Deregulation of the music industry, the Greek case. How music composers and
groups affect the role of the music industry in the new technological era.
Giannara Eirini
Hellenic Broadcasting Corporation (ERT/ERA S.A)/ National and Kapodistrian
University of Athens, Department of Communication and Media Studies
Keywords: Music Industry, Internet, Traditional Media, New Media, Radio, Youth,
Social Isolation, Podcasting, Composers, Groups
Abstract
In the past few year, “online” consumers developed two very powerful habits for the
informative goods of – the first one is the “downloading” via Internet and the second is
the “free of charge” acquisition. These habits influence now the music, as a newer
informative good. The changes that resulted in the consuming behavior and at extension
in the economy of musical industry are powerful and direct. They are considered in
deed so much powerful what they tend to change the whole structure of music industry.
The new structure describes the deconstruction of old chain of production in the music
industry. Recording companies, as we knew them, tend to disappear. Also their role will
change in order to be adapted in the new structure of music industry or will shrink
considerably. Nowadays the fundamental channel for commercial promotion and
distribution of music is the Internet. The New internet model of dissemination of
information replaces the old enterprising model of distribution of goods.
Music
Music: perhaps the simplest and simultaneously the most complex concept.
Contradictory finding, but it reflects the truth and shows the key feature of the musical
art: its vague nature. Music is not clearly defined, is not limited, it is not tangible and is
not fully evaluated by objective criteria. Despite the fact that related to practical and
objective criteria, issues such as mastery, talent, creativity, synthetic ability and many
else besides, these are not the elements, which give in music its values and shape its
identity.
By contrast, music in some way is indentified with the audience. If music is not heard, it
cannot become part of human culture. If does not «travel» in time and space, it ceases to
be important and loses its value. Therefore the existence of the audience is an integral
part of music. In modern times, where new technologies and managerial lifestyle have
invaded in all aspects of life, the meaning of music has changed partly its nature.
1
In recent years, culture is moving around the backbone of the economy. Apart from the
value of music as one of the higher arts, appears as equally important and freight value,
the value of distribution, exploitation, promotion and general the consumer value. This
new aspect of music does not subtract anything from its actual value, but affects a large
extent and in many ways the music production. In essence creates a new relationship
between music and audience.
Music in the Information Age
In the course of the continuing development of the Internet as a major new medium
across the world (but particularly in the Western societies), music - related
communication has increasingly come to supply an important portion of the total
amount of information transmitted over the Net. Today, there are multitudes of well-
frequented newsgroups catering for musical tastes from the very broad to the very
specific, e-mail distributed mailing-lists for even more specialized topics, and a plethora
of Web sites created by fan and industry organizations.
Obviously music-related discourse is generally central (not only) to Western societies;
due to its very nature music is virtually inescapable, so that listeners are continually
confronted with it, and thus find themselves perpetually considering the extent of their
like or dislike towards even merely incidental music.
Music is central to popular culture, and intimately connected to the trends within it: as
Attali writes, “music runs parallel to human society, is structured like it, and changes
when it does. It…is caught up in the complexity and circularity of the movements of
history”. As we move into what is now usually called the “information age”, then music
as such and the music industry are likely to experience, but also foreshadow certain
fundamental changes in society related to that beginning age, and here particularly to
the first major medium of this new period of human history-the Internet.
The Net exhibits a number of characteristics which set it apart from the traditional
media. Centrally, it is the first mass-access medium where the public can actively and
publicly – in contrast to the mere one-to-one communication of media like the
telephone, for example-participate in large numbers.1 Is therefore has the potential to
give the “average” member of the public, so far virtually excluded from topic-setting
participation in the mainstream media, their say: thus “critical to the rhetoric
1 where access is available, and thus excluding for the moment underprivileged individuals and communities, as well as remote areas
2
surrounding the information highway is the promise of a renewed sense of community
and in many instances, new types and formations of community” (Jones 11).
In the context of modern society, music is an integral part of daily audio landscape
(soundscape). The technology has also lead to a major redefinition of relations between
artist/audience in the performance of music. From the underground dance music scenes,
where computer technology has redefined what it means to operate as a "musician"
(Negus, 1992) in the karaoke-bars, where the audience and the performers are
essentially exchangeable (Drew, in 1997 .. 2001. .2004), Technological development
has exerted great influence on the role and importance of music in everyday life2.
