Reflections on a Changing Music Industry
As the hearing began in the West Coast of the United States, I calmly sat at home on the East Coast listening to the ironically named ‘And Justice For All’ album from one of my favorite heavy metal bands of all time, METALLICA.
Interestingly enough, at the time my friends and I were astute enough to understand how peer to peer (P2P) file sharing worked and we were daisy chaining our desktop computers together to reduce bandwidth for the downloads in order to gather as many songs as possible. Why is this relevant? To summarise, Metallica’s drummer, Lars Ulrich, accused Napster of copyright infringement for allowing the P2P (peer-to-peer) file sharing network Napster to upload an entire catalogue of music that did not belong to them.
Much like today’s accusations that social media firms like Facebook are responsible for the news content that flows through it’s servers, Napster was accused of failing in its responsibility as a file distribution platform (enjoy Martin Sorrell’s discussion of the social media content regulation debate in his exclusive Money Maze Podcast interview here)
A present day comparison of the P2P model would be buying a hit single from your favorite artist and then sharing this song with your friends by allowing them to download it from you without having to pay for the song.
This created the dichotomy of the file sharing phenomenon, which, when done correctly, meant a song could go viral overnight. Essentially, the increased free music supply inevitably boosted demand in the paid end of the market (although this was clearly not a profitable marketing model for the record companies and publishers!).
As Napster grew to 80 million users, the lack of control over the copyrighted material would inevitably become an issue. Record labels, artists and even the Recording Industry Association of America voiced their concerns, which led to the lawsuit in California. This culminated in the shutdown of Napster’s network in 2001.
For a lot of people at the time it signified the end of a free society; we rebelled as kids with the idea that the man is out to get us, and denying us free music merely acted as confirmation of this. Common themes touched on in certain tracks only acted to legitimise our rebellious tendencies. It was like Woodstock ‘69 all over again.
Looking to learn more about the current state and direction of the music industry. Enjoy our latest episode with Merck Mercuriadis below. Merck is the Founder & CEO of Hipgnosis Songs Fund Ltd, a FTSE 250 firm which has turned music catalogues into an exciting new asset class #PlayMeThatInvestment
Today we turn to music as an investment theme, and our guest has worked with the greats, from Elton John to Beyonce, and has been in the front row of the music business for nearly 40 years.
The court case however had little impact on the internet’s impact on the business. Digital evolution created an entire industry from where peer-to-peer sharing would be a norm. Fast forward 20 years and now we have Spotify, Apple Music, YouTube, Soundcloud, Mixcloud, and the list goes on.
The way digital currency will change our relationship with money in the next 5 years is the same way the digital evolution of music has forever changed how we experience music as a whole. The rise of streaming service is a benefactor to this and this platform will no longer be the same.
The age of analog music is behind us and a new age of binary 1s and 0s is here to stay for a very long time, at least until the next phase of human evolution pushes it to another format.
I for one, as a music lover, can’t wait to see what the next stage is.
Carlos Delgado is a Money Maze Podcast Brand Ambassador. He fell into finance by chance and grew to love it the more he worked in it. He currently works in operations at a major international firm doing a variety of oversight audit work.
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