Category Archives: Music

Artificial Intelligence Executive Summary: What Have We Accomplished?

What is Artificial Intelligence? According to Stanford University, artificial intelligence is “the science and engineering of making intelligent machines, especially intelligent computer programs. It is related to the similar task of using computers to understand human intelligence, but AI does not have to confine itself to methods that are biologically observable.” AI is the first step towards self-learning machines that seem to have two main goals: to solve problems and to make tasks easier and more efficient. To do this, it must be a flexible, rational agent that can perceive its environment in order to take actions that maximize its chance of success. Artificial intelligence is changing our lives, it is already impacting our lives in major ways today; Siri, Echo, Amazon’s purchase predictions, and certain home devices are very common examples of this. Its mark on the world has recently started to grow beyond this, and it’s doing so rapidly. AI’s have already been able to contribute to successfully trialing autonomous vehicles, composing music, writing screenplays, and beating masters at their own game (this and more will be explored more deeply during the course of this project). It’s all very remarkable, but like any progressive movements and advances, there are concerns attached. The video below discusses the current impact that AI has on our lives and the implications it has for the future, especially the replacement of human labor with AI. The speaker compares it to the impact agriculture had in the world, (which was immense by the way).

At the moment AI is nowhere near having the same powerful cross-domain ability to learn and plan as a human being does. The cortex in our brain has ways of computing that Ai developers have not been able to achieve yet. If human level machine intelligence may arrive sooner than predicted, then will we need any further technological advancements? If super intelligence is achieved, this may be the last if not close to the final invention humanity will need. With such an ability to mature a superintelligence may be able to find a cure for cancer, expand human longevity, or even space colonization. The main question is: What will AIs impact on the world look like in the future?

One of the things AI has already started to impact is the art and entertainment industries. Most of our firsthand experience with artificial intelligence in entertainment stems from farfetched cases of an undeveloped understanding of AI in vivid Hollywood scenarios. Majority of the scenarios bring to question whether advances in technology could evolve beyond our control in movies like, The Terminator, Ex Machina, and children’s action film Spy Kids. In these notable films, AI agents develop a conscious thought process equivalent of the protagonist their up against in these films. While this gives a flowery depiction of AI, the outstanding question of AI and its affinity in the context of art/entertainment remains. It’s important to understand the original purpose of AI, which is to assist humans and their interaction with technology. “The technology we have today compared to what could be is like making a stick figure drawing of Michelangelo’s David,” stated by Tim Tuttle, CEO and founder of AI firm Expect Labs. But what if that same AI technology can produce art much greater than Michelangelo’s David? When considering art, one must at some point or another question it’s origin and what makes it so special. Some people believe art comes from something beyond our comprehension; a higher power of some sort. Others believe that art at its core is a very human thing. No matter what you believe, Artificial Intelligence has the potential to disrupt your current philosophy and force you to reflect on what it all means. In 2014, Melomics released 0music – an album composed by an artificial intelligence named Melomics109 without any human intervention whatsoever. You can watch and listen to one of the songs from the album here. Now, the music isn’t anything special; it’s no Mozart or Beatles. However, it’s lack musical greatness doesn’t take away from the magnitude of the step taken. As we’ve all learned from studying disruption innovation, most disruptive innovations start out unimpressive; that’s why most people don’t pay attention until it’s too late. There are even instances where AIs are writing film scripts. AI has written Sunspring, a movie which is said to be “hilarious and intense” according to an article by Annalee Newitz. After watching the movie myself, I realized the movie had no plot, no story, and make absolutely no sense. At first I was confused and wondered if there was something I didn’t understand, since the lines didn’t flow and were a bunch of gibberish. But then I looked at the comments and realized that other people felt the same way. They wrote things like “This was like a bad lip reading video” and “I am so confused. This is like either extremely profound or completely absurd.” So basically, AI”s music and movie writing is terrible, but that’s not the point. The point is that it’s a step and a giant one.

AI is not only affecting the art and entertainment industries, but is also affecting the education industry. Milo, “A humanoid robot that engages with children with Autism and delivers research-based lessons that teach social behaviors. Here is a video explaining Milo and thoughts about this robot from our own teammate, John Ferry.

There are also endless amount of legal implications that comes with the technology of AI. Here is a video which speaks about the legal aspects and addresses questions about morals and ethics in terms of AI posted on the YouTube channel of another one of our own teammate, Matt Ehrhardt.

