in the mid 1990s, but the oligopolistic character of the sector, dominated by four majors has largely persisted. The question is whether the majors will once again find a way to retain their control of the market for recorded music, and here the developments in the market for downloads are significant (Hesmondhalgh 2007). The major companies after some delay and doubt have started to embrace this new mode of distribution, and as in previous technological revolutions may be able to retain their position in the various markets for music. However, distributing music digitally does seem also to have some interesting effects on patterns of music consumption.
Already the download chart is starting to exhibit both volatility and an openness both to new music, but also revived interest in older tracks spurred by outside events, such as the screening of a film on TV. Certainly there will be traffic across and between these two tiers, and indeed, as has always been the case the majors will seek new talent from the independents (and from re-releasing material into the download market – such as the entire Beatles back catalogue). Moreover in the ‘casual’ consumption tier previous concentrations of consumption around a small group of global stars may continue (Hesmondhalgh 1996: 483). However, with the ability of digital technologies to deliver a reasonable working income to non-affiliated musicians, the majors’ claims to be able to support a complex ecology system of musicians are starting to ring a little hollow; and when this happens we might ask what exactly is the point of the first tier of the music market where the majors reside?
Here a plausible business opportunity for the majors (and their marketing departments) may be the ability of record labels to become more explicit sorting mechanisms for (busy) consumers music choices, offering short cuts to music that may appeal to consumers unable to, or unwilling to locate themselves in the specialist groups where new artists and their music emerge and are enthused over. Whether the industry can rebuild its trust relations with its customers to enable it to fulfil this role will remain to be seen, but given the history of the industry it is not a foregone conclusion that this is a workable strategy for the survival of the majors, but equally it is not necessarily the case that the majors will fail to find a way to shore up their market position.
Music has been one of the key cultural/artistic mediums to be aggressively commodified, and problems stemming from technology are hardly novel in the sector. The invention of a new carrier medium for music (starting with piano rolls and subsequently a number of other technologies, including vinyl records and now compact discs) has repeatedly contributed to shifts in the distribution of reproduced music driving some companies out of business and helping others get started. In this sense, while digitisation may have a major impact on the way we receive, appreciate and ‘use’ music in our lives, it is far from the first such technological ‘revolution’ to confront the music business. Thus, while digitisation may turn out to be as important as the first technologies that enabled specific performances to be captured, the music industry has also successfully adapted to previous technological changes; the question is whether this technological shift can be as successfully incorporated into the industry’s preferred business models?
Music had been performed and utilised in social interactions across many millennia, but the widespread commodification of the reproduction of performance (in the last century) is clearly linked to the industrialisation of cultural production. Questions about the commercial control of artistic endeavour and the social dissemination of cultural artefacts have always been central to critical perspectives on the recorded music industry (as well as other cultural industries) and this has become an increasingly important issue as in recent years market control has been further consolidated in what has historically always been a relatively oligopolistic sector (Bishop 2005). After discussing some contemporary developments in the music industry, I will conclude that this consolidation may reflect shifts in the relationship between the elements of an already existing two tier market; a division between the large scale ‘traditional’ industry and the smaller scale (perhaps artisanal) smaller artist/enthusiast led independents focussed on other business models of music distribution. But before looking at these changes, it is as well to briefly specify the music business of the last few decades.
The music business: commodification for distribution
Recall that in Karl Polanyi’s discussion of the ‘great transformation’ from feudalism to capitalism, the key capitalist commodities, money, land and labour became subject to property relations through a narrative of markets, efficiency and ownership. Stories were (and are) told about why we must treat these ‘fictitious commodities’ as property (despite their social character) for the good of society and its continued economic development (Polanyi 1957: 72/73). For music the shift to a largely commodity status was a longer process, moving through a period of patronage and minstrelsy, and the commercialisation of sheet music sales during the eighteenth and nineteenth centuries, but only accelerating with the advent of recorded sound. With the technologies of reproduction under their control, music-sector industrialists claimed that by allowing music to be treated as a commodity, the audience for any particular artist would exponentially larger than could be managed by the artist’s own efforts.
