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Thanks to the Internet, you no longer have to rely on local radio stations to listen to music you like, and you don’t have to worry about albums being out of stock at the local record store. You have access to a much wider selection of music, and you can listen to radio stations that are programmed according to your tastes.

Besides benefiting consumers, the Digital Music Revolution also gives musicians more control over their music. Thanks to MP3 and the Internet, bands that don’t have contracts with a record company now have access to a worldwide distribution channel that offers them a much higher profit potential. With Internet distribution, much of the overhead disappears. In fact, Internet record labels typically offer royalties of 50%, compared to the 12%-15% typically offered by the major labels.

The economics of Internet music distribution are so compelling that even major artists are choosing to distribute their music through the Internet. Some bands are going a step further and setting up Web sites to sell music and merchandise directly to their fans. Even if only a small percentage of their fans are online, this approach can generate much greater profits because the costs are so low.

A key factor early in this revolution was the development of Winamp, a popular program for playing digital audio on PCs. Winamp was the first full-featured program for playing music in MP3 format. Winamp was developed by Justin Frankel in April 1997, shortly after he dropped out of the University of Utah. Winamp quickly surpassed other players in popularity because of its advanced features like equalizer presets and support for third party plug-ins and skins. In June 1999, Justin’s company, Nullsoft, was acquired by America Online (AOL) for approximately $80 million in stock—not bad for a 20-year-old.

The spark that made the revolution front-page news was the lawsuit filed by the RIAA (Recording Industry Association of America) and the AARC (Alliance of Artists and Recording Companies) to prevent Diamond Multimedia from selling its Rio portable MP3 player. Before the Rio, MP3 users were limited to listening to MP3 files on their computers. But the Rio provided a way to make MP3 portable and, therefore, more appealing to mainstream consumers. Suddenly, MP3 was a serious threat to the recording industry, which had previously not paid much attention to it.

The RIAA is concerned about MP3 because its small file size and lack of security measures make it easy for people to illegally reproduce and distribute copyrighted music. College students with fast Internet connections quickly found out that with MP3 they could download hundreds of songs in less time than it would take to make a trip to the local record store. This kind of piracy is difficult to prevent because the music is just digital bits, and not physical media like tapes and CDs. On the Internet, a single copy of a file can grow to thousands of copies in minutes.

The RIAA argued that the Rio was a digital recording device covered by the Audio Home Recording Act of 1992. A provision of this law requires consumer digital recording devices to incorporate the Serial Copy Management System (SCMS), to prevent the proliferation of multiple generations of digital copies. The RIAA also maintained that the Rio was used primarily to play pirated music downloaded from the Internet.

In June 1999, the U.S. Court of Appeals ruled unanimously in favor of Diamond Multimedia, accepting its argument that the Rio was a computer peripheral and not subject to the SCMS requirement. The court also ruled that the Doctrine of Fair Use (see Chapter 5) allows consumers to “space-shift” music by copying it to another device, similar to their right to “time-shift” video recordings. The right to time-shift was established in the case of Sony versus Universal City Studios in 1984 (464 U.S. 417), which concerned the sale of videocassette recorders in the United States.

Diamond Multimedia not only won the lawsuit; they also received massive amounts of free publicity, which helped increase the demand for the Rio to the point where they were producing more than 10,000 of them per week. The ruling in favor of Diamond Multimedia was also a victory for consumers and consumer electronics manufacturers. But the battle over consumer’s fair use rights is far from over, and will likely require further legislation.
Knowledge Is Power.......
Seek and Ye Shall Find!

The Digital Music Business

As becoming one of  few multimedia websites providing services to a diverse group of independent artists from all music genres (rap, R&B, gospel, Christian Rock, underground music, folk, bluegrass, and more).

 

There are other websites that offer segmented services to independent music artists. However, their scope of services and diversity of artists served are limited. FUNKHOPSTARZONLY ENT,LLC has devoted more than five years of research about how the overall marketplace currently serves independent artists and what is missing from this range of services. For example, the website www.indie.com only serves independent bands. Another website, www.myspace.com, caters mostly to a specific genre of music and category of artists. Also, www.schiphop.com represents underground rap artists in a specific geographic area. Also another major plan description that will be impletmented is rather than staffing entertainment business units around distinct properties, we will be freeing up resources to feed new areas of focus.We'll be investing in the development of next gen media platforms, applications and services, creating cool new opportunities for third-party publishers and media companies while also harnessing the power of social media and user-generated content.Which will bring in far more interest from this new era of music fans,which is in fact a very important milestone wtih the success of 1 billion music dowloads from apples itunes.

