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How the Internet has Changed the Music Industry - PowerPoint PPT Presentation

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How the Internet has Changed the Music Industry Bob Gretchen Ryan Gawlas Susan Wright Music Industry Analysis The Internet Music Piracy iPods and iTunes Falling CD Sales Who makes money from what? Legal Battles Napster Mainstream Music Progression

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How the Internet

has Changed

the Music




Ryan Gawlas

Susan Wright

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Music Industry Analysis

  • The Internet

    • Music Piracy

    • iPods and iTunes

  • Falling CD Sales

    • Who makes money from what?

  • Legal Battles

    • Napster

  • Mainstream Music Progression

  • “Making It” Through the Internet

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Why Artists are Avoiding the Record Labels…

  • Fact: 90% of records released by major recording labels fail to make a profit.

  • Suggested Retail of a CD: $16.98

    • Where does the money go?

      • Packaging & Distribution: 25% = $4.25

      • Artists: 10% of Remaining $12.73 = $1.27

      • Record Company: approx. $10.00 per CD

  • $17.56 Million songs were purchased and downloaded off the Internet in January, 2006 alone, totaling 150% growth for the year.

  • Album sales fell in 2004 from 666.7 million to 618.9 million,

    a 7.2% decrease; sales

    declined another

    8% in 2005.

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    Clap Your Hands Say Yeah

    • Brooklyn-Based Band

    • Refused Main-Stream Outlets to Gain Popularity

    • Played weekly shows at “Pianos” in Manhattan to attract attention.

    • Distributed CD’s by mail from manager’s apartment, selling approximately 45,000 copies.

    • Among various recognitions, Rolling Stone Magazine voted CYHSY as the “Hot New Band” for 2006.

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    The Boys from Minneapolis, Minnesota

    • Members

      • Josh Grier (Tapes 1): Guitar, Vocals

      • Jeremy Hanson (Tapes 2): Drums

      • Matt Kretzman (‘n):Keyboards, multi-instruments

      • Erik Applewick (n’): Bass Guitar

    • Active since 2003

    • Genre: Indie Rock

    • Style ranges from fast-paced polka to blues influenced songs

    • Labels: Ibid Records, XL Recordings

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    Blowing up via the Blogosphere

    Gorilla vs. Bear

    Music For Robots

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    • Started by Ryan Schreiber in 1995

    • Daily reviews, interviews, and music news

    • Audience of more that 170,000 per day

    • More than 1.3 million unique readers a month

    • Music Reviews use two different rating systems

      • Individual track ratings out of 5 stars

      • Album reviews out of 10.0

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    Chain Reaction

    • Pitchfork Music Festival

    • South by Southwest Music Festival

    • Rolling Stone and Spin Magazine

    • XL Records

    • David Letterman

    • Nissan Commercial

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    Rag’s To Riche’s in Under 8 MonthsThank you Technology!

    • Just finished a nearly sold out tour in the United States

    • Have sold out show’s lined up for the UK in the near future

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    OK Go:Creating Fans Through Youtube

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    OK Go

    Chicago based Indie Rock band formed in the fall of 1998

    Videos on Youtube sparked huge popularity!

    Produced low budget video

    “A Million Ways”: Band dancing in their backyard

    "Here It Goes Again“: Band dancing on treadmills; it became so popular that the band performed at the MTV Music Awards

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    Arctic Monkeys:Gaining Popularity Through the Internet

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    Arctic Monkeys

    • Indie rock/post-punk revival band from Sheffield, England. Formed in 2002.

    • Used a “Viral Marketing” campaign  gave away CD’s at shows (for free) and fans passed the songs along the internet, creating huge buzz.

    • The band attributes their success through fan-made demo tapes and online file-sharing. This created fans who knew the music before it had even been released.

    • Media commentators see the band as leading the way to which new bands are promoted and marketed.

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    The Future of the Music Industry

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    Artist-Run Label

    • BNL’s “Artist-Run Label” Desperation Records

    • Barenaked Ladies (BNL) grossed $1 million off intellectual property sales

      • -Physical CD’s -USB flash drives

      • -Digital Albums -Ring Tones

      • -Deluxe Editions -Multi-tracks for remixing

      • -Streams

      • -Licenses for Media

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    Artist-Run Label

    • The percentage the band receives is much higher

    • No Record Company = No Middle Man

      “The artist-run model is the future. If we can break bands using this model,

      the industry will be forever changed.”

      -Terry McBride, BNL Manager and CEO of the Nettwerk Music Group

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    • Jessica Simpson is selling 534 distinct versions of her song “A Public Affair.

    • Model Tyra Banks recorded approximately 500 different names for a new promotion for the TV show “America’s Next Top Model.”

    • VairTalk coordinated similar campaign for Samuel L. Jackson and his movie, “Snakes on a Plane.”


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    Acquiring Music


    • File-sharing programs such as Limewire, Unlimited DownloadCenter, K Lite, etc.

    • Users share files, legality still in question


      -Wide variety of music -Little Technical Support

      -FREE -No Tutorials

      -FREE -Very Limited anti-virus and

      -FREE anti-adaware protection

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    “Because no one knows exactly what the RIAA will do next, or who they will sue next, the file sharing tips offered below do not guarantee safe file sharing and do not guarantee becoming a target of the Recording Industry yourself someday.”

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    Acquiring Music

    Legal Downloading Sites

    • 35% of music consumers are downloading legally via the internet

    • Real Rhapsody, Napster, Emusic, Music Match, iTunes

    • Offer music that the sites have LICENSES for


      -No legal questions -$$$$$$$$$$

      -Virus-free Downloading -Limited Selection

      -Technical support -“song format” issues


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    Aquiring Music

    • Zune

      • promoting more “independent” rockers in association with their product and music service. Music is not compatible with Ipod.

    • Urge

      • Microsoft’s bid to fight Apple’s Itunes. Music is not compatible with Ipod.

    • Ruckus

      • Offered free through the University of Delaware. Music is not compatible with Ipod

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    • Music in multiple formats

    • Reluctance to pay for music

    • Licensing fees

    • Personalization


      • Internet has lead to a more informed consumer, decreased power of the middle man (i.e. record companies)

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