Although music production now is often focused on sales of specific (recorded) performances, in the pre-industrial phases of human musical culture, music was most often not produced for commercial reasons, but rather for social and ritual fulfilment. Indeed, music continues to be made and enjoyed socially, remaining embedded within non-commercial cultural practices, at the same time that specific elements are being commodified. Because this non-commercial activity continues, the global music industry has needed to continually (re)construct music as a saleable commodity (through a narrative of commodification). However, it is this property narrative that has been challenged and indeed has partly broken down with the advent of digitised copying, and new arenas or channels of communication between artist and listener/fan; channels unmediated by the large music companies. Thus, there is considerable tension in the contemporary global music industry between the (capitalistic) attempts to control music expression and the varied/diverse desire to use and enjoy music(s). In the last quarter of the twentieth century, the recorded music industry was patterned by consolidation of the mass market, and now just four ‘majors’ currently dominate the global market for recorded music: Sony/Universal Music Group; Warner Music Group; Bertelsman Music Group; and EMI – and may soon become three.
From the industry’s perspective the two central issues for the sector’s future (the reproduction, and the distribution, of music) come together in the realm of intellectual property rights (IPRs). Intellectual property is intended to make knowledge and information behave in a similar way to material goods in a market (May 2000: chapter one) and is thus a central element in the industry’s commodification model. More generally, capitalists’ recognition of the importance (and value) of knowledge- and information-related resources has reinforced their desire and need to control, own, and profit from such resources, defined as property. In a similar way to which the land owning aristocracy, during the growth of intensive farming, sought to enclose that which had previously been common land, intellectual property is predicated on the remaking of knowledge and information as property despite its potential for free availability and costless distribution (May 2000: 48). To enable a price to be taken by capitalists, (recorded) music must be rendered as formally scarce and this is achieved by the legalised limitations of use owners can mandate by utilising copyrights, alongside various technological limitations. The possibility of cheap or even free reproduction and/or distribution must be resisted, and rendered illegal, if music is to remain a commodity around which an industry can be organised.
In light of this continuing commodification, and despite being developed from an analysis of the historical particulars of nineteenth century capitalism, Karl Marx’s analysis of the centrality of property relations to the functioning of capitalist society therefore remains as resonant today as it was one hundred and fifty years ago. Simply put, Marx argued that capitalism is built on the relations between property holders and those who only have their labour to bring to the market. If capitalists are to make a profit, and therefore accumulate more capital as they must to survive as capitalists, they need to find things to buy and sell. Most importantly they must find things to buy which can be combined by labour and then sold for more than their collective input costs. This requires a regime of property rights to allow for the legally sanctioned transfer of resources (including labour) through market relations. Historically capitalists have managed to render many things as property, and the expansion of IPRs represents merely another phase of their need to mobilise raw materials (their inputs) as property. Commodification (the construction of legally recognised property from socially existing ‘things’) is at the very centre of the ‘logic’ of capitalism (and in the context of this article, the recorded music industry).
Commodification allows relations of power between individuals to appear as relations between (formal, neutral) things. And, the most important ‘thing’ to be rendered as a commodity is an individual’s work, or labour. By depicting labour as a commodity, capitalism presents the appearance of an equal exchange between contracting parties in a neutral market, rather than the unequal relationship between the powerful and the (relatively) powerless (Marx 1887 : 77 and passim). The work contract is made to appear as an agreement between equal parties over the transfer of a commodity or property (in this case, musical outputs of various kinds). But for Marx, the formal appearance of (legalised) neutrality obscures crucial differences in power between the parties, with capitalists controlling the means of production while those that work for them merely have their own labour to deploy. Even if such a description might need to be modified in light of the latest developments of (informationalised) capitalism, this division is still clearly evident in the relationship between musicians and record companies.
One of the driving forces behind the long history of the division of labour is the need for capitalists to hide their (unwarranted) appropriation of surplus by claiming that only they can organise complex processes (Marglin 1974: 38). Thus, record companies have been careful to ensure that they buttress their claims to privileged knowledge of the market (as well as the mechanisms of music reproduction and distribution). For musicians, composers and performers to take advantage of the system, to profit from their labour, the rights to their outputs (codified through copyright) have to be transferred to companies that agree to ‘market’ their creative outpourings. In other words, it is the control of distribution, not the control of the production of music itself, that has been the basis of the record companies’ profitability (Toynbee 2000: 16). Although there have always been attempts to record and distribute music outside the major global recording companies, the ‘majors’ have hitherto mostly remained the only route to large scale distribution; for instance, the recent use of MySpace and other non-traditional modes of distribution by the Arctic Monkeys was followed by a major record company distribution deal, rather than the continuance of independent distribution for their work.
