MN 1024
Managing Information Technology
Disclaimer: I confirm that I have completed the plagiarism training tutorial and understand
how the university defines and regulates plagiarism.
The music industry, such a complex and broad field which has undoubtedly changed and
evolved a lot, especially in the past century. Probably the main driver of that change was the
evolution and the absorption of Information Technology (IT) within the industry. The use of
IT in music has changed almost every aspect of it. It has changed the way people make
music, how music sounds, and thanks to IT, even new genres were created. But, most
importantly, this immersion of music and IT has forever changed the way that people today
"consume" music. Currently, music is easier to access than ever thanks to streaming
applications and companies like Spotify. Therefore, giving more artists a fair chance at
success in the industry because of the way that big record labels today work with and pay
new artists. Also, modern record labels handle a lot of Big Data and the rights of their artists.
This information is more susceptible to being leaked online because of how much IT has
developed and privacy is a big matter that these companies must consider. Overall, recent
developments in IT have been a major factor in the modernization of the music industry and
how it grew around peoples' needs and demands while also evolving around the correct use of
the industry’s data.
Firstly, in order to gain a better understanding of how recent IT developments have
influenced the modern music industry, it is vital to note that the way in which people
consume music is one of the primary factors of that influence. Spotify, as previously
mentioned, is a platform which offers music streaming services, and it was founded in
Sweden by Daniel Ek and Martin Lorentzon (Parsons, 2018). The platform was developed in
2006 and it was officially launched two years later changing the industry forever (Medium,
2017). The main idea behind Spotify was that by creating such a platform, they could impact
the ongoing piracy problem that the music industry was facing (BBC, 2018). Once the
application was launched, it had gained over 1 million paid subscribers by 2011. The word
“paid” is used to describe its subscribers because of the digital business model that Spotify is
running. The company runs on model referred to as Freemium, this means that Spotify offers
both a free version with advertisements and a premium one without ads and with some added
benefits for its subscribers. This use of the Freemium model has revolutionised the field of
music streaming as it allowed the company to make money while at the same time paying for
licensing and paying the artists (Desai, 2019). According to ‘The Telegraph’, Spotify is the
biggest and most well-known music streaming app and has the largest subscription in the
industry (Field, 2020). As of September 2020 Spotify, had 144 million subscribers and a
combined total of 320 million active users each month (Spotify, 2020). To better illustrate
those number in fiscal terms; Amy Watson (2020) published in Statista that the revenue of
the company for just the third quarter of 2020 surpassed 1.9 billion euros. The income that
Spotify generates is divided into categories because of its digital business model and around
90 percent of their revenue comes from their subscribers while the rest is from selling
advertisement space in their application for those who are using the free version (Desai,
2019).
What do these numbers mean for the artist that decide to share their work on the platform?
Spotify works with both major record labels and independent artists, and they are either
paying the artist directly or paying the licensing of their label. Either way, the way that
Spotify pays its artists has been criticized a lot in the past years. Reportedly, after 2013 the
company decided to be more transparent with their numbers, revealing that on average an
artist gets paid just 0.007 dollars per stream (Institute for Prospective Technological Studies,
2015). They claimed that this number is seemingly small but in fact, during 2013 alone about
half of the platform’s earnings were spent in royalties and that the artists make more from
successful albums, thus they should not be focusing that much on just their streams on
individual songs. The company even went as far as creating charts to appease the alarmed
artists and to better illustrate the monthly earnings that different type of albums can make
according to how successful they are. Another point the company made against the fuss at
that time was that streaming is not a one-time payment and that each artist can make a fair
and relatively stable monthly income from the platform, in contrary of how physical copies
work (BBC, 2013). Later, Tim Ingham, the founder and publisher of Music Business
Worldwide analysed Spotify’s numbers in remarkable depth and concluded that only “top
tier” artists, which make 90 percent of the platform’s total revenue, can make a sustainable
salary from the platform with that being an average of 90 thousand dollars a year. This means
that the rest 10 percent of the platform’s record music payments would have to be divided
amongst almost 3 million artists, which translates to an average of just 12 dollars a month.
Perhaps, Spotify may not meet their core mission, which is to allow creators to make a living
from the platform, just yet (Ingham, 2020).
Moreover, smaller artists need more projection of their work, and Spotify’s algorithm and
how they utilize their users’ data tries to enhance that. Spotify as a digital music company it
is expected to receive huge amounts of data. The platform’s users create an impressive 600
gigabytes of data every day, which then gets used to offer the user a tailored experience all
over the app (Park, 2018). The platform’s algorithm analyses each customers data and applies
this information to create new playlists and to promote new songs to the user according to
their preferences. Through this process a profile is developed for each user called a “taste
profile” and in order to create that profile, the platform’s AI system must pay attention not
only to what the user listens to, but how they react with each song. Also, with the utilization
of its users’ data, Spotify can create targeted ads for new potential users by analysing what
music is trending in the application and using it in their marketing campaign (DiFranza,
2019). Furthermore, in the application certain tools are used to create a more personalized
experience. Some of them are “Daily Mix”, “Discover weekly”, and “Release radar” which
are playlist specifically designed for each user, based on the genres they listen to, the songs
that they “liked”, the user’s playlists and the songs that they listen to the most (Spotify,
2020). By creating this sort of playlists, they make the user feel more in touch with the app
and as a result their experience gets smoother throughout the platform resulting to them using
it more. Likewise, Spotify bought an AI developed by Niland in 2017 which uses
its Application Programming Interface (API) and machine learning to specifically understand
music so it can offer a more well optimized experience to its users (Russell, 2017). Currently,
the platform even manages important data and analytics for artists, that then gets provided to
each artist so as to help them achieve a better understanding of the current market, trends, and
of their following to facilitated growth (Marr, 2017). Consequently, within the data that is
generated on the platform, exists some of the user’s personal information and it was reported
in 2020 that there was a breach which exposed their clients’ information to some of Spotify’s
partners (Muncaster, 2020b). This incident allegedly affected around 350 thousand users,
which were then advised to reset their passwords once the company dealt with the breach
(Muncaster, 2020a). Briefly all the above, shows how important the use of data is for the
platform and how it can offer an optimized experience for both its users and its artists when
used confidentially.
