Supply and Demand of Online Music Streaming - Essay Example

Supply and Demand of Online Music Streaming Contents Contents 2 Answer Increase or decrease in demand 3 Answer 2: Increase or decrease in supply 4 Answer 3: Demand and supply equilibrium 6 References 8 Answer 1: Increase or decrease in demand Online music streaming is the enabling of online access to audio contents without the user being able to store the contents permanently on a computing device. This enables the users to gain access to the vast audio collections in different databases without having the need of any permanent transfer of data from and to a computing device. This process alleviates the needs for appropriation of content. The demand for online streaming has seen a multi fold increase in the recent few years. The market trends are indicative of the fact that the consumers of this industry have shown a high degree of preference towards this multi-platform facilitated mode of accessing content. Also, this mode of online streaming is much preferred over the illegal mods of accessing pirated versions of music because this is a legalized form of distribution. There are three main types of demands noted in the online streaming industry. The fans who prefer free audio show high relative elastic demand, the fans who are interested to pay a small amount of fees for streaming audio contents display a mild relative elastic demand in this industry and the fans who are interested to pay any amount for listening to their favourite audio contents account for the highly relative inelastic demand in the online streaming industry (Liebowitz, 2006). Not only the published contents but also electronic musical festivals which are difficult for every person to attend are seeing high popularity of online streaming, As the suppliers try to drive the prices of online streaming, this is also supported by the increasing demand of online streaming by different groups of fans. The market forces have shifted the demand curve towards a steeper trend because the changing landscapes of this industry and digital contents industry have made it favourable for online audio streaming (Krueger, 2005). Also, the increasing threat of content piracy to the considered industry has made the suppliers in this industry support the growth and popularity of online streaming of audio. The streaming of music festivals, rock concerts as well as live playing by musicians have seen an aggregate increase in demands over the recent years. The accessibility of these contents has also changed considerably in the last few years. The increasing trend of the musicians and singers posting their audios online for selective streaming has boosted the digital scopes of online tune contents. The producers and copyright holders of different audio contents have published these consents in the virtual world to ensure tapping in more audiences. This has also added to an increase in the demand of the online streaming backed by authentic supplies of sources of online audio as preferred over the non-legal and pirated versions of such contents. The high prices of the tickets to rock concerts and international music festivals as well as the change in the audio accessing trends of the global consumers have created a boost in the demands for online streaming in recent times (IFPI, 2012). Answer 2: Increase or decrease in supply The supply in online music streaming has increased considerably over the last few years. The most significant factor contributing to the growth of online content streaming is the interest of the suppliers to prevent the pirated versions of it becoming popular and finding widespread use. The anti-piracy campaigns by different authorities guiding the global entertainment industries have acted as a significant driver of the supplies of online media content because it is a legal form of distributing audio contents among the global audiences. According to the executives engaged in this profession, today this industry has become more of a service industry which is a major shift from the initial role of the industry as a commodity industry. Earlier, recorded versions of music were considered to be the most efficient source of revenue for this industry. However, in the present landscape of the industry, tours, live concerts and music festivals have assumed a greater role in revenue generation (Lanier, 2011). The online streaming forms an important part of revenue generation in this industry with more and more audiences preferring to use this mode as a favourable mode to access their favourite contents. Today, international tours and live performances are no more mere promotional tools. Instead these have emerged as mainstream operations in the global music industry through the online streaming options being opened up to the audiences. The streaming activities help to retain the authenticity of the contents and allows for selective distribution of the contents. This has led to the need of more supply of contents in the digital media. The supply of online contents have ensured a growth in the number of global audiences, has increased the accessibility of international music and has also helped the industry to offset the negative impacts of its greatest threat of music piracy (Choi, 2006). Social media sites like Facebook, video websites like YouTube and blogs have become major sources of online music streaming. For example, the international electronic music festival of Tomorrow land could be attended by only 185,000 people in 2012. But the event was streamed online by more than 16.9 million people across the globe. This was subsequently viewed more than 100 million times (Peitz and Valletti, 2012). The online video and music streaming is accessible and can be relived over a longer period of time by the fans and audiences. The suppliers are interested to increase the supply of the music sources for online streaming because this also ensures that a one time performance is re-watched and relived by the global audiences and it acts as continuous source of revenue for this industry (Becker and Ziegler, 2000). Answer 3: Demand and supply equilibrium (Source: Evans and Wurster, 2001) The changes in the demand and supply curve are likely to impact the overall market equilibrium. Normally this industry follows an oligopolistic nature in which there are major music brands which have captured more than 90% of the total industry. The major distributing firms like Sony, WEA, BMG and PolyGram are the main competitors of music distribution. Though the online streaming market is a free market, there are certain limitations in the industry perspectives which may lead to shortage of supply in the forthcoming industries (Anderson and Coate, 2005). The stringent controls over the copyrights and the competition from substitute products like distribution of unauthorized tune contents and pirating activities for the music contents may lead to certain constraints on the online streaming market by preventing the online streaming sources to act in the free market and by making it difficult for the online streaming activities to compete as major mainstream activities in this industry. When the companies operating in this business try to supply the online streaming of the concerts and music festivals online, and publish these contents in video websites like YouTube and social websites like Facebook, this could drive up the prices of the tickets for the musical events. The social media sites and the online video sites can be considered as substitutes to the live events (Sandvine, 2012). However, the supply of online streaming has made it possible for both the suppliers to make profits. This is because the supply of music events in both these mediums leads to a division created among the consumers relevant to price elasticity. The consumers with relatively inelastic demand tend to lose because the prices of the tickets become more, while the consumers who have relatively elastic demands i.e. those who are not willing to pay more for the tickets would gain because they would be able to access the music through online streaming without having to bear any expenses for the same. The suppliers would be able to have profits both from the sale of the tickets as well as from the online streaming of the music. Thus, these factors have boosted the increase in supply and demand of online music streaming in the current world. References Anderson, S. P. & Coate, S. 2005. Market Provision of Broadcasting: A Welfare Analysis. The Review of Economic Studies. Vol. 72(4). Becker, A. & Ziegler, M. 2000. A survival plan for the music industry- Napster and the consequences. Munich: Diebold Study. Choi, J. P. 2006. Broadcast competition and advertising with free entry: Subscription vs. Free-to-air. Information Economics and Policy. Vol. 18(1). Evans, P. & Wurster, T. 2001. Blown to bits-how the new economics of information strategy. Boston: Harvard Business School Press. IFPI. 2012. Digital Music Report: Expanding Choice, Going Global. [Pdf]. Available at: http://www.ifpi.org/content/library/DMR2012.pdf. [Accessed on 4 July 2014]. Krueger, A. B. 2005. The Economics of Real Superstars: The Market for Rock Concerts in the Material World. Journal of Labor Economics. Vol. 23(1). Lanier J. 2011. You are not a gadget. Westminster: Penguin Books Ltd. Liebowitz, S. J. 2006. File Sharing: Creative Destruction or Just Plain Destruction? Journal of Law and Economics. Vol. 49(1). Peitz, M. & Valletti, T. M. 2012. Content and Advertising in the Media: Pay-Tv versus Free-to-air. International Journal of Industrial Organization. Vol. 26(9). Sandvine, T. 2012. Global Internet Phenomena Spotlight. North America: Fixed Access. Read More