Historically, independent record companies have only been able to garner international success by allying themselves through licensing arrangements with the ‘majors’, who have used their affiliated labels as one way of obscuring their domination of the global industry and as a way of capturing for exploitation music that has been produced outside the major’s roster of contracted artists. To secure significant distribution of musicians’ products the majors have been able to maintain the perception that rights need to be assigned to a large company, who then control those rights for exploitation. However, recording industry contracts are notoriously unbalanced, as Steve Albini (1997) has illustrated at some length; when the income is shared out, the artist is last in the line for a share of total income generated by their music, well behind the record company itself, the producer, the manager, the studio and lawyers.
Generally then, the industry revolves around this exploitation of the monopoly privileges of copyrights. Or as Simon Frith put it some years ago:
For the music industry the age of manufacture is now over. Companies (and company profits) are no longer organised around making things but depend on the creation of rights (Frith 1987: 57, emphasis in original).
Companies are able to exploit these rights, partly in the traditional manner of selling carriers (CDs, Cassettes and now digital downloads), but also by exploiting the rights’ income that can be gained through public performance, and through music’s role in enhancing the value-added of other goods (from advertisements to movies). The possibilities of value added spread far to include rights over marketing artists images on clothing, image rights and other areas where the star-value can be co-joined with other products to enhance overall market price, in what are now often referred to as 360o contracts (Economist 2007). While noteworthy for its possibly unprecedented high monetary value, EMI’s contract with Robbie Williams to ensure the company controlled and profited from rights’ income in all these areas, not merely the direct recording rights, was merely the latest development in widened rights-based contracts. Indeed, one of the responses of the major companies to difficulties in their traditional markets has been to seek to widen the forms and character of activities where their ownership of rights can be utilised to produce viable income streams (Hesmondhalgh 2007: 8-10).
All this is to say that the emergence of new technologies does not necessarily indicate a profound change in the underlying relations of production or their (intellectual) property based organisation. Nevertheless, one question has become the focus of much recent discussion of the recorded music industry: has the advent of digital music reproduction, alongside the increasingly widespread deployment of powerful new information and communications technologies (ICTs), fundamentally undermined the global music industry’s ability to continue to function as a capitalist industrial sector? This has prompted much discussion of piracy and the continual conflation between commercial piracy and what use to be called ‘home-tapping’ but we might nowadays refer to as (to coin a phrase) ‘home-burning’.
Scarcity, digital rights management and iTunes
It is an often repeated claim the music industry is beset by a tide of counterfeited material, that undermines the market for legitimate music releases across the world, and when linked to the (claimed) widespread disregard for copyright on the Internet by music consumers who download music files from non-industry-sanctioned providers, this is presented as a major crisis for the major record companies. Their response to these difficulties has been essentially bi-directional. In one direction, as already noted the major companies have continued to endeavour to control not merely the rights to mechanical reproduction of musical performances delivered through the normal encoded carriers (i.e. CDs), but have also expanded the sorts of rights they can exploit. The major companies have recognised that a ‘superstar’ brand (be it individual performer or group) can produce value-added not merely in their primary field of creativity, but across many associated fields. This ranges from the uses to which other industries can make of recorded performances (thus the expansion of agencies helping companies link their ‘product’ with advertising campaigns and films) to new services like mobile phone ring tones based on the ‘hooks’ of popular songs. This strategy is not a new departure (see Chapple and Garofalo 1977: 306-308), but the depiction of the music industry as a rights-exploitation industry is increasingly more apt.
In the other direction, the music industry has tried to challenge the rights of customers to use industry’s products in any way they see fit. This has been successful on one level, inasmuch as the industry (allied to other content carriers and software manufacturers) have been able to establish strong legal protection for their favoured technical fix, digital rights management (DRM) technologies. Interestingly the legal protection of DRM makes explicit that the rights being protected are neither performers’ or authors’ rights, but rather the rights of ‘owners’. Therefore, while copyright retains a normative appeal to such narratives of creativity, the legal regime around DRM is explicitly a response to commercial interests. Perhaps in recognition that these protections still will be unlikely to enable them to prosecute the large scale individual (claimed) trespass on these companies’ rights, the industry has also stepped up its (re)inscription of consumption norms. The discourse around copyright serves the industry well here, focusing as it does on the individual creator, stressing the rights for such individuals to both benefit from the use of their creations, and to control the way these creations are used.
The increasingly public disputes over the use of DRMs, prompted by investigations by the UK National Consumer Council and continental European consumer groups, have also revealed the extent of the control that the industry wishes to claim over consumer behaviour and activity. This is itself hardly popular with the industry’s customer base, suggesting as it does the desire of the industry to halt practices that while formally illegal have for many years been tolerated as there were few methods of halting them. Moreover, such practices have in the past been facilitated by legally available devices (often sold by the hardware divisions of the conglomerates record companies belong to), and as such has become customary activity that is now threatened by the record industry’s attempt to (re)establish control over their valuable properties.