Frith has suggested that what makes music special is “the way in which it seems to
make possible a new kind of self-recognition [and] frees us from the everyday routines
and expectations that encumber our social identities” (1987:144). In their appropriation
and use of musical texts, individuals are also symbolically engage with the everyday,
the conventions of play, pleasure and protest associated with collective participation in
music, facilitating a symbolic negotiation of everyday life in contemporary social
settings3.
As DeNora observes: “Music is a device or resource to which people turn in order to regulate
themselves as aesthetic agents, as feeling, thinking and acting beings in their day-to-day lives”
(2002: 62).
Digital Distribution of Music
Since 1999, the Internet has drastically altered the production, distribution, and
consumption of music (Molteni & Ordanini, 2003). Digital music distribution via
unauthorized consumer peer-to-peer (P2P) file trading has become one of the most
popular Internet activities throughout the world via the renegade pioneer Napster and
now current unauthorized4 organizations such as the popular Kazaa.
From 1999 to 2002, annual global music sales declined by about $2 billion, which was
attributed to unauthorized online P2P file trading, offline piracy (e.g., production and
sales of counterfeit CDs), a poor economy, and shifts in purchase priorities of young
2 The predominant use of music in advertising and the rise of retro market during the last twenty years has also glimpse the enlargement of the relationship between music and lifestyle. Like fashion, so the music now used effectively to articulate an ever more diverse range of lifestyles in the modern society. 3 This point is reinforced by Grossberg who argues that an understanding of music “requires asking what it gives to its fans, how it empowers them and how they empower it. What possibilities does it enable them to appropriate in their everyday lives?” (1986: 52). Although Grossberg is concerned here primarly with rock music and youth culture, his observations can be related to the role of music in everyday life more generally.4 The term unauthorized refers to the fact that the music currently traded on P2P networks is not licensed by record labels and copyright holders, and under the law throughout the world, is illegal.
3
consumers from music to DVDs and video games (Strauss, 2003). Darwin’s survival of
the fittest and Levitt’s marketing myopia indicate the power of new technologies to
disrupt existing business models to adapt or become obsolete. Two major factors have
contributed to this imperative: technology and consumer dissatisfaction with the
traditional business model (Freedman, 2003) .5.
As a business model define «the method by which a company builds and manages its
resources in order to offer its customers the best value (products and / or services) from
its competitors in order to increase the economic benefits» (Afuah & Tucci, 2003, p.4).
The multiple manifestations of the market, the development of the scope of trade, the
types of products and services provided, but the specific features and continuous
product development and the needs of consumers leading to the creation of different
business models. Hence the firms adjust their business model depending on the type of
market they face, products and services that will promote and particularly the
relationship that either have developed or wish to have with customers and consumers.
The classic business model in the music industry involves the mass production and
distribution of material goods (Hughes & Lang, 2003). The model refers to the record
companies that manufacture industrial product (primarily CDs-optical discs) and
distributed by Music Stores and shops on the music, club music (direct mail clubs),
online retailers (online e-tailers), as and musicians who sell their works in concerts. The
classic business model reflects the history of the music industry since the early 20th
century until the beginning of the 21st century. (Hull, 1997; Rivkin & Meier, 2002).
5 Past surveys have examined the response of major record companies to the phenomenon of music piracy and illegal trafficking in music over the network (e.g. through litigation created and developed technologies for digital protection of the right of authors Freedman, 2003). Other investigations have focused on economic and social impact of the use of P2P systems and the shift of power from record companies to independent artists and consumers (Hughes & Lang, 2003)
4
Deconstruction of the New Economy
As Evans and Wurster (2000) mention deconstruction is the dismantling and
reformulation of traditional business structures6. When the trade-off between richness
and reach is blown up, there is no longer a need for the components of these business
structures to be integrated. The new economics of information blows all these structures
to bits. The pieces will then recombine into new business structures, based on the
separate economics of information and things.
Many researchers originally thought that the Internet could be a powerful tool for the
democratization of communication in general and artistic communication in particular.
The optimism expressed by the «case of the electronic market» and the «case of
disintermediation».
According to the so-called «case of the electronic market» (Malone, Yates and Benjamin
1987), the networked computers will create a new, transparent trade area, where buyers
and sellers will meet in minimum time and with minimal cost7.
The case of the electronic market-if confirmed-is important for the music- sound
recordings industry, taking into account some of the features with one hand only 10% of
generating revenue, enough to cover losses from the remaining 90% and there are
profits and huge costs required to promote the product on the market.