Nevertheless, Spotify is not the only nor the first modern company facing this type of
challenges in a world where the business field has entered the ‘Digital Era’. In fact, one of the
first companies to do so was Napster. Napster was developed in 1999 and it was a filesharing service which allowed users to share MP3 audio files within the platform for free
(Lamont, 2013). The platform was a revolutionary idea of the 18-year-old Shawn Fanning,
but it was not long before the “peer to peer” sharing scheme that the service was using took
over college campuses and it just kept on growing rapidly. Yet, the way that the users were
sharing the files implied that, no one paid royalties for the music and that opposed a threat
towards the music industry and its financial situation (Haberman, 2014). Although Napster
was growing, many artists and record labels were not on board with how their work was
being basically pirated and many of them spoke up, including the band of Metallica and Dr.
Dre (The Guardian, 2000). In 1999, the Recording Industry Association of America (RIAA)
acted and sued Napster for copyright infringement and demanded that the company should
get permission and pay for licensing if they wanted to keep sharing music within their
platform (Richtel, 2001). At that time, Napster was running around 170 servers and it
averaged about 11.2 million active users at any moment while also having a total of more
than 50 million registered users. RIAA claimed that because of Napster the music industry
had last more than 300 million dollars due to the decreased sales (Rowell, 2006). Napster did
not manage to win the lawsuit which resulted to an injunction to stop its services. In, July
2001 the company shut down its servers thus ending their exciting run in revolutionizing the
way people used to consume music (Dowling, 2019). These events, where a result of the lack
of regulations in the digital world at that time and Napster took advantage of that but broke
other laws regarding the rights of the artists and other copyright terms (Forde, 2019). Overall,
Napster did change the field forever by open new paths in the way that IT interacts with the
music industry and creating a path for the next generation of online music services which
soon lead to today’s iTunes and Spotify (Kopf, 2019).
Additionally, these ethical matters keep reappearing in the music industry. A recent example
is that of Spotify. Spotify was accused of copyright infringement by Wixen Music Publishing
in 2018 and the label sought 1.6 billion dollars. Wixen Music Publishing argued that spotify
failed to address their artists’ claims for more than 10 thousand songs (BBC, 2018). Wixen
also argued that Spotify did not pay the songwriter royalties to their publishing company 21
percent of the time (Perez, 2018). The label proceeded to requested 150 thousand dollars in
statutory damage for each song, and that is why they asked for 1.6 billion dollars in their
original lawsuit. In the end, the companies announced that the have reached a settlement, but
the amount Spotify ended up paying Wixen for the rights remains unknown (Deahl, 2018).
Also, in 2017 Vevo was hacked and a total of 3.12 trillion GB of data was leaked. Vevo is the
world’s largest premium music video provider and the hackers managed to retrieve internal
documents and unreleased video content. The breach was a result of a phishing scam and it
could have affected the reputation of the company and the integrity of their artists if it was
not dealt with in time. Vevo though, managed the issue in time and the sensitive information
that was leaked, quickly got deleted (Cisomag, 2017)
One other recent incident associated with the lack of cyber-security happened to Warner
Music Group, a major record label. This time the incident did not affect the artists but the
clients of the company. Warner Music Group (WMG) belongs to “The Big Four”, which are
the four biggest record labels in the world (BBC, n.d). However, in August of 2020 many of
the company’s e-commerce websites had been under a Magecart cyber-attacks which resulted
to the leak of WMG clients’ personal information. This phenomenon is a common risk with
major companies that handle Big Data; it is included in the General Data Protection
Regulation (GDPR) of 2019 and it is described as an invasion of privacy (Andrew and Baker,
2019). The data that was compromised included, within other information, the clients’
payment card details, but the record label failed to provide the list of websites affected by the
Magecart attack. Thus, many individuals may not be aware that their personal information
was exposed (Hope, 2020). Once the breach was resolved, WMS offered the affected
customers 12 months of free monitoring services to compact any future uncertainty that
clients may have about their privacy (Coble, 2020). This type of events show that data is a
very important matter and that its exposure can affect everyone which is part of the industry.
In brief, the music industry has been heavily impacted because of recent developments in IT.
The road has certainly been scabrous, but this has not stopped the industry from evolving and
getting more modern. The rise of music streaming platforms has changed peoples lives and it
has also changed how companies use and interact with their client’s data. Thanks to Spotify,
more modern API technologies and learning mechanism have been developed in order to
better process the information of the application’s users. On another note, Napster change
how music distribution used work and revolutionised the industry by proving that it is
possible to share music online. The company may have not taken ethical matters into account
at the time but, it certainly showed the world what is possible through IT and it also made the
music industry more meticulous with the use of their artists’ rights. Also, some other
incidents where information was leaked made the music industry more concerned about their
clients’ privacy and it now is an ongoing matter that companies constantly work on
improving. Finally, the interaction of recent IT developments with the music industry may
not have been the smoothest but it has helped the field grow and it has changed how people
enjoy their music forever.
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