The difficulty for the industry, as Wilfred Dolfsma has noted, is that many consumers intuitively recognise that while the ‘intended effects of copyright are to create a flow of income for creative artists in order to encourage creative activities, the real effects are different…. [creating] an environment where record companies and music publishers make large profits’ (Dolfsma 2000: 6). Indeed, as David Nelson reports, with the exception of a few globally predominant artists, there are few who make money from their royalty payments; indeed Nelson assembles a gallery of relatively famous artists who claim to have never had a royalty cheque, although one must assume this means that their royalties have never outstripped the ‘advance(s)’ paid on signing their recording contract. Nevertheless, most (relatively) successful artists continue to make a living from live performance and thus the exposure that (free) file downloads provide are conceivably quite valuable for expanding the audience for performance (Nelson 2005: 577-590). Indeed, one recent study reported in the Financial Times suggested that the vast majority of artists made more from touring than from royalties, with large stadium level acts typically making 75% of their income from live performances (Edgecliffe-Johnson 2006a). This may be why the music industry has been able to find relatively few artists to come out publicly against (digital) copyright infringements, and why some have come out quite positively on the side of the downloaders and file-sharers.
Thus, mistrust of record companies suggests that one possible future for the production and consumption of music is the continued expansion of the performance centred model, alongside sponsorship deals for tours, and the use of linked products (such as tour merchandise) to support the income of musicians complementing direct sales of (own-produced) CDs. As I will discuss below, this is already starting to happen and has the potential to return music to something similar to the socio-economic model of minstrelsy and patronage that was historically predominant prior to the successful insertion of intermediation services by the recorded music industry in the twentieth century, although we should also be wary of romanticising what was often just a different way of exploiting musicians. Indeed, it is also the case that the contemporary structures that support live music events (venues, sound reinforcement, tour management) are also highly commmodified, and thus this potential for a more socialised consumption of live performance may be dissipated as the scale of the events grows (for instance, with major tours, or multi-performer festivals remaining large scale commercial enterprises). Conversely, using on-line communities like MySpace and other arenas, musicians are establishing direct contact with their fans for promotional and marketing activities, and are also increasingly able to sell their music direct to their fans, bypassing the established music industry completely.
Nevertheless, the music industry has put their hopes for salvation in DRM, and to support this technical fix the industry (alongside the film and software industries) lobbied hard for a new (globalised) legal protection against the circumnavigation of technical protections for copyrighted material. Established in the World Intellectual Property Organisation’s multilateral Copyright treaty in 1996, this protection was included as a major element in both the US Digital Millennium Copyright Act (DMCA) 1998, and in the EU Directive on Copyright 2001. In the EU and the US it is now illegal not only to use, or develop processes which might circumnavigate DRM software protection, but also to ‘traffic’ in these processes (to publicise them on the Internet or elsewhere) (Bygrave 2002; May 2007). Thus, both technical and legal means are being deployed by the music industry to try and hold back consumers from fully utilising the advantages of digitisation.
While the ‘problem’ of illegal downloading is currently not as wide-spread, nor as easy for the normal consumer, as the hyperbole from the industry would have us believe, neither is it completely clear that it is really a problem. For instance, it is not certain that file-downloaders do not buy CDs: one French study suggested that over half of downloaders went on to buy CDs of artists they had sampled over the Internet (study cited in Farchy and Rochelandet 2002); other research among users has concluded that while file-sharing certainly takes place among social networks, this is part of a communal consumption of music that expands the number of people likely to purchase music CDs by these artists (Jackson et al 2005). Thus, while there can be little doubt of the potential for digitisation to disrupt the music industry’s industrial organisation, it is not self-evident that it will necessarily immediately do so; there are ways in which the previous modes of distribution can be dovetailed with the new consumer practices that are enabled and fostered by the increasingly widespread use of the Internet (and broadband connections).
This is not how the major record industries see it however, and one of the key elements for particular rights’ holders to adopt forms of DRM is the perception of the extent of unauthorised copies that are being made of any specific product (Rothchild 2005: 556). Here, recorded music industry representatives have always been of the opinion that there is a large number of infringements taking place, that are robbing the industry of revenue. However, this is based on an assumption that infringing copies crowd out non-infringing copies of any specific musical product. Given the increasingly varied choice both of forms of music itself, and also between music products and other life-style and leisure activities (such as computer games, surfing the net), while some music may be listened to and downloaded if it is effectively free, charging for such products might decrease the distribution of such music quite severely. Conversely, the free distribution of music files may itself stimulate more sales among marginal consumers, with having sampled music they might not have bought speculatively, actually purchasing the products they have initially ‘stolen’.
