Where is that sound coming from?

Many of us have a box tucked away, full of LP records, cassette tapes or CD’s, tangible products which reflect our musical tastes and preferences whilst also providing a window into different times in our lives.

But when was the last time you went to the local music store and bought an album or single?

Like many consumers, you may still have an extensive music library and enjoy playing and listening to the music of yesteryear.  However chances are you don’t listen to your music through your CD, cassette or record player anymore – but your personal computer. In the past 30 years the rise of digital music has laid the foundation for personal digital music libraries such as iTunes, which in turn removes our need for physical music media.

History has seen music delivered to consumers in many different forms. CD’s quickly became very lucrative and as shown below, equated to almost $15b global turnover in the early 2000’s.  As music artists, producers, distributors and retailers all reaped the benefits of this, there was a serious threat that was beginning to gain traction…digital music.


Screen Shot 2016-03-28 at 9.10.15 pm

The birth of digital music is a contested topic, but few can dispute that the creation and sharing of the Mp3 file format was crucial in supporting consumers transition from traditional, physical media to digital.

The benefits of this new medium were not initially realised, as almost at the same time, the use of the internet as a communication tool was taking off.  Households across the globe were now connecting and sharing information in real time. With limited regulations around what could be shared, services such as Napster, released in 1999 provided consumers with a platform to share content for free which they otherwise would have paid for.

Traditionally, marketed as B2C (Business to Consumer) products, music was now being shared post purchase through a C2C (Consumer to Consumer) channel.  This was deemed to be illegal after precedence was set in the case of Napster which was forced to cease operation. This presented a risk vs reward payoff scenario that consumers hadn’t dealt with before;

  • Risk individual prosecution and obtain content for free (piracy)
  • Return to paying full price for physical media
  • Pay a reduced price for permanent downloads of music

Whilst a lot of attention was focussed on the rise and fall of free music sharing services, Apple was tuning into the changes in both consumer expectations and their behaviours relating to music consumption.  In 2003 Apple launched the iTunes store. The release of this platform revolutionised the way people across the globe accessed and purchased music and allowed consumers to enter a virtual marketplace that offered a range greater than ever before. Since its inception in 2003 consumers have purchased over 25 billion songs through the iTunes platform and it has slowly changed the consumer perception around the value of music.

The music industry is constantly battling the risk vs reward payoff for consumers who still want more for less.  The result of this in recent years has seen the birth of music streaming services which are based on a subscription model as opposed to a per unit consumption model. For a monthly fee, consumers can access unlimited music.

Very few industries have a free alternative (albeit an illegal one) with such a low risk of persecution and as such the music industry is still at the mercy of consumers.  If content delivery systems are not priced correctly and are not meeting consumer expectations the risk is not just that a customer will go to a competitor but that they may return to illegal piracy.

So…where is your sound coming from?

Name: Anthony Mason

Deakin ID: 900209063

WordPress userid: maant90



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