Amazon unleashed its MP3-based download store this week, one that includes content from labels Universal Music Group and EMI Music. The store integrates the downloads within larger artist search results, though users can also search for MP3s specifically.

Starbucks announced a major iTunes Store giveaway this week, part of a growing partnership with Apple. The month-long download giveaway starts next month, and lasts through early November.

Ford broadened its digital radio commitments considerably this week. The auto giant will offer the next-generation receivers as a dealer option within nearly all of its upcoming, 2008 models.

MUSIC BUSINESS STATISTICS

Here's some facts and figures for all you statistics buffs.

According to RIAA, the world music market is estimated at $40 billion. According to IFPI - it's $32 billion. One of them knows how to count. Probably. Both refer to 2005 - current figures are approximately the same.

Top 10: Global Music Markets

1. USA (37%)
2. Japan (12%)
3. UK (9%)
4. Germany (8%)
5. France (5%)
6. Canada (3%)
7. Spain (2%)
8. Italy (2%)
9. Australia (2%)
10. Netherlands (2%)

Note: The EU as a whole would take 2nd place with 32% of global market share.

Top 5: Record Company World Market Share (2005)

1. Universal Music Group (USA/France) - 25.5%
2. SonyBMG (Japan/Germany/USA) - 21.5%
3. EMI Group (UK) - 13.4%
4. Warner Music Group (USA) - 11.3%
5. All others (independents) - 28.4%

Top 5: Record Company World Market Share - USA (2005)

1. Universal Music Group (USA/France) - 31.71%
2. SonyBMG (Japan/Germany/USA) - 25.61%
3. Warner Music Group (USA) - 15.0%
4. EMI Group (UK) - 9.55%
5. All others (independents) - 18.13%

Top Music Genres (Worldwide) 2005

1. Pop (30.75%)
2. Hip-Hop (17.3%)
3. Adult Pop (13.23%)
4. Alternative Pop (11.38%)
5. R&B (9.84%)
6. Rock (6.87%)
7. Kids Pop (6.58%)
8. Country (2.60%)
9. Club & Dance (1.23%)
10. Latin (0.23%)

The Hottest Music Areas in the World (Production)

1. New York, USA (28.67%)
2. California, USA (22.86%)
3. London, UK (22.31%)
4. Berlin, Germany (8.56%)
5. Paris, France (5.11%)
6. Nashville, USA (1.97%)
7. Rural Germany (1.42%)
8. Texas, USA (1.40%)
9. Munich, Germany (1.39%)
10. Hamburg, Germany (1.07%)
11. Amsterdam, Netherlands (1.05%)
12. France, outside Paris (0.94%)
13. Austria (0.76%)
14. Cologne, Germany (0.69%)
15. Atlanta, USA (0.57%)
16. Virginia, USA (0.29%)
17. Sweden (0.23%)
18. Australia (0.17%)
19. Bucharest, Romania (0.17%)
20. Belgium (0.15%)

Top Music Producing Countries

1. USA (55.87%)
2. UK (22.15%)
3. Germany (13.16%)
4. France (6.07%)
5. Netherlands (1.05%)
6. Austria (0.76%)
7. Sweden (0.23%)
8. Australia (0.17%)
9. Romania (0.17%)
10. Belgium (0.15%)



After reviewing the content of these and other websites, FUNKHOPSTARZONLY ENT,LLC concluded that there are several untapped areas of the music industry: an ultimate venue serving all independent artists; an on-line retailer for music sales; a clearinghouse of information about the nuts and bolts of the music industry (publishing, production, contracts, company contacts, classified ads, etc.); easy access to national and international publicity and promotions; an exchange for real-time information (chat rooms, virtual listening parties and webcasts for artists) with continuously updated content; and a consistent and timely resource for industry professionals.


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The New Digital Music Revolution.

The Digital Music Revolution is already having a widespread impact on many industries. It will be years before the full effects are seen, but even at this early stage, many people are benefiting from opportunities created as the digital music industry takes shape. New business models are rapidly evolving and placing established businesses under increasing pressure.

A key reason why this revolution is moving so rapidly is the universal nature of music. Music plays an important role in our lives, affecting our moods and making us feel connected to the rest of the world. But finding music to suit our personal tastes requires a lot of time and effort. This is why we have record labels and radio stations: They act as filters for the music we hear and save us the trouble of sifting through thousands of songs every year.

The problem with this state of affairs is that most of what we listen to, and when we listen to it, is decided by the record labels and radio stations. Individual consumers have little say in this process other than their ability to vote with their wallet and the dial on their radio. One of the reasons why so many people make tapes is so they can listen to the kind of music they like, whenever they want to. Unfortunately, even with the latest equipment, recording tapes is a time-consuming and unforgiving process.

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