Nevertheless in light of the difficulty that digital copying by end-users is perceived to cause the industry, and the relatively difficulty of limiting this sort of behaviour, the industry is searching for a coherent response. The move to associated rights may be a key strategy (Hesmondhalgh 2007). This plays to the one scarcity it is difficult to violate, the individuality of the performer (and their image); there is only one Robbie Williams or Britney Spears! There may be little hope of completely protecting the reproduction rights that an artist’s output represents, but there is considerable ability to control other aspects of their scarcity. From T-shirt sales, to tour tickets, from film appearances to TV specials, there are many ways that the performers individuality can still be exploited, and where copying is much more easily policed. In the past there has been significant division of labour, between record companies, managers and artists in the holding of rights for these various activities. As record companies are less able to fully recover their ‘investment’ through music reproduction they will seek (and have sought) to control other rights and therefore the access to other income streams. In this regard the future of the record industry may lie in the complete control of their artists’ rights. Indeed, Sanctuary, a leading independent label, used to make over half its profits from such non-musical income streams, before the company was plunged into crisis after over-estimating its ability to exploit the rights to new signings. In the past, there have always been artists who have profited more from their marketing than their record sales, and now this is likely to become a more generalised situation, the record companies are going to want/need their share of these incomes streams.
Unfortunately for the ‘big four’, and although these major companies have been conducting a extensive campaign to retain and protect the business models that they have profited from for the last decades, another model of music consumption and enjoyment has been enlarged through the potentialities of digitisation, and it is to this alternative that I now turn.
The two tier future?
Now that the business model of the major record companies is not so obviously the only manner by which musicians might profit from their talent, commentators on the recorded music industry have become increasingly interested in the Grateful Dead model. Here, stressing the scarcity of the individual performers, the live event becomes the key commercial moment. For many years the Grateful Dead encouraged the taping of concert recordings on the grounds that this would enlarge the audience for their live concerts, which as their record sales declined remained a major form of income for the band. Importantly this lenience only extended to ‘tape traders’, the barter network that allowed tapes to circulate among fans with no financial implications. When these recordings become commercial bootleg issues (for sale) the band took legal action for copyright infringement against those distributing them (Marshall 2003: 67). Thus, the rights of sale of performance are maintained while the ‘community’ that supported live performance was enlarged by non-commercial distribution of concert recordings. The norm of consumption for live music was upheld, while the tapes circulated outside the commercial avenues of reproduction.
In one sense this is a return to the model of music production (especially for those music styles not subject to patronage) which was dominant for many centuries before an industry reproducing music for profit was possible. This form of making a living from music has never really gone away, although for many years it was seen as transitory stage prior to (although often never actually leading to) national and international success through the sale of recordings, what Toynbee refers to as a ‘proto-market’ (Toynbee 2000: 25-32), in which major corporations seek new opportunities for further commodification of cultural production. Performance was a proving ground to establish a following that would prompt industry interest, and the successful marketing to a more extensive audience than could be reached through concerts alone. For many styles (of which perhaps Jazz is the most obvious contemporary example) this remains the key area of income generation for artists.
Industry indifference to non-mainstream, non-superstar, music has allowed the continuing existence of the independent sector, producing niche musics and the occasional international success (such as Katie Melua’s début album on independent Dramatico, which has sold over 3 million copies worldwide). Additionally, many artists have recorded and then sold their own recordings, side-stepping record companies completely; for instance, Kate Rusby, a folk singer-songwriter managed to sell 60,000 copies of two self-funded recordings on her own record label. The Internet has proved vital in achieving this level of sales, and may represent one model for the future. Recordings can be sold at concerts and via the Internet, utilising postal delivery. Likewise John Otway has maintained a close relationship with his core fans through though Internet-based communication, and has managed to fund tours, and cooperated with fans over choices of commercial releases (leading to an appearance on Top of the Pops) while having no major company contract (Ellen 2006).
