Music industry back in the money


The shape of the music industry has changed dramatically over the past years and the evolution is far from over. Record labels are just starting to get back on their feet from the blows they suffered with the spread of the Internet, but the most important people, those making the music, are far from happy.

The international music industry last year produced increased revenues for the first time since 1999, indicating that it has adapted to the demands of the digital ambient. This isn’t necessarily good news for the musicians, though.

Buying a CD or any other sort of physical medium for music has become all but nostalgia as the numerous online channels and platforms conquered music distribution over the years. The availability of ‘free’ music has slashed the recording industry’s profits, which have still not recovered despite great efforts to thwart piracy.

But many musicians have frequently voiced the thought that if the record labels collapsed it maybe wouldn’t be an altogether bad thing, and they too have made attempts to capitalize on the availability of digital channels, though with varying degrees of success.

Nine Inch Nails’ Trent Reznor published his 2008 release on his website and invited fans to pay as much as they deemed fit. This practice was also endorsed by the likes of Radiohead and others. These bands now say they mostly regret the move in retrospect; what they hoped for was a new movement to take music back from the labels, what they found was that those listening to the tracks aren’t particularly thrilled to pay.

Yet other musicians are still happy to give away their records, saying that chasing down any prospective revenues is a pointless exercise, since any music will eventually end up on the net. Still, the music is the best way to support the promotion of live performances that can’t be duplicated.

There are now different channels being explored by various artists. Metallica has reached an online distribution deal that allows unlimited access to its catalog in return for a cut from the advertising revenues. An increasing number of popular artists are signing up with various online stores that are now being embraced by the major labels.

Music to their ears

This ability to adapt has allowed the international music industry to make a strong comeback having suffered heavily as the old, physical distribution channels inevitably succumbed to the spread of digital technologies.

According to the latest report of the International Federation of the Phonographic Industry, 2012 was the first year since 1999 that the recording industry saw an increase in revenues. The report published in February placed the total trade value of global recorded music industry revenues in 2012 at $16.5 billion, up from $16.2 bln the previous year.

Revenues from digital distribution were estimated at $5.6 bln, up 9% from $5.2 bln in 2011. Digital distribution is especially lucrative in the Scandinavian countries and the United States.

“It’s clear that in 2012 the global recording industry has moved onto the road to recovery,” said Frances Moore, chief executive of IFPI.

Money matters

The recovery of the labels and the prevalence of the mainstream are doing little to console artists who are active in genres that receive less support.

“It’s evil, it’s the devil,” said Benji Webbe, lead singer of UK-based modern metal act Skindred when asked about his opinion of the music industry. The notion is widespread, which is why numerous groups chose to set up their own, independent labels that then cooperate with the distributors instead of going through the big corporations.

There is no single recipe, however. Webbe, who spoke to the Budapest Business Journal before his band’s performance at the 2013 Hegyalja festival, could likewise offer no ideal solution.

He did, however, stress that consumers must also change their attitudes towards music and musicians and understand that what they’re getting isn’t free. He encouraged music fans to directly support those bands and artists they like by buying their merchandise, which is still a key source of revenues, especially for bands that largely make a living from touring.

"You've had a lot of music for a lot of hours for free. It's time to pay at some point," he said.

Torrents and consequences

The legal regulation around downloads is more-or-less clear in Hungary. Standing copyright laws allow the downloading of intellectual property for personal use unless that IP is protected, which includes movies and music. The exemption doesn’t apply to software. However, according to Artisjus, the organization preserving authors’ rights, distributing such contents online via channels such as torrents or putting them on music or video sharing sites constitutes reproduction and is accordingly a violation.

The penalty is relatively mild, since it mostly involves the copyright owner asking the portal to take the content down. More serious is when downloads are sold. A few years ago, authorities cracked down on several organizations that asked users for payment through text messages to get access to music and movies that they didn’t own. Such scams are hardly present today considering the wide range of content available legally or semi-legally, but at no extra cost.

But times, they are a changing, and several countries are reviewing their policies. Since last October, Illegal downloaders in Japan are faced with up to two years of jail time, while the laws in the UK threaten up to 10 years in prison. In contrast, France is preparing to revise a law passed in 2009, to do away with a passage that would cut off illegal downloaders from the Internet as punishment for their ways.

Hungary C/A Surplus at EUR 838 mln in May Debt

Hungary C/A Surplus at EUR 838 mln in May

AgMin Outlines Agricultural Priorities of Hungarian EU Presi... EU

AgMin Outlines Agricultural Priorities of Hungarian EU Presi...

50% of Ransomware Victims Saved by Backups Innovation

50% of Ransomware Victims Saved by Backups

Verzió DocLab Calls for Submissions, Offers HBO Development ... Art

Verzió DocLab Calls for Submissions, Offers HBO Development ...


Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.