How has Web 2.0 changed the music industry and what can be done to prevent piracy in the future?

I have undertaken a research in order to find out the importance of technology and the impacts on the music industry. As the result, this would certainly helped me to understand that large finance is not required in order to achieve a good product that would create high demand. Even though, this essay had been done for the other part of the cource, however, it had helped to analyse the current situation in the music industry. It helped to further seek the potential of gaining awareness of  any product online, which in my case would be to create a website as part of the promotional package. 

Music futurist Gerd Leonard had stated, ‘’music will be utility like water, like electricity, because essentially right now only two out of ten people are buying the music that they are listening to, but nine and a half out of ten are interested in music; together with sex and with games, it’s the biggest on the Internet’’. Piracy is a key issue as it has a massive effect on the music industry as a whole. AS the result, not only the profit margins dramatically decrease, but also it has a massive effect on the future developments as the artists do not gain the finance for the future projects.

Scouting for Girls had states ‘’it’s difficult to invest money into the business, when the product is given away for free, which leads to decrease of creativity’’. Web 2.0 changed the music industry, by giving an opportunity to download music tracks on the world wide scale. This is they key issue as there is no central law to control the users from different countries. According to 2006 report by European (IFPI) and American (RIAA) researchers, forty songs are actually downloaders for every legal music download. That adds up to 20 billion songs illegally downloaded in 2005, compared to a legal market of 500 million tracks, resulting in a partly $1.1 billion loss in revenue. As the research had been undertaken in 2006, the number of illegal downloads increase and increase every year, as the result the politicians, especially in the Northern America, are in the process of establishing laws that would protect the industry and punish financially are user that would break the law.

Many economists, including Dan Glickmann, argues that ‘’imagine the impact on the coffee shop bottom line if one in forty coffee drinkers paid for their cappuccinos? ’However, this is the reality of the digital economy. It is why the recorded- music industry does not have a financial future which could be supported by John Kennedy’s statement ‘’sewing the fans is not correct, music industry needs to rethink the process how to attract the customers’’

Sixty-one per cent amongst the age group of 16-24, download music for free, however, they key goal for the politicians is to change the psychological approach of the ‘wired generation’ as they believe that downloading files is perfectly normal without having to think about the likely impacts on the industry. Digital piracy and illegal file- sharing from services like Bit Torrent, eDoneky, Limewire and Soulseek have become the central economic reality in the record business. It is why there are 25 per cent fewer music stores in America than there are in 2003. As the result, International Federation filled 8,00 new lawsuits against illegal downloaders in October 2006. However, piracy became a massive issue as different laws are present in different countries. For example, in Sweden, piracy is not banned, and the users argue ‘’ the laws would be changed for the Interest of Northern American industries but use decided the laws of the Internet’’.

As mentioned, one approach of the music industry would be through introduction of always as for example, in the example, in the UK, new laws being entered into the broadband limit, however, the other approach, would be for the music companies including Universal Music and EMI, adapt to the changes. Lawrence Lessid argues ‘’ the value of books is lost, as the information is given away for free, including in schools, this would happen to the music industry as well as there will be loss of value’’.

As the result, given that only one is forty digital songs are being paid for, digital music, like it or not, essentially free. For 98 per cent if todays ‘’consumers’’, music is freer than the electricity or water. And the recorded music business is being forced to comfort this defacto economic catastrophe head on. Universal Music, the largest, of the major labels, with millions of songs from artists as diverse as Eminem and Hank Williams, announced in September 2006 that it intended to freely distribute its catalogue on the Internet through a Web 2.0 service names Spiralfrog. A month earlier, EMI, another of the four labels, announced a similar deal with a Web 2.0 company called QTrax. Both services give out the music for free on the Internet in exchange for exposing the listener to advertising, which could be seen as an adaptation.

To conclude, due to massive change in technology, the music industry certainly had been changed in number of occasions. On one hand, traditional industry, including Universal Music and EMI, are loosing not only the demand but also the profit margins decrease. However, on the other hand, internet gave an opportunity for the users with limited liabilities to attract the audience.