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Level 2 Business and Economics: External Influences 2

Case Study 3: Technological Change

The developments in technology has affected the music industry in many ways. Vinyl long playing (LP) records were followed by cassette tape and then in the 1980s compact discs (CDs). The CD revolution was a bit of a bonus to the industry in some ways because it meant that many businesses could now sell existing artists' work on CD and many people chose to replace their old LPs with CDs. The cost to the businesses was relatively small but profits and sales growth were high.

Stack of vinyl LPs on a shelf

Vinyl LPs - the development of CD technology provided a boost to sales of recorded music as people replaced their favourite LPs for versions on CD. Technology does not always provide opportunities, however: it also provides threats. Copyright: Kreal, from stock.xchng.

A monitor display of a file-sharing application

File sharing - a terminal threat to the music industry or an opportunity for a whole new way of buying, promoting and selling music? Copyright: , Bjørn Børresen, from stock.xchng.

In the 1990s, however, things began to change - technology advanced to such a state where people could now record onto CD; computers started to incorporate CD recorders in their systems and the advent of the Internet meant that millions of people throughout the world were able to share music - all for free - if they wanted.

CD sales started to fall not only because of this file sharing but also because people could now access music in different ways. MP3 players meant that thousands of songs could be recorded onto devices that easily fitted into a pocket and which could be carried around everywhere. Now mobile phones double up as MP3 players as well as a form of communication.

Many businesses in the music industry blamed illegal copying of music for the downturn in sales. Others just pointed to the fact that the music industry had been slow to react to the changes in technology and had not appreciated what the market now wanted from their music.

A classic example of how the music industry failed to move with the times was given by the Sheffield-based band the Arctic Monkeys. The Arctics made their way in the industry by encouraging fans to put their songs on the Internet. They were able to build up their fan base as people were able to hear the songs and decide whether they liked the band.

Their debut album called 'Whatever People Say I Am, That's What I'm Not' was released in January 2006 and sold 360,000 copies in the first week - the fastest selling debut chart album in UK history.

An 'e-card' of the Arctics, with shots of them walking down a street, playing live, laughing, sitting on a doorstep and standing against a wall

The Arctic Monkeys embraced new technology to build their fan base rather than try to fight against it. Businesses in the music industry are looking at the success they have had and seeing if they can learn from it. Copyright: arctic-monkeys.com.

Tasks

Each of these questions is designed to try and encourage you to think about the effects of technology on the music business. You might not have a detailed knowledge and understanding of how the business works but you can use some basic knowledge and understanding of business to help answer the questions. You can either answer them in written form or you could use the questions as the basis for discussion in class.

  • Carry out a SWOT analysis for a small independent music retailer selling a wide range of music styles on CD and Vinyl located in a small market town in the UK.
  • Many of the large music industry businesses blamed illegal file sharing for the fall in CD sales. What other factors do you think might have accounted for a fall in the sales of CDs?
  • Apple's iTunes downloading service has been a big success. What might be some of the business reasons for this success?
  • Do you think that CD singles will still be around in five year's time? Explain the reasons for your answer.
  • In 2006, the long running BBC TV show Top of the Pops ended after 42 years. Do you think Top of the Pops was a victim of developments in technology?
  • If you were part of a band like the Arctic Monkeys, what predictions would you make about how the music industry will develop over the next five years?

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