- The Possibility of music digitalization and its digital distribution has placed several legal issues in the focus.
-Digital transition continued with the idea of a computer as a reproduction device.
-There has been an attempt by the recording industry to make audio CD's unplayable on computer CD-ROM drives, to prevent the copying of music.
-It was estimated that by October 2000 Napster's software was installed on 30% of all PC's worldwide. In February 2001 Napster had 26.4 million users worldwide.
-The Recording Industry Association Of America denounced Napster as copyright infringement software and filed a law suit against it.
Nevertheless, the Napster case showed several issues to be consideres by major players in the music industry:
-Internet file sharing is an inevitable fact and a rapidly increasing trend.
-People enjoy to trade music and to download favourite songs at zero cost.
-People prefer to download individual songs, not entire albums.
-People are searching for popular music but also for music that is difficult to obtain in offline music stores.
-Digital music industry is not immune to theft within recording companies. For instance some songs were released on Napster months before their release e.g Metallica - I disappear and Madonna - Music.
-Currently, iTunes is the most known pay per download provider.
-In order to be successful online distributors, their catalogues have to hold music from five major recording labels plus many independent ones.
-A copyright may be broadly defined as a form of intellectual property that provides legal protection against unauthorized copying of the producer's original expression in fields such as art, music, books, articles.
-The emerging digital technology, the increasing use of computers, the communication technology and their convergence into integrated information technology have given rise to challenging legal issues for copyright and many more are expected in the future. The ease of distribution, altering digital information and the proliferaton of computer networking raise concerns about copyright. Copyright was designed for three basic reasons: to reward creators for their original works; to encourage availability of the works to the public; and to facilitate access and use of copyrighted works by the public in certain circumstances.
-The music industry look for ways to prevent piracy by going to court to sue for copyright infringement.
-Today all music is distributed in the digital mode. In the last decade, a new method of digital distribution has become very popular.
-Alternatively, the rights may be held or purchased by another party. Performers then play the song, at which point the value chain splits between performances that are made in a recording studio, for the purpose of recording, and those performed live, in for of an audience.
-The internet allows an alternative distribution method.
-Labels are especially interested in ways to capture this portion of the value chain.
-The second way the internet affects this segment is through the illegal distribution of music to unauthorized consumers.
-The fact is the combination of digital technology and the internet enables consumers to easily make and distribute copies of music.
-Digital distribution has its advantages. It brings economic and social advantages, but also has unwanted side effects: it undermines the chance for earnings for its creators.
-The Internet has not only changed the manner in which we communicate, but in which business interact among themselves and with consumers.
-No industry has been more impacted by the emergence of new media/Internet than the media/entertainment industry. Although entertainment-related products and services have progressively evolved over the decades to take advantage of digital technology and better respond to changing consumer taste, the industry's structure has remained relatively unchanged. This is due to several factors common to most media/entertainment sectors including:
1) the traditionally high cost of content creation
2) the role of content ownership and licensing rights
3) the necessity of near-ubiquitous distribution network in the applicable market
4) scarcity of distribution outlets
-The Internet though has challenged this entrenched structure by shifting the supplier-distributor relationship from a hierarchically layered structure to an open structure where traditional roles of manufacturing, distribution and retail are being fundamentally re questioned and redefined.
-In the case of the music industry, the internet/new media has hit the sector liek a freight train by fundamentally restructuring costs throughout the sector, reducing entry barriers and significantly increasing the number and nature of downstream outlets while providing upstream actors with greater control over content ownership, production and distribution. This presents the record labels with the threat of being bypassed altogether by the downstream and upstream market.
-AOL, Microsoft, E.Music and MP3.com - marketing and distributing and retailing of music online.
-Theres a shift from physical to virtual distribution.
-There is a new online music industry.
-The major labels consist of five players including Universal (which recently merged with polygram) Sony Music, BMG, EMI and Warner Bros, Although Virgin Records is increasingly being included in this group.