The Surfacing of Online File-Sharing and its Impact on the Music Industry

The introduction of file-sharing networks across the internet has increased the amount of music that is not only viewed, but purchased as well. Thirty years ago, the music industry was comprised of bands that relied on company labels to market their music through cassette and compact disc sales. The same principles are true to modern recording artists, however, there are some newer implementations of the music realm that have changed the way music is listened to and purchased. Online file-sharing networks now allow people to access music files without purchase of any physical compact discs from record stores. Music can now be downloaded – whether it be purchased or illegally downloaded for free – to blank discs or the ever-popular MP3. The shift has gone from physical albums in record stores to digital downloads from sites across the internet.

Like all countries across Europe and Asia, music has rooted itself into American society. European music landed on American soil from across the sea with the use of woodwinds and stringed instruments. With more immigrants landing in America from all corners of the world, regional styles began to develop. The only way to listen to music prior to the 20th century was by live performances – concerts, music festivals, or in private. The first radio to broadcast aired in 1920, creating a new medium in the way music could be listened. The radio industry exploded, with millions of radios being added to houses and automobiles. The radio provided music to the public in a free format and was the first form that allowed almost constant access to music at any time of day. Other mediums sprang up years later to broaden the way music could be viewed.

The development of better technologies in the music industry gave Americans the opportunity to purchase music from specific artists and bands rather than be restricted by playlists of the radio. The record first appeared in 1948 by Columbia Records and was the new standard for the music industry. Less than 20 years later in 1964, the compact cassette found its way into the hands of American music fans. The LP record and cassette tape accounted for the sale of hundreds of millions of units from their introduction to the end of the 1990s – a number of almost 3 albums per capita of the American public[1]. The compact disc was somewhat forced into the music world, taking the place of the LP record which were removed from music store shelves[2]. Compact disc sales increased from their rise in popularity in the mid 1980s to 1998, where sales began to slow[3]. The music industry virtually had control over the form of medium that Americans purchased, indicated by the sale of billions of compact discs to date. These physical mediums were – like live concerts in the 19th century – the only ways music could be listened to, purchased, and shared. The latest way that music can be purchased is virtually, having the capability of being downloaded online. The introduction into the digital realm gave birth to a new way music could be purchased through the file-sharing network.

File-sharing networks are the latest addition to the medium that music can be viewed. These peer-to-peer file-sharing programs have gained a tremendous following as the largest provider of music to the American public. Napster was released in 1999 and more networks followed including Gnutella, eDonkey2000, Kazaa, and Freenet. The amount of users on these networks increased exponentially.

Once files started appearing on the internet, they were quickly viewed as the new breakthrough medium in which music could be viewed. The timeline of music mediums has seen a new development almost every 20 years – radio in the 1920s, LP records in the late 1940s, cassettes in the 1960s, compact discs in the 1980s, and mp3s with online music in the early 2000s. Each medium has seen increases in sales after each new product gained popularity (a period ranging from 5-10 years after its original introduction.) LP record single sales saw the highest sale in 1973 with 225 million units sold. The LP fell dropped from the leading amount of single unit sales to cassettes in 1990, with cassettes dropping to CDs in 1998[4]. Compact disc complete albums rose to almost $10 billion in the late 1990s[5]. When file-sharing networks began emerging in 2000, online sale of music became the preferred standard. File-sharing networks have given opportunities to music viewers that the others before it could not offer.

When music entered the digital format, the public was exposed to a format unlike any of the previous formats. The mp3 player offered a handheld, portable music box that was capable of downloading compacted files. Mp3 players are just like cassette players and CD players in that they operate off of a certain format of music (cassette, compact disc, or data compression files.) Apple’s iPod has sold between 6 and 11 million units per fiscal quarter since 2005, a popular mp3 player with sleek design, simple use, and portability[6]. Bulky CD players were replaced with players that could fit in a pocket. Not only was the device itself more convenient to use, but the mp3 player could store huge quantities of music with no discs necessary. Unlike CD players, the mp3 player could store hundreds or even thousands of songs on a device much smaller than one that played a 10-12 track compact disc. Compact discs were quintessentially not necessary for the music viewer after the mp3 player gained popularity. Although music was rapidly going digital, compact discs were not forgotten about.

The move of music to the digital realm promoted the purchase of music media. The Chicago band Wilco experienced a speed bump when Warner Music Group dropped the band after lack of interest in their upcoming album[7]. The band’s album later was leaked onto file-sharing networks for free download. When the album Yankee Hotel Foxtrot was released, digital sales were double that of Summerteeth, the band’s previous album[8]. Wilco’s example is not always typical, but definitely not what was expected. The access to free music should have a negative impact on an artist, however, the opposite is usually true for lesser known artists.

