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The Impact of the Global Digital Music Economy on the Music Business Paradigm

Christopher Burnett By

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Will the lack of accountability be the downfall of the Open Music Economy?

Musings in Cb was started in 2001 and began with writings that centered upon issues related mostly to the impact of online music on the jazz scene. I eventually began including some of the other contemporary issues with regard to the digital distribution scene. All articles are written from my participatory ("in the trenches , if you will) perspective as an independent jazz recording artist and arts advocate.

AP LONDON - The Office of National Statistics said more Britons now use MP3s than the once-popular personal CD player. Dixons, a chain of electronics stores, said it sold an MP3 player every three seconds last Christmas season. "The MP3 player has become the default amongst music devices," said Hamish Thompson, a Dixons spokesman. "It is definitely the format of the future." The statistics office also added flat-screen televisions, digital camcorders and Internet music downloads to its "shopping basket" of goods.

Index
Global Digital Music Economy
Music Business Paradigm
Open Music Economy
Conclusion: Let's find a solution
Update




Global Digital Music Economy

You would have to had been asleep forrrrrr, let's see? Hmmm, for about 23 hours of most every single day over the last 5 years, not to have witnessed first-hand (in some actively coherent context) how global consumer confidence rose so rapidly toward actually making the act of routine retail purchases online the legitimate reality it is today. People can (and do) literally purchase most anything using the Internet and credit cards now. Particularly, I am one who will also applaud the successful security measures that have been initiated, and then taken through thoughtful implementation to protect all of us when we chose to engage in a retail transaction using this wonderful and convenient eCommerce technology.

These types of advances in the area of multi-media entertainment products will continue for quite some time also. For example, most products related to Digital Music (from the music files to the portable media players) are now so first-rate that every serious entity engaged in the retail or commercial aspects of the recorded music sales business, offers digital products along with their sale and distribution of physical music CDs or DVDs. Even the notion of hardcore jazz collectors using an MP3 audio device to play (and archive) their music collections is a consideration that likely exists more commonly today too. So, the Global Digital Music Economy is the defacto standard being used to develop the various modern business models in our industry. It is also safe to say that most music business plans include a digital distribution and sales division as a matter of course these days...

As artists, we now live in the time of unprecedented equal access to the music product consumer market place. This is due to the developments in Internet and eCommerce related technologies. The empowerment potential is truly unlimited for thousands of first-rate artists whose work might otherwise go undocumented, unconsidered, or unnoticed by jazz fans, if not for the new music business and distribution models which we use today.

Yet, with all of this seemingly good news for the recording artist on the one hand, significant concerns remain on the other. The same regulatory efforts that have been developed to protect the general eCommerce shopper have not been taken to protect jazz artists as business to business (B2B) consumers. So, despite all of the advances in producing recordings relatively inexpensively, and then having access to the global market place toward delivering the music to our fans; it is still relatively easy for the typical jazz artist to get "ripped off by another business. The problem with B2B eCommerce dealings is that there is no way for any artist (who is content provider) to actually audit sales done digitally.

If you sell a CD at a live show or at a local record store using some type of consignment arrangement, there is no doubt about the transparency of the retail flow throughout the life of such transactions. You do not have such comforts with digital eCommerce business dealings. You have to take the word of whoever collected the money first from the customer. This is especially true of some important eCommerce business to business (B2B) digital distribution products that we require in order to get our products, services, and music releases into the mainstream digital market places that are now available to most any artist.

Our new Global Digital Music Economy puts the power of choice in the hands of the consumer. Are consumers ready for this? I don't know the answer to that question. But, I do know that having the power to choose what music to purchase finally in the hands of the consumer again—is where it should always stay. Granted, with this new customer market being equally open for musicians who produce using laptop computers and studio software, there is inherently a lot more music to choose from. But hey, having "more choice is not necessarily a "bad thing either. And, as far as the "quality issue goes, there is a lot of great music being produced in many spare bedrooms around the world these days too. Besides, everything that is produced on a huge label is not always good either. Consumer freedom of choice is always the best.

Conversely, the same relative power does not yet exist for the artists who produce the music... And ultimately, true empowerment for the 21st Century jazz artist also includes the control (and understanding) of the business aspects of music, which as in this case includes contracting the services of other firms to perform certain functions for your organization. Without a balance in power in B2B issues, the jazz artist today will find that regardless of having access to all of the whiz-bang technology to produce records, and a really cool website, he or she is no better off than artists were in the old music economy.


Music Business Paradigm

Even in this new downloadable digital media age, we find that music distribution and distributors are still an issue. Even with all of the consumer conveniences that eCommerce provides the market place; the business to business (B2B) economics do not include any legal requirements that artists must be provided unfiltered access to all the official receipts, accounting records, verifiable distribution and sales data. This issue remains largely unregulated, and therefore it remains unresolved. Some firms who provide the service of digital distribution to independent artist get good grades in this area. However, just a few minutes randomly surfing through some of these businesses websites will show that the majority of others in the digital music distribution and sales business fail miserably.

Again, I honestly believe that all of these digital distribution businesses (including web-only labels and MP3 sites) should be required to be regulated and licensed at least at the state level by the attorney general's office. It is the only way that they will do the proper thing. If the business is legit, there is nothing to worry about and licensing should not matter. It is a relatively simple and honest thing to do. Providing this B2B data is necessary whenever an artist who produces digital products for sale utilizes another business as a digital distribution intermediary (who is paid a commission of some sort — usually from the artist earnings pool) to deliver the digital product seamlessly to the actual music buying customer.

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