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Introduction
The moment that changed the music business occurred when Shawn Fanning started working on Napster, once a famous file-sharing platform. Although distributed file networks existed on the Web, Napster focused on MP3 files combined with a relatively conventional interface. Accordingly, this enabled the service to reach 80 million registered users (Vonderau, 2019). The platform gained popularity because it contained unreleased and hard-to-find music, such as studio recordings and old songs. From many perspectives, Napster paved the way for todays streaming economy. Thus, it is essential to establish the evolution of the distribution and consumption of music from the mid-1990s to the present.
The Fight Against Piracy
The market started to form under the influence of Napster. Platforms with a similar method emerged, specifically Gnutella, Freenet, BearShare, Kazaa, LimeWire, AudioGalaxy, and Madster. It is essential to mention that each of these platforms has been undermined by copyright litigation. For example, the band Metallica has filed a copyright infringement lawsuit against Napster (Vonderau, 2019). The artists found a demo version of their song I Disappear on the site. The situation for Napster became more complicated when major record labels defended the musicians. They filed a suit against the site through the Recording Industry Association of America (RIAA). The company Napster failed in court and closed down in July 2001 (Vonderau, 2019). Apple CEO Steve Jobs was the one who contested traditional understanding. He questioned the value proposition of exchanging files for downloads.
It is significant to emphasize that piracy was not the catalyst for Napsters tremendous growth and influence on Jobs. Instead, the combination of simplicity and convenience was the determinant of chaos. Steve Jobs enlisted the aid of Jeff Bezos and Amazons famous patent to make sense of the mathematics of buying behavior. In September 2000, Apple became the first company to license Amazons 1-Click patent and trademark it for use in Apples e-commerce. This creation allowed Apple to store billing and shipping data, permitting customers to click once without details access. It was the key to solving the music industrys problem for Jobs (Vonderau, 2019). If the conversion was made easy and ownership simple, consumers would choose legal ways to listen to music.
The Recording Industry Progression
The music industry continued to increase, but there were still problems with legitimate listening and downloading files. In 2003, the iTunes music store surpassed its closest competitor, the legal version of Napster. iTunes was a precursor to 2005s Pandora and 2008s Spotify (Vonderau, 2019). When the director of Universal Music in Sweden first saw a demo of Spotify, he found that the service could be an avoidance of plundering. The music industry was losing billions of dollars, with more than $27 billion in the industrys revenues in 1999 and falling to $14 billion in 2008 (Vonderau, 2019). These circumstances convinced the entrepreneurs to involve the major record companies in their projects.
It is significant to remark that the development of the industry occurred when record companies were capable of negotiating with streaming services. Owners Universal, EMI Music, Sony (SNE), and Warner (WMG) transferred their music libraries to the Swedish startup. Spotify uses flexible pricing in 2018, with subscription prices ranging from $2.93 to $18.42, depending on the country (Vonderau, 2019). A family type of subscription was introduced in October 2014, and users can subscribe to it for a maximum of six people. The display of advertisements and functional restrictions in free access remained, but the monthly listening limit disappeared. In 2014, many artists accused Spotify of underpaying for listening to their music on the service (Vonderau, 2019). If a track did not become a sensation or arise on numerous playlists, artists revenue was considerably lower than their musics values in stocks.
In response to the claims, Spotify explained that it pays record companies for listening to songs, and how much of it the artist receives depends on the labels. Generally, musicians only get about 15 percent. Spotify has paid more than $11 billion to record labels since its launch, and the company realized that musicians were only gaining a small portion of that amount (Vonderau, 2019). To reverse the problem and settle the dispute with the artists, in October 2018, Spotify proposed a new way to work with musicians.
In this method, the organization suggests growing earnings from listening to songs and sharing the musics ownership with the artists themselves. It will also provide an opportunity to license their creativity and have exclusive rights to publish their music on Spotify and other streaming services. In the last ten years, Google Music, YouTube Music, Tidal, Deezer, Amazon Music, and Rhapsody have all emerged in the music streaming market (Vonderau, 2019). Thus, they offer paid subscriptions or partially paid use of their servers to users, which helps artists and record labels to generate income.
Conclusion
Therefore, Napster was the precursor of a market adjustment. The client had to buy a whole CD to hear two or three of the tunes they selected until this moment. Napster allowed ownership of individual tracks and, conversely, devalued sales of whole albums. In other words, between 2000 and 2015, the loss of physical sales eventually led to the industry becoming the one people know today.
Reference
Vonderau, P. (2019). The Spotify effect: Digital distribution and financial growth. Television & New Media, 20(1), 3-19. Web.
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