Western media coverage tends to focus on piracy and peer-to-peer exchanges of music files, but the delivery of music over the Internet has also emerged as a viable and increasingly important distribution channel for the record companies. Non-existent at the beginning of the decade, the global sale of digital music reached 2.9 billion USD in 2007, up 40 percent from 2006, according to the International Federation of the Phonographic Industry (IFPI).
Online sales now account for more than 15% of the recorded-music segment (including mobile ringtones and subscription services such as Rhapsody and Napster): 1.7 billion tracks have been downloaded from over 500 legal online music services identified by IFPI across the globe. More than 6 million different tracks are available online, and the number is growing constantly, as labels digitize old recordings (such as concerts of classical music or ethnographic footage of indigenous songs) and make them available to a very specialized audience.
The so called “long tail” of niche product distribution over the Internet offers tremendous possibilities to musicians, producers and record companies around the world, as they are able to cater for the needs of small groups of consumers at much lower costs than in the physical world. For instance, recordings of traditional music which are digitized, could be made available to world music amateurs and ethnomusicologists.
Most of the online music stores, however, are operated in developed countries, with Apple’s iTunes holding a commanding market share. The online, digital music industry has not yet emerged in developing countries and many hurdles remain. To start with, Internet access is expensive in relative terms and frequently in absolute terms as well: a Malian pays more for his or her monthly ADSL subscription than a German.
Connectivity levels are poor, bandwith hardly ever up to “broadband” standards and the quality of service marred by infrastructure problems. This situation is improving, but rather slowly, especially in the least-developed countries (LDC).
Local companies able to provide the right IT competencies and to build an e-commerce platform centred on digital contents are few, and local stakeholders from the music industry not really able to write the technical specifications to design such a platform.
Last but not least, these record companies are focusing on their domestic markets and on other revenue streams such as live performance. Furthermore, the local demand-side in those countries is either not ready for legal downloads of music (insufficient financial resources, no devices) or unwilling to engage. Attempts to offer legal download services are facing the competition of illegal ftp-servers widely used by Internet-café clients.
Before starting with the online promotion of local music productions, it is important, beforehand, to evaluate the export opportunities for locally produced digital music at the country level, with an emphasis on assessing the domestic music industry's global brand and reach.
Furthermore, there is a clear need to strengthen capacities of music producers and artists to allow them to engage in online sales with training and low-cost solutions based on state-of-the-art information and communication technologies – in particular wireless technologies.
IFPI statistics show the importance of the mobile channel for the dissemination of music. Contrary to the low penetration rates of Internet usage in many developing countries, cellular networks have spread at a tremendous speed all over the planet, and in LDCs as well.
At the same time, as operators upgrade their networks and handsets sold are increasingly sophisticated, users increasingly have access to more sophisticated services than voice and SMS. Mobile Internet access is rapidly catching up on wifi access and even on landline Internet connectivity, with subscription prices being more attractive.
Consequently, Juniper Research, a large telecommunications consultancy company, predicts that more than two billion people will have purchased digital content with their mobile phone by 2013: a substantial share of these consumers will be located in developing countries.
With the proper support from government and trade-support institutions and with the adequate engagement of international organizations, musicians and other stakeholders of the music industry in the developing world can contribute to the diversification of their countries’ exports.
Music is an export-oriented industry capable of generating employment and sales in foreign currency. The current global shift towards the digital delivery of music thus offers new business opportunities without posing any threats.
Source: Extracted and adapted from same-titled International Trade Centre Technical Report.