Back to the question presented in the beginning of this entire journey: What will AIs impact on the world look like in the future? According to an article by Max Tegmark, the AI today is only narrow or weak AI which “is designed to perform a narrow task” but the AI in the future will be general AI or AGI (strong AI) which will “outperform humans at nearly every cognitive task.” Many questions arise with this type of change into our lives. How will we be able to stop/control AI if it is designed to outsmart human intelligence? What are some of the problems that will arise because of Artificial Intelligence and how will be combat these issues? What are some of the benefits this new technology can provide? Max discusses some of the dangers that can result from future AI. In addition to being able to outperform human, AI can also do good things the “bad” way. For example, Max states how “autonomous weapons are artificial intelligence weapons that are programmed to kill” meaning that if this technology gets misplaced or put into the wrong hands, it can easily cause mass causalities, maybe even be able to “destroy the human race” as we have only seen in movies. Also, even if the end goal of AI is to do something good, it may not take the ‘safest” way to reach that goal. Max gives an examples of how if the mission of an autonomous vehicle is to take one to the airport as fast as possible, it might get one there being chased by helicopters and being covered in vomit. In an article on Business Insider by Guia Marie Del Prado, Prado states “AI could either make all of our dreams come true or destroy society and the world as we know it.” Above we discussed the dangers of AI, but what are the possible benefits? Prado discusses a number of benefits that can come from smarter and better functioning AI. The first one is that it can keep us safer, which is an obvious fact. But if autonomous vehicles become a lifestyle in the future and there are zero to no human drivers, the road for humans, pedestrians, and animals could be made much much safer. There will be no issues regarding speeding, drunk driving, or “deer on the road”. In addition to driving, AI may also be able to warn us of coming disasters and even be able to enable appropriate responses to eliminate these disasters. AI has the potential to not only become smarter than humans, but to make humans supersmart and “better at everything”. The combination of Artificial Intelligence and humans can make history with its accomplishments and help humans achieve more than they ever could alone. AI can also be able to solve the world’s problems and save the world. As Staurt Russel writes in Prado’s article: “If you had a system that could read all the pages and understand the context instead of just throwing back 26 million pages to answer your query, that kind of program could actually answer the questions asked. It’ll be like if you asked a real question and got an answer from a person who had really read all those millions and millions and billions of pages and understood them and been able to synthesize all that information.” This type of intelligence could help the world solve poverty, or diseases, or prevent wars and find solutions without having to take lives to do it. All this can happen of course, after ethics are taken in to consideration and applied to each of these aspects that AI focuses on.

Our team has researched and attacked several aspects of Artificial Intelligence and it is safe to say that the future of AI is almost the present. We don’t whether this technology is going to help us or destroy us, we don’t know whether we’d ever be able to keep it under control, or if we could ever learn to coincide with it. All we know is that it’s coming and its going to keep improving. We have just heard sporadic instances of the successes and failures of AI in the past of couple of years, but none of us ever looked deeply into this until we started Disruption. All of the things we thought we had to do to prepare for the future: take the SATs, go to college, get good grades, get an internship, we realized are all pretty insignificant to the future that is actually coming. We don’t even know if by the time of our graduation, AI has taken over half of the jobs we thought we’d have to do. What if AI becomes better at PR or accounting or determining stocks at Wall Street than we do by the time we have to find a job? What would we do? Artificial Intelligence, and other disruptive technology, is growing faster than we can imagine the most we can do right now is be digitally literate on these topics and be prepared by being FAIR for the change that is coming.

 

The Sway of Artist’s Rights

The Sway of Artist’s Rights

November 30, 2015

Caroline Strickland

The atmosphere within the music industry is arguably as convoluted as ever. The industry is infamous for “ripping off” an artist by using their work as content, while paying little to no royalties out. This story is as old as the dawn of the 18th century when player piano companies were not paying royalties to artists when they programmed an artist’s piano piece into the piano. At the time, Congress declared that only music that could be read by the human eye (read: sheet music) would be protected by copyright. That decision was later appealed in favor of requiring a copyright for each mechanically reproduced song.