Therefore, the music industry could reduce costs, eliminating or at least drastically
reducing storage, transport and distribution of «natural product», as the CD.
From the perspective of authors, some researchers - such as Shapiro (1999)-considered
that the formation of this new market will contribute to further democratization of
artistic communication.8
Today, it is possible to create quality music productions with professional standards,
using only digital technology for the control and management of sound. Large
orchestras, or separate areas for rehearsals are no longer required. There is no need even
for musical instruments with the «traditional» sense. Any creation can then be put into
6 It results from two forces: the separation of the economics of information from the economics of things, and the blowup (within the economics of information) of the trade-off between richness and reach. Traditional business structures include value chains, supply chains, organizations and consumer franchises.7 The producers will reduce their overhead costs and eliminate traditional stages of distribution and consumers will benefit from unlimited choice and the cheap prices. According to Kretschmer, Klimis and Wallis, this case is consistent with the theory «on frictionless capitalism». 8 «The visual artists make virtual galleries, which expose their works. The Cartoonists have their cartoons on many sites simultaneously, instead of newspapers. The musicians have their compositions in cyberspace for the public hearing ... digital creators may collide with the Disney world, creating a completely open market with cheaper distribution ... » (Shapiro, 1999)
5
circulation in the world cyber market, either directly from the manufacturer or by a
single intermediary. For several years, businesses have emerged musical sound
recordings, which operate exclusively via the Internet. Thus, even where the parties are
unable to handle the tools required to publish their works on the Internet, may delegate
this process in such enterprises, which require an even rate, if there is sales.
It, therefore, the well-founded view that the Internet-combined with advanced
technology music-production will contribute decisively to the disintermediation of
artistic communication, making unnecessary several of the major mechanisms of the
cultural industry and intermediate stages inserted between the musicians and audiences.
The new business model involves the provision of legitimate music distribution services
digitally. By 2008, according to Forrester, a percentage that is expected to be reach 33%
of the sales will be music from legitimate online «download» and that sales of CDs will
fall by 30% from the peak in 1999 ( Needham, 2003).
The provision authorized online music services is part of the primary Web business
model, which refers to digital products and digital distribution and often creates
strategic alliances with Internet service providers (Bambury, 1998). The first company
to provide legitimate music content distribution services on the Internet appeared in
1995, but none of the previous or later efforts to provide services did not appear to give
(Rivkin and Meier, 2002) 9.
Music Industry and Internet Market: The Greek Case
Greece is among the countries which have been slow to gain on technology
infrastructure and advanced information systems. The dominance of the Internet in
everyday life and in the professional field of citizenship is a matter of recent years. The
proliferation of personal computers and provide faster and more stable connections were
the causes, which contributed to the spread of Internet in Greece. Alongside the state
planning and initiatives are always crucial for the development of the country and in this
area.9 In May 2004, Napster 2.0 version was introduced in the European market with the British edition of next month and the iTunes of Apple opened up its platform in Europe, particularly Great Britain, Germany and France («iTunes Tops", 2004 ; Twist, 2004). In 2004, competition has increased with more than 10 online distributions of music files, which operated platform in Windows (Legon, 2004). Nevertheless, in accordance with the existing situation, the legal «download» music files is considered a drop in the ocean of the Internet and music compared to the mass acceptance and use of exchange files through unauthorized and therefore illegal music distribution services. When in April 2003, the company Apple presented its new iTunes service had made the first major success for this business model. Within the first six months of operation of the service purchased for «download» more than 14 million song titles. In July 2004, iTunes reached 100 million «download» ( "iTunes Tops", 2004).In the European market there are more than 30 legal online services that offer music files or method of payment per «download» (pay per download), either through subscription (IFPI, 2004).
6
During the period 2002-2005 the program of the Ministry of Economy and Finance
under the title «Information Society» and more specifically the Greek working group on
broadband, has cooperated with relevant European groups, to ensure the financial
market of the country10. As such, it and similar efforts have given a boost to adapt to
modern Greece online reality. Despite the positive results Greece has some way to go
yet. The experts talk of «Internet gap» in comparison with other European countries,
including Greece is (in 2007) in the last position in the use of broadband (large band)
internet with just 7%, dramatically small compared to the average Europe (42%).
