Traditional record industry business model
Sacha Wunsch-Vincent and Graham Vickery note that the relationship between the artist and the record company is usually contractual which normally last for a limited period of time or number of records depending on the specification of the contract.1 Record companies converts the artistic creation into consumer products alongside investing in artists to expand and market their works.2
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A record industry can be said to be doing extremely good if one in ten of the total artist investment in turn out profitable. Noteworthy, most artist often never sell enough to recover the incurred overall cost. Record companies sponsor novice artists from profits, catalogues sales and new releases. Artist must achieve a specified number of copies sold to break even.
The customary recording industry revenue is collected from recordings while the turnover from T-shirt sales, concerts and so forth, normally grow to the artist. Once a music piece has become popular, the music industry package industry in diverse bundles to sell the same consumer the same piece multiple times.1
In times of increasing revenue from sponsorship, merchandised, live touring and declining sales of CDs the industry has experience a shrinking share in the general
1Sacha Wunsch-Vincent and Graham Vickery, ‘Digital Broadband Content: Music’,
Working Party on the Information Economy: Directorate for science, technology and industry committee for information, computer and communications policy, 2004, p. 39.
2Barney Wragg, Vice President, eLabs, Universal Music International (UMI) and Ms. Sara John, Government Affairs Head, EMI Music during the OECD Digital Broadband Content Panel (OECD, 2004b).
music revenue. With regard to declining CD sale, the negative outcome of the changing record label approach on the artist’s returns had to be revisited in terms of digital music sales also which may shift artists’ returns. 1
Digital rights management (DRM)
Effective DRM technologies have been embraced as the business enablers has for the digital delivery of music as well as for the numerous business models that meet the consumers expectations. In spite of their drawbacks, they may be a significant technical device for protecting the IPRs and have potential of becoming persistent across the overall digital distribution chain.
Through their capacity to secure content, they may motivate the content rightholders to avail content for digitization and ensuing digital sales. By virtue of their ability to offer diverse access schemes to content the, DRMs may afford content aids that are conform to consumer needs including the right to buy time-limited admittance to songs and thereby increasing consumers choice and expectation. Many problems are associated with DRMs.
To begin with the key problems with DRM’s appear to have had difficulty in curbing unauthorized access. DRM programmes and technologies should be substantially robust to guarantee the protection of digital content to piracy. Means of harnessing technology to secure intellectual property have been developed and have taken effect.
3European Commission, ‘communication on The Management of Copyright and Related Rights in the Internal Market’.
To address this issue, various governments have pledge to develop a sufficient legal protection and useful legal solutions against the circumvention of technological security interventions such as DRMs. These lawful protections are prerequisite for DRMs to function as expected. 1
Second, the expanding adaption of DRM technologies has posed question that the latter may potentially restrict usage rights. Indeed this concern has become a policy basis presumably for consumer association and is apparent in relevant forums. Based on some academics, limits place to private copies can turn out bothersome when they swing the equilibrium between the expectations of copyright holders as well as the public.
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DRMs have seldom been known to block legitimate access of content and services, unlike the CD-Rom copy-protection technologies. Nevertheless, designers of DRM, users of DRM-protected product must be equally concerned to ensure suitable usage rights, and players in the market adapting DRM, transparency, privacy, and ease reliability of access.1
European Commission, ‘communication on The Management of Copyright and Related Rights in the Internal Market’, 2004, pp. 11
Wragg B, & John S, ‘EMI Music during the OECD Digital Broadband Content Panel’ (OECD, 2004b). Wunsch-Vincent, S & Vickery G, ‘Digital Broadband Content: Music’, Working Party on the Information Economy, Directorate for science, technology and industry committee for information, computer and communications policy, 2004, p. 39.