Positive Impacts of Digital File Sharing - Article Example

Positive Impacts of Digital File Sharing Introduction Technology and creativity have been the catalyst throughout development of music industry. In the past ten years there has been permeation of technology in the music industry, encoding music into CDs, DVDs, and laser discs. These technological improvements have become enormously popular in the music industry due to their portability and quality. However, the most significant boost to the music industry in the 21st century is the recent development of digital file sharing technology. With the rapid advancement and popularization of internet, digital file sharing technology is now permeating into people’s daily life. Having noticed this trend, musicians and music retailers are now focusing on the online market leading to large changes in music culture. The virtual market has great potential: Both the accessibility and diversity of music has been greatly improved. Although online file sharing community has seemingly led to a decline in the sales of albums and the quick emergence of piracy, relative studies indicate that it dose have positive influence on the economy of music industry as a whole, generating more revenue for music producers. While technology gives the go ahead to distribute music all over the world with a touch of a button and makes it possible for artists to advertise on an unmatched scale it also permits music piracy anywhere, anytime. This is the unauthorized replication of goods protected under intellectual property law. This was the case when music technological advancement started back in the 1920s. Artists only got paid for sales of music purchased by radio stations but not the number of times their music got air play. Then followed the invention of the cassette tape, which ahd very poor sound quality. This was followed by CDs that were largely pirated with and artists got no revenue from it. The invention of file sharing and internet in the music industry increased the piracy rates, but the positive impacts that these digital platforms have brought are more than any piracy losses. Positive impacts To the economy Boorstin S. Eric, a lawyer graduated from Princeton University, once conducted a study about the impact of the emerging online music retail industry on total disc sales. He combined data on population characteristics with Nielson SoundScan data onCD sales for 99 metropolitan areas in the years 1998, 2000, and 2001: The total sales in music during the year 2002 were US $32.2 billion; 41% in North America, 18.6% in Asia, 34.5% in Europe. Japan had more than 80% of the total sales in Asia, leaving Latin America and the rest of Asia and Africa to have 3.1% and 2.7% respectively. Music sales are best in the top five markets; UK, US, France, Japan and Germany, which represents 76.5% of all global sales. The channels of music distributions have been changing and music stores are being kicked out as the sources of sales. They are being replaced by digital music transactions. The trend in online retailing has increased since 2001 from 5% on average. In 2003, the total sales of music downloads in the US was US $30 million, a 0.25% of total sales (Boorstin 44). Free download of music can to some extent harm the music creators and intermediaries since the consumers no longer buy it with higher prices (Liebowitz, 450). This negative effect in profits is however compensated by sampling; the consumers are more than willing to pay much more for the commodity simply because product features and buyers’tastes match has improved, this is held under product diversity and sufficient heterogeneity of the consumers’ taste for music. The Oberholzer and Strumpf multiproduct monopoly model explains that file sharing indicates a small fraction of album sales decline, but it has a positive effect on the total average album purchases. (Oberholzer and Strumpf 106) This has been further predicted by the worldwide download of moves, software, and video games which have made the responsible industries to have a continual growth since file sharing was invented (Martin and Patrick 909). Access to large amounts of music Another positive impact of digital music is that it allows music producers and artists to give consumers a wide range of song samples. Consumers have a variety of music styles and genres choices from their favorite musicians due to the digital community and the cutting edge technology. New technologies also offer a platform for consumers to discover new artists and songs through file sharing networks, social networks, streaming, podcasts and internet radio. They have new formats in which they can listen to music, and MP3 players in particular have increased the exposure that consumers have to music. A great tool for music exploration is online community since it is possible to get personal recommendations. A phenomenon of longtail is generated. This is a model that explains the exploitation of products that are difficult to find in physical stores (Alain and Waelbroeck n.p). These communities comprise of file sharing networks against which companies have gone to court and social networks like Face book and My Space. Thousands of people including semi professionals and amateurs connect to these sites regularly to create some buzz. This is a way of music promotion done by the artists and the consumers. For example, some artists like Radiohead have promoted their music albums online by passing their record companies. Not more than ten years ago, new releases were primarily done by the record labels. Additionally, retail stores have added an online store for their customers to assist in reading the reviews posted by other online users and receive personal recommendations. For example, Amazon has an offer for such a community space as well as a market place that helps to bring individuals and professionals together. Diversity According to Bounie, Eang and Waelbroeck(105), the best selling cultural products in these spaces are totally different from those selling in the physical stores. In digital marketplace for example, online, 30% of those that entered the top 100 monthly list had good sales offline. Furthermore, the online market demand was not concentrating on the top sellers and new releases because of the long and fatter tails. In the new music paradigm therefore, consumers are the largest winners in the music distribution. Key players in the music industry will do whatever is convenient to the consumers to deliver high quality music,some of them even offer the songs for free but in return they gain more benefits through the advertisements they make. For example, EverAd, which is an advertising company based in New York s currently testing an advertisement embedding system into free music that will be offered to the website’s visitors. It is designed in a way that a series of advertisements appear when the song is playing. Conclusion It is evident that the music industry is experiencing a change from a one size fit all products to various services and products that are designed to take care of all demand sectors in the music industry. Consumers are able to listen to free music on You Tube by paying a monthly stipend or by downloading the music at a standardized fee. Digital music versioning has led to increase in sales significantly; however there are challenges in this digitization. For example artists are required to be visible online to allow a successful promotion but this is lacking. The prices of digital music are also constrained by other competing formats, however to get the total profits from digital music, all these factors need to be put in a plat form so as the delivery of music is sophisticated. A great promise in the music industry is the chance data collected by large retailers of digital music will help to make predictions of the fickle demand and make it better somehow. Works Cited Alain, M and P Waelbroeck. "Music varietyand retail concentration." Proceedings of the 2006 Telecom Paris conference onthe economics. Paris, 2006. Boorstin, E. Music sales in the age of file sharing, senior thesis. London: Princeton, 2004. Bounie, D, B Eang and P Waelbroeck. "Les plateformes de vente en ligne."Revue économique, (2011): 101-112. Liebowitz, S. "Pitfalls in measuring the impact of file-sharing."Cesifo Economic Studies, (2005): 435-473. Martin, Peitz and Waelbroeck Patrick. "Why the Music Industry May Gain from Free Downloading—the Role of Sampling."International Journal of Industrial Organization, (2006): 907-913. Oberholzer, F and K Strumpf. The effect of file sharing on record sales: An empirical analysis. Mimeo: University of North Carolina, 2004. Read More