However, the increase in Greek households with access to the Internet though small,
reflects the forthcoming change.
Despite the delay of Greece to acquire the appropriate technology and computer gear,
the imposition of the power of the Internet became evident outset. Many areas of
professional, but also the personal life of Greeks was influenced by the Internet and
companies base their business plans more and more to it. So is particularly interesting
study of business models trafficking and distribution of music online. The most part this
is simply conventional type business models. But there are a number of new studies and
research on business models, which have to offer something different.
Frequently encountered models of the type of online shops (e-shops11), or as existing
businesses that operate via the Internet, either as a pure Internet e-business. And often
for international companies, which are operating in Greece12. In most of these e-shops
you can choose from a variety of products related to music, as musical instruments,
sound systems, professional sound equipment, CDs, DVDs, books, etc. That does not
mean that there is not and what specialized online stores, as the buyer can choose from
specific types of products. In general the above electronic stores follow the imperatives
of the era of access. In terms of content can be described as fully updated with extensive
uses interactive and personalized user interface.
Another notable reference example is Madshop13, owned by Mad TV14. In this e-shop
the user has the option to buy music CDs and other promotional items with the logo of
the channel. It is a hybrid type of advertising and business model.
10 “Broadband Access”, Consultation on the Content and Services of broadband networks in Greece, Business Program “Information Society”, 200311 For example, Musica.gr, ArtSound, Compact Disk Club, CDStore, MusicStore etc.12 For example, Compact Disk Club, Music Store etc.13 http :// www . mad . tv / shop 14 Popular music channel in Greek television. Lately Mad TV bought the broadcast rights of MTV for the Greek district.
7
On the other hand is now growing the creation of Greek Internet radio. Most of these
are Web pages, through which mainly conventional radio stations transmit their
program. 15
But the last two years in Greece have made their appearance and their purely online
radios (web radios) 16. The online radios are on the merits and new business model
differs radically from conventional radio station. Users have access to various
interactive services, while offering them the choice to shape and influence to a large
extent the music program. In some of these listeners create and upload their own
program17. Also frequent is the phenomenon of pre-recorded broadcasts, as well as the
«music libraries» from which everyone can choose tracks.
In general, online radio in Greece becomes highly competitive, following the evolution
of technology and acquiring a growing audience. Attribute the proliferation of web
radios is that very often created specialized radios, which rely on a very specific kind of
music.18
The landscape or the “soundscape” of the Greek online business models related to the
overall management of music on the Internet is still relatively blurred. But as shown by
what has been said already, the power of such business strategies has been recognized
and trying to «embrace» as many sectors as possible. More and more artists and groups
turn their interest in smart business moves via the Internet. It is noteworthy the fact that
most of them have a personal website on the Internet, through which they advertise,
promote and feature their music. Also it is interesting that this move is done not only by
young people, new artists, but also from older and well established artists.
The attempt to find a successful business model for the protection and management of
copyrighted digital content and is now part of the Greek reality. In this direction are
moving in recent years many researchers trying to identify a very strong formula
business and communications strategies in the modern technological environment.
Several of the scholars refer to a model designed to protect copyrighted digital works,
15 Such as: Nitro Radio (http://www.nitroradio.gr), Orange Radio (http://www.orange932.gr), Antenna Radio (http://radioantenna.gr, Second Program 103,7 (http://www.deytero.gr) etc.16 Όπως το Radiobubble (http://ww.radiobubble.gr) , το Grassagoogoo (http://www.grassagoogoo.gr), το Ραδιο Κύκλος (http://www.radiokyklos.gr), το Active Radio (http://www.activeradio.gr) etc.17 For example to Mindradio (http://www.mindradio.gr )18 For example radios, which rely on Greek folk music such as Epirus Music (http://www.epirusmusic.gr), which promotes the music of Epirus.
8
the main characteristics of which are expected to be flexibility and the partial project
management and the detailed design19.
This model refers mainly to projects and works of the Greek cultural heritage and not
the music industry. Therefore this can be an indicator of the extent that business models
have taken place into the new technological environment in Greece.
Another model, which could well be applied on the Internet distribution and
management of music, either through commercial Web (e-shops), or through other
online music sites dissipating, is that of Creative Commons licenses20.
