Quincy Jones
Managerial Economics
Michael Jackson
Mid-term Paper
The Luxurious Music Industry
The music industry is an industry that works for you as well as against you depending on what role you play. The way the music industry works in the present time is far from how it used to run before the invention of mp3’s. Before 1999 the industry was worth about twenty billion dollars. Now the industry is only worth about four billion dollars due to the piracy of mp3’s. Nevertheless, the mp3 is one of the greatest inventions known to man, but it has yet to prove that it can be a moneymaker for the industry because of piracy.
The industry has evolved from being an automatic moneymaker to every artist striving for sales. When an artist makes a record the record company gives them an advance. This means that the record company gives the artist money to make the record before any sales are made. No matter the type of artist, or how popular the music is since mp3’s were created, it’s almost been impossible to make profit. Even though artists are selling their music, they aren’t selling enough to gain recoupment from their advances. This hurts artists because they have to repay the record company all the money that was given in advance.
The RIAA is the recording industry association of America. They review album sales for the year and compare them to previous years. They also are the main part of the industry that is trying to preserve artists’ music. Under the RIAA’s review of last year’s end shipment data alone, sales are -10.9%. Although digital sales raised by twelve percent, they still decreased into the negatives. The demand of music from artists itself has been a major increase from consumers, record labels don’t have enough money to invest in artists when they’re not making recoupment back from sales. This is when the music labels think about the opportunity