April 28th 2003 was the launch date of a new legal service to access digital music. iTunes was available in the United States of America and the cost per track was just less than a dollar (still the same 10 years on despite inflation). Launching in Europe, including the United Kingdom, just over a year later in 2004 at 79p per track in the UK or just less than one Euro in the Eurozone. Many welcomed this new service, most record companies had been slow to react to the opportunities for revenue that the internet could provide as they were mostly engaged in trying to stop file sharing. The iTunes software allowed the consumer to easily access music and use it on the various players they might own and agreements were in place for the recording owners to be reimbursed.
Ten years of development later and new methods for acquiring the music are available. Streaming is growing as an alternative to downloading with advantages to the consumer of being generally cheaper and available from a number of sources. Accessibility to millions of individual tracks has become more convenient for the user but how well are the creators, the composers and performers, being rewarded by the digital distribution systems?
The general consensus is that the digital distributers keep around 30% of the fee and the rest is divided between the various copyright owners (depending on the agreements that have been made for the recording, composition and performance). There may be other services that take a percentage as well. Many of the download and streaming companies prefer to accept music through intermediaries, the distributor or aggregator, another percentage or per track/album fee to account for.
In the most recent reports from the International Federation of the Phonographic Industry (IFPI) and the British Phonographic Industry (BPI) the messages are very similar. Music for the ‘single’ market is nearly entirely downloaded and, after the peaks between 1994 and 2000 when over one billion units were sold each year, album sales are declining. The decline was quite marked from 2000 to 2004 with the downward trend now slowing down and this takes into account the total market, including both download and physical transactions.
The IFPI and BPI market analysis works well with old technology when there is a product to send, physically or digitally, but the streaming concepts do not integrate well into this evaluation. Some commentators are concerned for iTunes and Apple as their share of the market has started to diminish and new methods of listening are beginning to achieve a significant share of the music market.
My concern is with the creative artist, the composer and performer, and will they be able to survive with a diminishing return on each work that is used online. The figures from the Office for National Statistics in the United Kingdom show the rate of inflation has gradually risen from around 1.3% per year in 2003 to over 4.8% in 2011 (apart from 2009 that had a 1% fall) yet the price of a download has not changed during that period. The streaming fee for the use of a work is much less than those advertised by iTunes and other online retailers are trying to take market share from Apple by offering a cheaper price. At what point does it become economic? How many streams make a download, how many downloads does a track need to recover the costs of production and how many years will it take for a music investor to recoup their money?
With the changing of approaches from consumers in their listening to and accessing of music, is it now the time for the creative artist to break with the traditional view of searching for a recording contract and search for an online technology company partnership instead? Is there scope for regional music co-operatives that can work for their local following with interactive and interesting approaches to the artist – fan relationship?
Many ideas this week for the composer, the money and equipment needed for recording is becoming less and less. It is just the final part of getting the music to the fan/listener/consumer/customer that is still evolving and most of this is happening without much thought for the creators of the future.