This system proposed by the Creative Commons licenses is not the overthrow and
abolition of intellectual property, but the redefinition of the rules and creating a new
balance based on the principles of the Internet.21
The free adaptation and transformation makes the content accessible to the public the
contractual terms the same authors choose, with the ultimate objective of creating a
public space digital goods with which they may produce other projects. The Creative
Commons licenses no change in the institutional framework for the protection of
intellectual property. The principles of Creative Commons licenses leading to the
coexistence of two parallel licensing or categories of use: the licenses are based on
stable intellectual property rules, and licenses based on the rules of Creative Commons
and relate mainly to the use of works in digital form.
Unfortunately, artists are not so familiarized with these kinds of licenses hesitating to
leave the relative safety of conventional contracts. Especially, when this situation is
related with the refund of intellectual property rights. A very important sector of the
music production and distribution, which in Greece is governed by a monopolistic logic
of a single body of intellectual property management. Recently, however, more and
more known artists and groups have incorporate Creative Commons licenses in their
musical material disseminated via the Internet. The development of the Internet is a
reality and the changes it brings expanded and revised. If Greece will succeed in its
effort to follow the international pace of the Internet is an open question. The truth is
19 Tsolis, D., “The role of business models in the light of Intellectual Property”, High Performance Information Systems Laboratory, Patras University.20 From 13 October 2007 Greece was added to the countries so far have adapted the Creative Commons licenses under their domestic law to protect intellectual property.21 This system proposed by the Creative Commons licenses is not the overthrow and abolition of intellectual property, but the redefinition of the rules and creating a new balance based on the principles of the Internet. The authority is governed by the logic of Economy prize, which could be described more transactions on the Internet.
9
that Greece has entered the age of access and has been affected by it, living at the same
time all the controversial implications of this act.
Conclusions
With the emergence of peer to peer networks (P2P) has contributed greatly to the so-
called adjustment of the business model. A change that forced a readjustment and the
existing international law and intellectual property rights. And here are the changes that
had occurred but also the legal adjustments and revisions made, «rise» plethora of
concerns. Freedom or restrictions? Participation or passivity? May be strengthening and
promotion of music in society without the required freedom of movement of its creators
and supporters? The answer is of course not.
New market conditions and sales, new ways of communication, new ways of
distributing music and new ways of listening, and finding music collection are some of
the results that have come to internet business models. What is remarkable in this case is
the way in which all these were entered in everyday life as essential elements. Perhaps it
could be considered that they meet the basic requirements of modern times:
convenience, speed, personality, access to information. Therefore reflect the services
offered via the Internet business models the values of modern Western society? And if
so, how this combined effect of personalized social person with the concept of common
heritage and common ownership of intellectual creations, which captures more and
more? This is contradictory issues, but successfully combined several times from the
online business models.
Taking this as a starting point of a sociological approach to the phenomenon of the
Internet is very easy to give satisfactory answers to the questions raised in this paper. A
widespread view on the identity and function of the Internet is «the ideal vision of the
Internet as a place of public debate and democratic communication» (Atton, 2004).
However, technological and economic aspects and the many other roles of the Internet
in everyday life help to understand how Internet is more than a medium of
communication. Mainly this can be seen as an alternative medium of communication
(Atton, 2004). As such does not exist just to facilitate communication between people
but also serve as a valuable tool for social and political guidance during the era of
globalization. The immediacy which characterizes Internet as a medium of facilitates its
role in shaping the identity of users / consumers.
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The faith of «belonging» in an online community restores and strengthens the sense of
identity. Through this faith is emerging a new idea for culture and civilization. The idea
of the common cultural heritage and participation of all cultural goods are more
powerful than ever.
The new Internet business models of music management adopt this dipole, which
combines the creative action of the author / user / listener / consumer with a sense of
cultural heritage in fact it is a shift that has been done primarily by the law, «intellectual
property has come to consider the symbolic forms of art as property» (Toynbee, 2002).
It is also the fact that copyright laws distinct to each project the idea of expression. Thus
the same and can be used repeatedly modified and a different way to other copyright
works. The spread and availability of music, image, sound and all creations are free via
the Internet and is not considered necessary to have intellectual keeper of the project.
However, the leeway offered in people resulted in a commercial property and
perception of art, collected, is available, copied and exchanged on the Internet. A
project «breaks» into smaller pieces exploitation and utilization of any one of which is
the corresponding «owner» and administrator. So the subject is active and affects the
fate of all creations, but also for society as a whole comes into contact with the so-called
cultural heritage, which now is undoubtedly part of the common property.
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