MSG Team's other articles

12988 What is Crop Insurance – Risks and Its Future

Agriculture is a prehistoric occupation. In fact, it is said that human beings only started building civilizations after they discovered agriculture. But agriculture has always been an inherently risky business. Thousands of years have passed between the discovery of agriculture and the modern society that we live in today. However, the modern farmers are exposed […]

9195 ERISA Act – The Government Mandated Stock Market Crash

America is sitting on a demographic time bomb. Their economy boomed thanks to the “baby boomers” that brought prosperity to the nation. However, they have got old and now is the time for them to retire and be replaced by a younger generation. The problem is that the number of people retiring is far more […]

8743 What is Inventory Management – Definition & Types of Inventory

In any business or organization, all functions are interlinked and connected to each other and are often overlapping. Some key aspects like supply chain management, logistics and inventory form the backbone of the business delivery function. Therefore these functions are extremely important to marketing managers as well as finance controllers. Inventory management is a very […]

11676 Types of Inventories – Independent and Dependant Demand Inventories

Inventory Management deals essentially with balancing the inventory levels. Inventory is categorized into two types based on the demand pattern, which creates the need for inventory. The two types of demand are Independent Demand and Dependant Demand for inventories. Independent Demand An inventory of an item is said to be falling into the category of […]

11291 Comparison of Six Sigma and Total Quality Management

Both Six Sigma and Total Quality Management are effective tools for quality management but a thin line of difference does exist between them. Although the methodologies and procedures involved in both the two appear quite similar but there are certain major differences. Six-Sigma is a relatively newer concept than Total Quality Management but not exactly […]

Search with tags

  • No tags available.

The economics of the music industry has been radically changed in the past two decades or so. Ever since the internet became a reality, music could be shared for free. The entire industry faced the onslaught of the latest developments in web technology. Companies like Napster encouraged piracy and allowed users to download and share music for free. People have essentially stopped paying for music since the 1990’s. Many business analysts thought this would be the end of the music industry. However, the industry has defied all odds and still continues to survive today. In this article, we will understand how companies survive selling a product which is free!

New Sources of Revenue

It is true that companies can no longer sell music to end consumers for money. However, with changing times, the industry seems to have found out new ways to monetize their product.

  • Streaming: Music streaming has now become the norm. Companies like Spotify are now the new face of the music industry. Apps like Spotify provide consumers with access to free songs. Consumers can choose to listen to these songs for free, but they will have to bear with advertisements. Instead, they could pay $10 each month and listen to their favorite music ad-free. From the producer’s point of view, companies like Spotify buy music from artists to stream on their apps. This has now become a major source of revenue for the music industry.

  • Product Placement: Music videos have also become an important part of the revenue strategy. The producers are well aware that as songs become popular, they are viewed almost as much as they are heard. Hence, they have the user’s attention and can influence them. This is where product placement is used. Music producers often tie up with brands and promote their products in the videos. Some music producers even imbibe the name of the product in the lyrics itself. Companies pay good money to the producers of popular songs and hence this has become an important source of revenue.

  • YouTube Monetization: The success or failure of a song is now gauged depending on the number of YouTube views that it has managed to garner. It is not uncommon for songs to have millions of views. YouTube allows creators to monetize their content. As a result, this also becomes an important source of revenue for music producers.

    YouTube has allowed many youngsters to bypass the record label companies completely. Theoretically, they can place their content on the web and earn revenue from the same. However, as we all know that the web is a sea of information. Hence, gaining popularity from the web without the help of any corporation is a daunting task, to say the least.

  • Licensing: Creators of songs can also license their songs to corporations for use in advertisements. This is not the source of revenue that a music company can foresee. Also, this revenue is not sizeable. Hence, this can be thought of as a windfall gain for some of the content that the producers have created. Nonetheless, this has also become another unique source of revenue for the music industry.

  • Touring: Artists and music companies also make a lot of money via tours and concerts once their songs become popular. It is true that the music can be downloaded for free. However, there are still a lot of music enthusiasts who will pay money to watch their favorite artist perform live. Music companies negotiate contracts wherein they get a percentage of the revenue that has been generated from ticket sales. It is not uncommon for artists to be on tour for the major part of the year since touring is what generates maximum revenue. Touring has become the number one source of revenue for music producers. This is because the web makes it easy for the music to spread worldwide. Hence, concerts can be held in different countries and more revenue can be generated.

  • Merchandising: Music companies also make money from merchandise sales. Some of the clothes and other items worn by the artists in the song become famous. People are willing to pay money to be able to buy similar merchandise. This is the reason why music companies often have merchandise sales at their concerts. Also, it is not uncommon for music producers to collaborate with professional merchandising firms to sell their products online.

  • Royalties: Lastly, the artists and music producers are entitled to get royalty from their content if it is played on air. This means if the music is played by music channels such as VH1 and MTV, they have to pay royalties to the producers. The same is the case with radio stations that also have to pay royalties to the music producers. This can also add up to a significant sum.

The bottom line is that even though nobody pays to buy music in the 21st century, there is still a lot of money to be made in the music industry. The revenue from selling audio cassettes and CD’s may have been lost. However, the industry has found over a dozen new sources of revenue which compensate for the loss.

Article Written by

MSG Team

An insightful writer passionate about sharing expertise, trends, and tips, dedicated to inspiring and informing readers through engaging and thoughtful content.

Leave a reply

Your email address will not be published. Required fields are marked *

Related Articles