On The Reproduction Of The Musical Economy After The Internet

On the reproduction of the musical economy after the Internet
Andrew Leyshon
UNIVERSITY UNIVERSITY UNIVERSITY UNIVERSITY UNIVERSITY
OF

NOTTINGHAM, UK BIRMINGHAM, UK NOTTINGHAM, UK OXFORD, UK NOTTINGHAM, UK

Peter Webb
OF

Shaun French
OF

Nigel Thrift
OF

Louise Crewe
OF

This article examines a crisis of reproduction that began to afflict the music industry in the late 20thcentury. It considers the causes of the crisis and explores some of the ways in which the industry is being reformed in the face of the emergence of a new regime of socio-technical organization. The musical economy, at the time of writing, was dominated by four large corporations – AOL-Time Warner, Sony/BMG, Universal and EMI – that were responsible for 80 percent of global music sales and hadsignificant interests across the media, entertainment and technology sectors. In the early 21st century, the music divisions of all these companies experienced a reversal of fortune, linked to falling sales and numerous misplaced investments. This marked a significant break with what, in retrospect, may subsequently be interpreted as a ‘golden era’ in the history of the music industry, during which itenjoyed about 15 years of steady growth in recorded music sales following the introduction of the compact disc (CDs) as the predominant format for the playback of recorded music (Figure 1). In 2001, global music industry sales fell by 5 percent, and then by over 9
Media, Culture & Society © 2005 SAGE Publications (London, Thousand Oaks and New Delhi), Vol. 27(2): 177–209 [ISSN: 0163-4437 DOI:10.1177/0163443705050468]

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FIGURE 1 Global music sales, 1970–2001
$ Billion 50

Emergence of free P2P file transfer

40

30 Global economic downturn 20 Audio cassette growth CD format introduced

10

0 1970 1975 1980 1985 1990 1995 2001

Source: Sanghera, 2001

percent in the first half of 2002 (Sanghera, 2002) (Figure 2). For an industry used toyear-on-year sales growth, this reversal had serious consequences, with the leading firms in the sector posting disastrous financial results. Vivendi-Universal, for example, recorded a staggering $12 billion loss for the first nine months of 2002 (Economist, 2003a), although part of this loss was due to activities in other areas, such as motion pictures. EMI, which is the least diversified of the majorcompanies, and the most reliant upon sales of recorded music, recorded a financial loss of £54.4 million in the six months to September 2001 (Economist, 2003b).1 The other companies experienced similar losses and, as a result, the major record companies have resorted to dramatic acts and gestures. Rosters of artists and repertoire have been reduced, and have been turned over more rapidly. Inextreme cases under-performing acts have been bought out of their contracts altogether, so that the companies can avoid future outlays on production and marketing for material that, in their estimation, would not be recouped. The rapid circulation of artists through record companies has been accompanied by a similar high turnover of staff, within what was already a precarious industry in which to work.In seeking to account for the poor performance of their businesses in recent years, record company executives are almost as one in identifying

Leyshon et al., The musical economy after the Internet
FIGURE 2 The music industry in crisis
Annual % change 5 First half figures *

179

0

–5

–10 Value growth Unit growth –15 1998 1999 2000 2001 2002 * January – June 2002 over * January –June 2001 only

Source: Sanghera, 2002

the main cause of their current malaise: the Internet. Or, more particularly, it is the rise of digital file-sharing systems, such as peer-to-peer (P2P) networks (Leyshon, 2003) that have significantly increased the rate of circulation of illegal copies of copyrighted music, which is identified as the clear and present danger to the survival of the...