On the Music Business

This week's Nightly Business Report on NPR and Public TV hosted a special series on the Music Business. Background and description below.

"On December 6th, 1877, Thomas Edison shouted a nursery rhyme into his new talking machine. The recording industry was born. Over more than a century, the technology evolved from wax cylinder to shellac platter to long-playing vinyl to cassette tape to compact disc. But the business model remained the same: The artist recorded to the label`s satisfaction, the label did the manufacturing and handled the distribution, and the consumer could take it or leave it.

That changed in the mid-1990s, when personal computers got the ability to make digital compact discs. Unlike analog, digital recordings are simply computer data files, and the tools need to create, capture and manipulate digital music are inexpensive, high quality and widely available. Now, consumers can use the recording industry`s compact disc to create their own compilations, re-edit to produce derivative products, and yes, make perfect copies. When the cost of the blank needed for a copy fell to pennies, the industry`s business model fell apart.

If the ability to easily copy compact discs was a problem for the recording industry, Napster and other file-sharing systems were a disaster. Created in 1999, Napster let consumers freely trade the computer files of songs with others over the Internet. The artists, publishers and recording companies never saw a dime.

Nearly 40 million people were said to be using Napster when it shut down. And for every Napster that was shut down, another method to share files sprang up. The industry`s trade association sued thousands of people, mostly college students, to stop the practice. The lawsuits, tens of thousands by some counts, continue today."