Independent record labels have begun to replace major music labels. Independent labels (dubbed Indie) function on a more directly-to-the-consumer approach[9]. Unlike major music companies that pick and choose the albums that they put to their name, indie bands create music the way they want to. While many young artists begin with independent labels to get their music career rolling, a shift has begun to take place as artists either stay with independent labels or move from a major label to an independent label. Indie labels give way to more creative music, not being restricted by the desires of a major music label.

Independent labels give its artists more profit than a larger label, as made apparent by the now returned-indie band Barenaked Ladies. The middleman is nearly cut out from the equation, generating a larger sum of money for artists. The artist can sell directly to the fans, not bound by contract. Profit from Barenaked Ladies albums went up to almost $6, as opposed to $2 when with Warner Music Group[10]. To gain more fans and ultimately sell more CDs, concert tickets, and merchandise, artists of the indie realm have to be intimate with their fans. Blog postings, photo-shoots, and interactive music videos are examples of how Barenaked Ladies maintains a solid fan base in America[11]. Another important aspect for the survival of the indie artist is to give free music sample options to fans. Myspace, ringtones, Youtube music videos, and free downloads get viewers interested in upcoming releases[12]. Allowing music to be released on the internet without charge allows for more creative and cultural experiences for genres of music.

Promotional tools were key to the success of music of artists. Despite radio being free, people were willing to buy albums with familiar songs, making the radio the earliest, unintentional promotional tool for music purchases[13]. Blank compact cassettes were often times used to record live concerts, a common practice at Grateful Dead concerts in the late 1960s. This practice was kept alive by many of the band's groupies, called “Deadheads,” for the band's 30 year career[14]. The Grateful Dead encouraged recording of concerts and trading of cassettes among fans – album sales did not suffer as a result and the band’s music was able to be spread between large numbers of listeners[15]. Present day, file-sharing networks are now the biggest (and baddest) of the “promotional” tools for the purchase of media on the internet giving Americans virtually free music to download. Although this method is deemed responsible for the decline of compact disc sales in the United States, smaller label independent labels are reaping the benefits – artists do not have to deal with major labels and the advertising associated with it[16]. Download sales of indie artists make up for the lack of advertisement, as the band makes much more per album. Though allowing for the free-roam of music files on the internet aids in the selling of indie albums, larger music corporations are less fortunate.

Online file-sharing networks gave Americans something they had not experienced since the radio – free access to music. Downloading of music on the internet can be found for free, without the need for blank CDs or cassette tapes necessary from previous years. Reports show that in 2003, 60 million Americans obtained music through file-sharing networks[17] and in 2006, more than half of the music acquired was not paid for[18]. College students aged 18-24 used to be the music industry's biggest customers, but has been devastated as of late by college students showing the greatest increase in use of free music[19]. The record companies are responsible for forcing the compact disc down the throats of the American public. This in-turn led to the “ripping” of music onto computers so it could be dispersed on the internet – an action highly regretted by the major record companies[20]. The internet is a substantial piece of technology that allows files to be spread all over the world. Once music reached the internet, it spread like wildfire.

Though sampling helps in the promotion of independent labels, major labels blame file-sharing networks for the decrease of album sales. Napster fell under fire in 2000 by A&M Records for copyright infringement, resulting in the shutting-down of the network[21]. Other networks like Limewire, eDonkey2000, and Supernova.org have had to shut down after facing lawsuits, or to avoid lawsuits[22]. Despite allegations by the Recording Industry Association of America, Jupiter Research found that 34% of veteran file-sharers spend more on music now than before free music sampling – as opposed to the 14% that said they spend less[23]. Over 1 billion files are available for download on peer-to-peer networks. These networks offer versions in which files can be purchased – these versions allow better access to downloads, quicker downloads, and more hosts to download from.

Compact disc sales are seeing a decrease in sales but file-sharing networks are not completely responsible for the decline. Mp3 players make it possible to purchase music without the need of a physical CD. Older audiences still value physical albums, but the younger generation has been hooked-and-baited by digital media[24]. The compact disc industry may be a dying breed in the midst of other mediums growing in popularity. Video games, DVDs, and cell phones contribute to the taking away of CD sales[25]. The more people spend on these three items, the less they have for compact discs, something that can easily be found online for lesser costs. The new technologies available today for the modern viewer do not require compact discs. Record companies can argue that mp3 devices compact music, leaving out “unnecessary” audio sounds while CDs provide a better-than-free means of music viewing[26]. The truth of the matter is, now that Americans have the option of getting music digitally, the compact disc and other physical mediums of music may start to be put on the shelves to make way for the mp3 player and the file-sharing network.

File-sharing networks have spawned a digital-age revolution that no longer requires the consumption of physical mediums of music. In the last century, the choices of music media have changed significantly. With music going digital, the death of the major music label is a lingering possibility in the near future, with more and more artists shifting to independent labels, not only for more money but a broader audience as well. The entrance of file-sharing networks online are the new standard – they are already on the internet and the results have to be accepted for they are irreversible. Digital music and the mp3 player will soon be the replacement of stereos and compact discs.

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