One could say that the wheel turns, but nothing ever changes. However, such is not the case here. Today’s playing field is vastly different in that the technologies used are infinitely more advanced and an artist’s work is infinitely more widely spread. As soon as any song is uploaded to a single website, it has the capacity to permeate thousands of websites, webpages, streaming services, etc. by the next day. Thus, royalties today are not nearly as simple as a player piano company copying down a song into their machine. It is a matter of defining who is responsible for an artist’s royalties, what portion of royalties is distributed to the artist themselves versus the others involved, and how ethical current practices are in the face of plummeting album sales for most artists in the industry.

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Artists like Adele, who are highly influential in the music industry, have the ability to pull their albums from various streaming services with stock-moving influence. (Photo Credit: http://www.npr.org/sections/therecord/2012/02/13/146786971/adele-sweeps-the-grammy-awards)

Some people have speculated whether or not the few major artists’ decisions to pull or keep their albums from streaming services is a trend. However, it is important to note that there is a big difference between the power held by the “big guys” and the “little guys” in the industry. The highly influential artists like Adele, Taylor Swift, and Beyoncé have enough clout to hold back albums and actually make so much of a difference that they can directly influence stock prices. They stand to lose enough that pulling an album is a viable option. For instance, the year Taylor Swift pulled her album 1989 from Spotify, she was on track to make $6 million from the streaming service. Contrast that to the fact that Bon Jovi’s “Livin’ On a Prayer” streamed 6.5 million times within the course of a year, and only brought in $110 in royalties for the artist and his two co-writers. However, the industry has very few of these artists. The rest of the crowd is made up of less influential bands everywhere in notoriety from Maroon 5 to St. Lucia. These bands don’t have the power to pull their albums from streaming service, so the “trend” created by the big artists are little more than individual choices. The following video is from ABC News and helps one to fully grasp the numbers involved with these artist’s choices.

 

 

Although the country star has “shaken off” spotify, the real trend here is still barreling toward streaming services. . . Unsurprisingly, artist’s rights are still being mauled in the process. The hope of streaming services “[making] music cheap — or free — for consumers while assuring that the artists who created the songs would be fairly compensated,” as quoted from Rolling Stones, is just not coming into fruition.

My forecast at this point in time is that, in the near future, artists will feel enough pressure from streaming service’s drain on their profits. They will migrate to a new breed of content-sharing: direct-to-peer platforms. In this way, they will share their content directly to fans without the third party that is SoundCloud and iTunes. Most often, changes in the industry has come when artist’s rights have been infringed upon so substantially that millions of dollars are being lost because copyrights aren’t being applied to their work in some capacity. Largely, that has been due to new technologies.

 

Mentioned Sources:

The Wall Street Journal; Adele Says Hello to Pandora

The Motley Fool; Adele’s “25” Isn’t on Spotify or Apple Music–Here’s Why It Doesn’t Matter

CBS News; Songwriters: Spotify Doesn’t Pay Off. . . Unless You’re a Taylor Swift

Billboard; Official: Adele Breaks *NSYNC’s Single-Week Record U.S. Album Sales Record

Rolling Stones; The 10 Biggest Holdouts in Digital Music

YouTube, ABC News; Taylor Swift Shakes Off Spotify

The Music Industry: The State of the Union

The Music Industry: The State of the Union

November 30, 2015

Sean Reagan, Megan Gordon, Ryan Stetz, & Caroline Strickland

 

 

The music industry itself can be likened to a very intricate song. As with any industry, it has various moving parts. If a song melds the sounds of percussion, brass, woodwinds, and strings, then the music industry strives to find the balance between artists, producers, consumers, and content-sharing platforms, whether those be streaming services such as YouTube and SoundCloud or a physical device, such as the iPod. As with any song, a single point in time may find  one section overwhelming the others, thus momentarily taking control of the song’s ambiance. Likewise, there is an ebb and flow of power between the industry’s different players. It crescendos in the form of major policy changes and content-sharing disruption. It becomes adagio when the industry settles into a new technology for a while, such as the introduction of radio and vinyl, which dominated the markets without significant challenge for many years. In this, the Music Industry Team’s Final Podcast, we illuminate the song that we feel the industry is playing at present. Most importantly, we forecast how the song is likely to develop.

This podcast is largely focused on Adele’s new album, 25, and her decisions to allow or disallow her music to be played via streaming services. From this conversation, we stem into more general topics that diagnose the music industry at present. We speak about the rights of the artist, the surprisingly positive affects piracy has on competition within the industry, and we make our final remarks (for now) concerning how the industry will proceed and which major players will be driving the change. Will it be the consumer, the record label, the artist, or some new center of influence that will emerge through technology-based disruption? Do you suspect a crescendo will be coming soon? We encourage you to listen and share any thoughts you may have concerning the analysis.

