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  • TRADE IN SOUNDS: HOW TECHNOLOGY HAS CHANGED THE WORLD OF GLOBAL MUSIC

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    Trade in Sounds: How Technology has Changed the World of Global Music

     

     
     
    International Trade Forum - Issue 3/2009 
     

    © ITC/M. Labbé 

    New technologies have fundamentally changed the global music market. The advent of digital networks as a new promotion and distribution medium means that the investments required to produce, market and distribute music is now lower than ever before, offering small recording companies unprecedented opportunities to offer their products at affordable prices for consumers.

    However, in many cases, piracy can still thrive in a context of expensive and archaic distribution methods, which in developing countries offer a marked contrast to the low price and general availability of pirate copies. As a consequence, earnings are sporadic and largely dependent on live performances, although the music industry contributes significantly to employment and gross domestic product figures.

     As Daba Sarr, coordinator of the Export Bureau for African Music (BEMA) in Dakar, Senegal, puts it, "Either African artists are signed up by the big labels in Europe and the US, or they struggle to get noticed and make a living." With sales estimated at between US$ 875 million and US$ 1.75 billion, "world music" accounts for up to 10 per cent of the global recorded music market. Recorded music represents about a quarter of the entire music industry worldwide (i.e. including both live and recorded music sales), which is worth a total of some US$ 130 billion.

    Despite being the "home" of world music, developing countries are for the most part unable to provide the production and promotion capacities expected by rising stars. As a result, revenues are mostly channelled through record companies in Europe and the United States, and very little trickles down to the countries of origin. So far, the same applies to the online world, with web sales of music offerering a growing revenue stream to the music industry - but mostly in developed countries.

    According to the International Federation of the Phonographic Industry (IFPI), in 2008 there were more than 500 online music services available in over 50 countries generating more than US$ 3.7 billion in global sales. But only 8 per cent of online music services identified by IFPI are hosted in developing countries. On a positive note, artists and music companies are beginning to explore the Internet as a solution to falling revenues from traditional sources.

    A case in point, Malian music company, MaliK7 (www.mali-music.com), has struggled with declining income in recent years due to the increasing pressure of music piracy. With domestic revenues vanishing, MaliK7 cannot rely on exports either, as the company only exports small volumes of CDs to specialized boutiques, mostly in France. In understanding that, MaliK7 realizes that online music services are the future of the industry and has started selling digital tracks via platforms operated in Europe, such as www.mondomix.com. "We are working with online music businesses in Europe and it's a nice niche, but we would like to offer those same tracks on our own website. We just need the technology, investment and training to venture into this line of business," says P. Berthier, Chief Executive Officer of MaliK7.

    Producers elsewhere in the developing world face similar problems and are looking to the Internet with the same hope. "We have archives of ethnographic recordings of Tajik music. We know they are of interest to amateur music lovers in the United States, for instance, but we just don't have the technological capacity to make them available over the Internet," says Sayfiddin Nazarzoda, Director of Takijistan's Rudaki Institute.

    In Jamaica, the issue is somewhat different. Although Jamaican music has one of the strongest brand identities in global music, the opportunity for Internet-related revenue is not being embraced. "The value addition in the Jamaican music business is not taking place. We see the potential of the Internet to change this. We see it as a low-hanging fruit that we just haven't picked yet," says Lisa Bell, Vice-President of the Jamaican Trade Promotion Organization.

    ITC is responding to the gap between the opportunity and the reality of online music revenues for developing countries by identifying simple, cost-effective ways to harness the potential of digital content distribution through effective online marketing and e-commerce solutions. The business opportunity is too great to be ignored. 

    For more information, please contact Martin Labbé atlabbe@intracen.org