Furthermore, although music sales by the majors continue to decline, industry spokesmen do not dispute that only around two fifths of sales contraction might be directly attributable to ‘piracy’, leaving the majority of this decline to be accounted for by other reasons. Independent labels (such as Zomba Music and the Beggars Banquet group) continue to develop successful careers for their artists, and have seen both sales and profits rise at the same time the majors have reported market contraction. This suggests the cause of decline in major companies sales, which they often attribute to the theft and duplication of their products by ‘pirates’ actually might be caused by ‘creative’ issues, and by sales outside normal retail channels. However, this dynamic is hardly new: as Simon Frith pointed out in the early 1980s, ‘innovation in such an oligopolistic industry is only possible because technological changes open gaps in existing market control’ (Frith 1983: 89), and indeed recent technological shifts have opened up new opportunities for the more innovative independent labels and artists. However, these alternative market segments also offer a clear ‘anticipation of commerce’ (Toynbee 2000: 29), as for many artists (at least) the wider potential exposure offered by the majors is a temptation that is difficult to refuse.
The increasingly fragmented and divergent forms of music on offer may have moved a large number of consumers outside the traditional channels of the recorded music market. However, this should not be seen as an argument that the market for recorded music was comprehensively controlled by the majors in the past; as Jason Toynbee has argued, the idea (often drawn from Theodore Adorno) that the market for music was constrained and controlled by the corporate commodifiers, misreads and underestimates the independence of the audience for music (Toynbee 2000: 5-8). Thus, one might say, recent technological changes have opened up alternative avenues for the consumption of music, which may not always be clearly obvious in industry statistics. Certainly direct sales by artists and independent labels are unlikely to show up in industry sales statistics, and while this may not account for all the claimed fall in sales, it must have had some impact (which remains unrecognised by the industry lobbying organisations).
Given that the pornography industry is often held up as a major realm of innovative behaviour as regards the sale of content, it is interesting to note a similar shift in Internet-porn. There is an apparent (and growing) move towards individualised pay-per-view, interactive, porn sites run by independent entrepreneurs (i.e. the ‘artists’ themselves) bypassing the larger combined sites. Although these often offer niche-products (based on specific fetishes) they also offer a direct link between audience and performer, in what Jonathan Coopersmith has referred to as the ‘democratisation of pornography’ (Coopersmith 2006: 10). This shift in market relations mirrors (or even precedes) similar shifts by non-mainstream musical performers and artists, where it is the scarcity of live performance that becomes the loci of profit making, alongside an individualised commercial relationship with the purchaser. However, while the music industry has been slow to adopt these new methods, pornography companies and artisans have been swift to move to new forms of distribution. That said, as Coopersmith (2006: 15) notes, the key difference between pornographers and the music industry, is that the former work on the (seemingly plausible) assumption that demand for pornography is effectively insatiable, while the music industry seems to have encountered the limits of demand, or at least the demand for its mainstream, mass products.
This shift in the patterns of demand may suggest that those musical genres hitherto relatively under-exploited by the majors are the very areas where profitable activities linked to the reproduction and distribution of musical performances may likely remain possible (no surprise to the thriving independents in niche markets from jazz to folk music). The use of Internet downloads to try out new music for free also may have a positive effect on sales if the initial download can be turned into sales of items under-exposed through radio and other media. Already some artists (and companies) are offering free downloads with exactly this intent.
As Steve Jones (2002: 222ff) argued, the arrival of the Internet has led to a process of radical disintermediation (the removal of previously existing commercial stages between production and consumption). While it is unlikely that there will ever be a complete lack of intermediation between artist and consumer, not least of all as this would require perfect information on the part of the consumer as regards what music is on offer, Jones suggests that a form re-intermediation is the only manner in which the industry can survive (by offering sorting and signalling services). However, for the major companies to continue their oligopolistic domination of the industry, as they have done during previous changes in the mode of distribution, they must control the means of distribution. The varying and on-going technological and legal strategies adopted by the industry may indicate that the ‘majors’ can survive this latest set of challenges (McCourt and Burkart 2003), but this will involve some clear changes in the way they do business; paradoxically the strongest contender for a new business model has emerged from Apple (and Steve Jobs) rather than from within the industry itself.
Certainly, the iTunes Music Store launched by Apple in April 2003, represents a powerful model for the next stage of the recorded music industry. Rather than suing or attacking the audience for music, Jobs has argued that iTunes will compete on the basis of the quality and breadth of catalogue offered. Indeed, a study by Piet Bakker (2003) demonstrates the plausibility of this strategy: iTunes dispenses with the slow frustrating search for a good file among many offered on illegal services, only one legal file of a song is offered; for parents iTunes allows children to be shielded from pornography; and it includes features like artists’ own play-lists and other (marketing) features absent from illegal systems. The issue of pricing remains, and Bakker concludes that there will always be those who use illegal services.
