The Transformations of the Music Industry in the Age of Digital Platforms: A Analysis in Terms of Network Economies

Name: Gabriel dos Santos Cavatti
Type: MSc dissertation
Publication date: 19/05/2020

Namesort descending Role
Alain Pierre Claude Henri Herscovici Advisor *

Examining board:

Namesort descending Role
Alain Pierre Claude Henri Herscovici Advisor *
César Ricardo Siqueira Bolano External Examiner *
Robson Antonio Grassi Internal Examiner *

Summary: Digital platforms have transformed the music industry in these last two decades. Due to new technologies, like storage, streaming and music sales, the recording industry was changed dramatically during this period. Its revenue dwindled in about 40% in 15 years, mainly due to the influence of file sharing networks, followed by a recovery in the last 5 years. This transformation happened because of these new technologies that have altered the economic nature of the musical good, and part due to the recording industry’s ineptitude or laziness to adapt to this transformation. File sharing platforms managed to internalize the externalities that were created by the recording industry, and at the same time they created negative externalities to this industry. The recent increase of revenue occurred primarily due to the use
of new ways in making service, in this case because of the music streaming, coupled with alternative financing methods, through the secondary market, with the gathering and sale of user data and of their audience. On the other hand, for the music production, these transformations have altered the way artists acquire revenue, as a result of the reduction of phonograph sales, which also reduced the copyright revenue. The specificities related to the
music industry also explain why they were so impacted during this period, since other cultural industries, like the cinematographic industry, didn’t suffer from this kind of restructuration during the same period. There is also a current revival of live music events that have intensified during the last 15 years.

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