RS 7: The Economics of the Music Industry

            In the two podcasts I listened to, “Why K-Pop Is Taking Over The World” and “Katy Perry’s Perfect Year”, I learned that economics plays a bigger role then I expected it to play.  Music in America is one of only huge industries left that we still out do every other country in.  But slowly and surely Korea is on its way to something great. As big as the music industry is, you would think the record labels would be pulling in some more cash but that is not the case.

            As they said on the podcast, anywhere in the world you go, you will hear the American music.  It is such a big industry that is worldwide, with a fan base so large that there just are no signs of it slowing down.  Most recently though Korea had a star shine pretty bright when the song “Gangnam Style” came out.  It burst onto the music scene when it hit youtube.  It is now one of the most viewed videos on youtube with over five hundred million views in just three months.  If that is not a sign that Korea has a music culture on the rise then I don’t know what is. 

            If you turned on the radio last year you would hear Katy Perry on ever radio station about twenty times a day.  She absolutely with out a question was the most successful artist in the past decade if you go on strictly hit songs.  Not only are her songs catchy but they have good lyrics.  That is why she has so many hit songs, clever lyrics mixed with a good beat will give you fame. And that is exactly what happened to her.  She has become one of the most famed musicians in the past decade but also one of the most high paid.  With all the revenue she produced the record labels on average will earn fewer than ten million dollars by the end of an album.  The record labels do so much and get so little in return.  So these record labels have almost become extinct, there are three big record companies left in what is now; Sony, Warner, and Universal.  They have started to make deals with the artists by collecting income off of every revenue that the artist gets because it was getting to the point where these labels were just not getting paid enough for the work thy put in.

            Before this new deal was being used by the recording companies they would only get commission off of the money earned through song and album purchases.  When a song was bought off of iTunes, the recording company would only walk away with about twenty to twenty-five cents from the ninety-nine cent song.  But now with the Internet people download songs illegally for free, so the artist is not gaining any profit off of that person because they didn’t pay for it.  People will also just go on youtube and just sit there and listen to their music for free along with Pandora.  These tow websites allow you too listen to music for free at no cost to you except at the cost of artists who put in the hard work to produce that song.  So with the economy changing constantly, in the future we will get to the point where there are no record labels and ITunes will no longer exist.