Nevertheless, iTunes’ sales during its first eighteen months were around 1.5 million downloads a week and with 25 million songs sold in the first three months (Naughton 2004); by the beginning of 2006 Apple was able to report the one billionth download (Johnson 2006). In April 2004 Sony launched its similarly structured SonyConnect exploiting the company’s strength in music and hardware, demonstrating some confidence in the potential of this new mode of commodity relations. More recently Microsoft has also tried to enter the market with its Zune music player, having initially regarded this as a service and market that could be ignored. However, initial problems with interoperability (linked to the robust Microsoft DRM system), even with tracks bought from Microsoft’s previous on-line music service (BBC 2006), and the late move into a swiftly maturing market seem to have already undermined Microsoft’s ability to compete against iTunes and the other established download service providers (Waters 2006).
Microsoft’s interest in a market that in 2005 was worth around $500milion, and looked to continue its accelerating growth (figures from Brown 2006), is hardly surprising, and suggests that this may indeed be one clear direction out of the difficulties the music industry finds itself in. Certainly given that the record companies are able to earn more per track through iTunes than the equivalent from CD sales (Steve Jobs, quoted in Brown 2006) this may provide some respite from other pressures, provided that the current government-linked investigations on pricing on both sides of the Atlantic do little to force reductions.
Perhaps most interestingly, while iTunes and SonyConnect have to various degrees retained aspects of DRM (and Zune has a robust DRM system), the second placed provider in the market for digital downloads, eMusic which specialises in music from independent labels, supplies files for download that are completely free from any DRM-related restrictions. Thus, without deploying any form of restriction on use (and thus allowing files to be potentially freely onward distributed from initial purchases), eMusic has established its position as the second largest on-line retailer of downloads, selling around 3.5 million songs a month (EDRI-gram 2006). There is also an increasing awareness that utilising such services as MySpace (following the example of the Arctic Monkeys in the UK) may be a way of securing a fan base that will then prompt a major record company to sign a band to a more traditional contract. This use of file-sharing and downloading has prompted the establishment of services which allow various forms of downloads for unsigned bands, ranging from free services (often through MySpace or similar ‘community’ portals), to sites that offer sales packages, sometimes utilising DRM protection for the files provided to fans.
On one level, it may all be a question of how music is consumed: the market for DVDs has been much less afflicted by home copying (although organised criminal counterfeiting remains a major problem). However, as Fred von Lohmann has pointed out, this is hardly because DVDs cannot be copied in the same way CDs can. Rather, they are a much more complex product, consumed in a different way, and perhaps most importantly through either rentals or purchase can be consumed much more cheaply relative to single music tracks. The costs in time and effort to secure a digital copy of a film far outweigh the costs of consumption (with rental costs for a movie well below the legal download costs for an entire LP worth of songs), suggests that the music industries’ real problem may be a question of pricing rather than home based ‘piracy’.
One further shift in practice that may save the physical-carrier element of the music industry, and which is already starting to happen, is for companies to provide extra value-added to make a CD a more attractive purchase. Thus, some releases are already coming with extra CDs of remixes, or are released as dual use discs which in their DVD mode contain videos, unseen interviews and other elements that consumers might regard as adding value to the product. These moves to a more complex product may allow the industry to balance a market for transient music consumption, based on downloads, with a longer term more traditional market (with some continued attempt to build fan loyalty to specific artists) through the continued sales of CDs. This suggests that various elements in the music industry have started to appreciate that the deployment of DRM as a ‘fix all’ solution misunderstands the changes in consumption patterns and the increasingly competitive environment that surrounds the music industry, and that this misunderstanding by the majors has allowed a rapidly expanding non-traditional sector of music distribution to flourish.
It is this alternative sphere of music production and consumption that is expanding and will likely make the two tier market for music much more obvious. Certainly, in one sense the music industry has always had at least two tiers – the major companies sphere and the (true, rather than major company affiliated) independents, alongside artists own market activities (this second tier might be broken into two realms – the independent companies and the independent artists). As Frith (1983) and Hesmondhalgh (1996) also pointed out some years ago, it is also not the case that this difference in size necessarily maps onto a difference in commercial interests; many independents (whatever their claims for artistic integrity) are just as interested in making a profit from their productions as the majors.
What has been crucial for the independents, is that the Internet and its ever widening usage have presented a considerably enhanced ability to reach the mass market where significant sales can be achieved which previously was the preserve of the majors. From the independents’ point of view one of the key advantages of a digital download model of supply is that it removes the need to organise a considerable investment in physical stock of the music carrier (here the zero marginal cost of further digital copies is the key aspect of the technology that will advantage small and artisanal operators). Certainly, the marketing spend that can be mobilised by major companies will for some time continue to be more important than the purported possibilities of word-of-mouth marketing, but as most artists were never able to build global careers, it is far from clear that artists need to establish global superstar status to make a reasonable living from their talent and creativity.
