Record sales hit a peak in 1999 of $14 billion.
You'll probably remember earlier I said that the sale of music in 1958
was only $604 million.
So the century ended on a high note.
And it was truly a century of technological advancement and
entrepreneurial momentum.
But at the same time, Napster arrived on the scene and burst the
bubble of CD sales.
Those sales plummeted as a result of illegal peer- to-peer file sharing.
No one knew how to stop the havoc that peer-to-peer file sharing was wreaking
on the music industry until 2003.
And Steve Jobs of Apple Computers came up with a new way to access and
purchase music online--
a digital distribution method, iTunes.
That became very, very successful.
He also accompanied that with hardware, like the iPod and the
Shuffle, which enabled people to take music wherever they wanted to-- their
music, their playlist, similar to what happened back in the '80s with the
Sony Walkman, a great technological advancement.
Interestingly enough, over the following years, iTunes returned the
single configuration as being the predominant configuration
in the music industry.
I like to say that people had to start living the singles life.
And I referred back to the '60s and '70s when singles were the predominant
selling configuration of music.
And that's what happened in the first decade of this century.
Also around that same time, you had artists like David Bowie, who
predicted and dreamed that one day music would be accessible in a
unlimited manner.
He could see music flowing like water.
And he also, I think, dreamed of the music being paid for just like you pay
for water, being paid on a monthly basis.
There was another technological advancement--
satellite radio.
XM and Sirius Radio networks enable people to receive radio signals via
satellite in their automobiles.
And the interesting part about this is that that was the first technological
advancement that kind of had people willing to pay on a monthly basis to
receive music, not a new concept, certainly.
Cable people have been paying since the '70s a monthly bill.
As a matter of fact, I think about 75 to 100 million people pay a monthly
cable bill.
And that was the thought, that this type of payment and access to music,
not just owning the physical product, but actually having unlimited access
to music would be a wave of the future.
Another emerging technological advancement was the internet radio
service, Pandora, which really was built on a model of a two-tiered-type
service, where people could actually register for the service and listen to
it for free.
But they also had a premium service, where you can pay a monthly
subscription fee.
And that would eliminate the ads that were placed between
songs on the free service.
Eventually, the recording industry united and worked to put Napster out
of business.
But you had the development of other services to provide music in a manner
similar to what David Bowie suggested, in a manner where the music would flow
like water.
You wouldn't necessarily have to have physical copies.
But you would have access rather than ownership.
Internet and mobile streaming services, like Spotify and Rhapsody,
creates a new market of tremendous growth for streaming services in a
multi-tiered format.
Ad-supported free service and premium subscription service, which eliminates
the ads, has been creating great new revenue for the music industry that
really stands to continue in the future.
Spotify was one of the first streaming services that was able to negotiate
licenses with all of the major labels and many independent labels to allow
for unlimited access to a wide catalog of music.
And artists have been considering the ramifications of these special deals.
And basically, major record labels and publishing companies and even
recording artists have been giving special deals and the government as
well through compulsory licenses have been giving these new companies, like
Pandora and Spotify, special deals royalty rate-wise, so that they can
get their business started and in the hopes that this will flourish.
And they'll have a number of subscribers.
And it will get to the scale that every one can make more money.
And that's going to be the big charge for artists over the coming years, to
make sure that they're represented well and advocate for greater share of
the revenue that's generated from these subscription services and
digital streaming as these businesses come to scale.
The advancement of digital technology creates all types of opportunities for
a number of businesses through this medium.
We've seen it over the first decade of the century.
Berklee alum, Derek Sivers, started CD Baby, a digital service that allowed
you to order CDs that were mailed to you.
And now, they can even be delivered digitally.
You had Sonicbids, a company that was started by another Berklee alum, Panos
Panay, which created a virtual talent agency and booking agency, as well as
providing a number of other services.
Social networking sites--
Facebook, Twitter.
You have crowd-funding sites and apps--
Kickstarter, PledgeMusic, all creating great opportunities for the merger of
innovative technology with the creative sector of artists to reach a
brand new market during this century.
Many people point to the fact that the live performance market has grown as
far as the generation of revenue.
And many people feel that artists, even though they may not make as much
money from selling records or even from having their music streamed or
being heard through various subscription services, how are they
going to make money?
Well, many people think that they can make money performing, that artists
should be able to make money on the road.
They should be able to perform live.
Well, that may be true.
You have a tremendous growth in festivals.
You have a growing club scene throughout the country.
The question will be, to what extent can new artists generate revenue from
those sources?
Certainly, the heritage artist and the artists that are performing at the big
festivals are making a tremendous amount.
But what about the artist that's just starting at the club?
And here's another point to think about.
All creators of music aren't performing artists.
What about songwriters?
Nashville has a great system of songwriters, a great system of
songwriting, and a great cadre of songwriters.
And all they do is write songs.
Where do they stand in this mix considering the fact that sales are
down and the streaming royalties and subscription royalties aren't at the
point that they can provide a great living that these songwriters have
become accustomed to?
So we're in the midst of changes there.
Certainly, they're going to grow over a period of time.
Also, artists are making tremendous amounts, some of the top artists, from
other types of opportunities, like endorsements and sponsorship and even
product development.
50 Cent hasn't released a record in maybe eight years.
But has he had a successful career as a businessman with Vitamin Water?
He certainly did.
He made millions, hundreds of millions of dollars by having an ownership
interest in that business.
So interesting things are happening in the music industry.
The possibilities are limitless.
But you really have to find out where do you stand in there?
Are you going to develop an app?
Are you going to write the next great song?
Are you going to be that performing artist?
Are you going to come up with some other type of service that's going to
be of benefit to artists?
Where do you stand?
What is your goal in this new emerging digital age?