Our social enjoyment, and social production, of music pre-dates the commodification strategies of the global music industry, and while some form of payment may continue (suggesting some continued form of commodity relationship) there is no reason to suppose that the forms of commodification which have benefited the industry in the past century will do so in the future. Music seems to have become much more of a disposable consumption item, and often has moved away from more ‘artistic’ models of long-term commitment to consumption (such models of aesthetic enjoyment were always partial), further facilitating digitisation and pay-per-play service models of music distribution. This undermines the socialisation into music consumption that the record companies, at least partly, have relied on in the past to maintain their income streams from major stars through communities of fans eager to buy each new release. When these practices of consumption collapse, older social practices of music appreciation have space to flourish
The return to some form of ‘minstrelsy’ (musicians travelling and playing live as a central part of their working style) may have the beneficial effect of returning the focus of some (but by no means all) music making to the direct (and often immediate) relationship between performer and audience. This shift is reflected in the reported 13% rise in concert attendance in 2006, with major venues seeing big jumps in revenue, prompting one music industry researcher to speculate that ‘consumers may be downloading the album for free and spending their pennies on the live ticket instead. The consumer clearly wants more of an “experience” for their buck’ (Jack Horner, quoted in Terazono 2007). The political economic organisation of society will continue to inform and shape the organisational possibilities for music (musicians need money to eat, like the rest of us), but equally cultural practices still allow music to often inhabit a space at least partly outside market relations. This will likely be partly an issue of scale: large events and festivals will remain commodified spectacles, and certainly it is clear that these major tours are increasingly part of the major companies array of profit making activities. Thus while at level of smaller-scale concerts there is an interesting avenue of renewing/maintaining audience-performer links, as the scale of events grows, so the more commodified forms of entertainment (re)assert themselves over this relationship. The end of the capitalist music industry is not nigh, but its field of operations may have reached the fullest extent possible, halting further expansion, and revealing the continued possibility for other social process of the consumption of music. The majors are not about to go away, but they are likely to find themselves in a much more volatile and difficult economic environment than they experienced in the past.
 This article was originally prepared for AHRC/ESRC Cultural Industries Seminar Network seminar, Royal Society, Edinburgh, in January 2007, and I am grateful for the comments and discussion at that event which helped me improve and refine the argument presented here. I would also like to especially thank David Hesmondhalgh whose extensive comments on that paper have helped me refine my argument considerably, and the anonymous reviewer for JARP who suggested a very helpful restructuring of the argument.
 For my extended analysis of the global music industry see May (2005), and see Barfe (2004), Chapple and Garofalo (1977) and Gronow and Saunio (1999) all of which cover the longer history of the industry in more detail, albeit with varying foci.
 other aspects of Marx’s analysis are also useful for analysis of the information age (May 2002), but here I only note the usefulness in regard to the role of property rights in the recorded music industry. An extended discussion of a Marxian analysis of the market in recorded music can be found in Toynbee (2000: chapter 1).
 I have discussed these issues in much more detail in May (2006)
 Elsewhere, I have discussed at length the impact of DRM on the social perception of markets for digital goods, see May (2007).
 It should also be stressed that the influence of the US music industry did not stop there; considerable lobbying pressure was brought to bear over specific aspects of the DMCA before it was finally passed by bother Houses of Congress (see for instance, Imfeld and Ekstrand 2005).
 Early indications are this combined model is how the movie industry will seek to roll out downloadable films: a combination of download and physical DVD purchases, although currently due to the much larger files involved, technically the movie industry lags the developments in the music industry (see Taylor 2006).
 see also ‘Sex Empires: Queens of Porn’ BBC2, 2 November 2003. This view is echoed by ex-Factory boss Tony Wilson (2003) who notes that Internet porn entrepreneurs have often been invited to talk to the annual ‘In the City’ conference and still the music industry has been slow to pick up on the methods that have allowed the Internet pornographers to develop a successful business model.
 Interestingly Steve Jobs of Apple has recently argued that due to interoperability issues (and its essential failure to halt ‘piracy’), the record companies should forego DRM protection for their products and embrace clean digital downloads (Jobs 2007).
 See Fred von Lohmann’s remarks in Fordham IPMELJ (2005: 1047)
 This explicitly is the strategy being adopted by EMI, see Edgecliffe-Johnson (2006b)
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