As always, the Music Industry Team hopes you enjoy the thought provoking points that stem from this discussion, and we thank you for your thoughts.

 

Sources Mentioned:

Fortune; 3 Questions for Musicians After Adele’s No-Streaming Strategy

PBS; Chronology: Technology and the Music Industry

Business Insider; The REAL Death of the Music Industry

The Wall Street Journal; Adele Says Hello to Pandora

The Motley Fool; Adele’s “25” Isn’t on Spotify or Apple Music–Here’s Why It Doesn’t Matter

Billboard; Official: Adele Breaks *NSYNC’s Single-Week Record U.S. Album Sales Record

The Detroit News; Adele’s Record “25” Sells 3.38 Million Copies, Breaks Record

Rolling Stones; The 10 Biggest Holdouts in Digital Music

Rolling Stones; Mid-Year Music Updates: Streaming Is King as Downloads Fade Away

Digital Music News; Apple Says Spotify, Pandora, and YouTube Are “Building Their Services Off the Backs of Artists”

AUX TV; Music Industry Executives Say Artist Aren’t Treated Fairly

CBS News; Songwriters: Spotify Doesn’t Pay Off. . . Unless You’re a Taylor Swift

University of Washington, Foster School of Business; The Upside of Digital Piracy: Greater Investment in Quality

 

 

The Fight Against Piracy

According to Universal Music’s Olivier Robert-Murphy, brands can help fight music piracy. He explains how now brands see musicians as more than performers and people that are creative and whom they can form broader partnerships with.

Some examples of these were Will.i.am with Intel and Lady Gaga with Polaroid. Intel hired Will.i.am as Creative Director. He helped Intel develop new technologies, music and in technology advocacy. The main goal was to improve the optimal sound experience the way that the artists intended it to be heard by their customers when playing through headphones or speakers. Lady Gaga was named Creative Director for a special line of Polaroid Imaging products. Polaroid was interested in her due to her fashion forward aesthetic and close connection to her fans. They worked on merging the iconic history of Polaroid and instant film along with the digital era.

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Robert-Murphy said that now brands form partnerships with these musicians and they are able to give customers the same experience as free, but even better. The more people that like this option the more people that they can recruit to subscribe as well. This will help customers realize it is more than just the content of the song and it is more about the whole experience, including the technology and brands and branding are helping musicians and helping spread awareness.

 

 

Willi.am with Intel:

http://www.pcworld.com/article/217687/article.html

Lady Gaga with Polaroid:

http://www.polaroid.com/news/lady-gaga-named-creative-director-for-specialty-line-of-polaroid-imaging-products

A SWOT Analysis of the Music Industry

(My first post can be found here.)

While some parts of the Music Industry are caught in a downward spiral, streaming services along with the new Direct to Fan platform have done well in adapting to the disruptive technologies in our society today.  So where does the Music Industry stand as a whole? In order to answer this question we must do what all businesses do when they need to see where they stand, and that is we conduct a SWOT (Strengths, Weaknesses, Opportunities, and Threats,) Analysis for the Music Industry.

 

Links:

Streaming music sales in the US beat CDs for the first time

Adele Is Said to Reject Streaming for ‘25’

Apple to end Beats Music on November 30

That’s Business, Man: Why Jay Z’s Tidal Is a Complete Disaster

Recording Studios Face Uncertain Future

The Recording Studio’s Heritage & Demise

The music industry of today finds itself split into two distinctive camps. The industry has often been found in this precarious position. It was once the battle of the radio versus the vinyl. Then it was the cassette versus the CD. More often than not, evidenced by the aforementioned struggles, the divide is that of technological preference. Through the massive overhauls in music recording, distribution, and listening, the losing side has always been those that resist change until they’ve dug in so far they are incapable of bending to prevailing market forces.

There are a few areas that we could examine. Those are:

  1. Recording
  2. Distribution
  3. Personal Use

This installation on the DT&L blog will focus on recording. The issue of recording preference and strategy is at the core of the music industry for one glaring reason: it IS the music. The two camps of today are: analog and electronic. To put it more simply: that’s difference between the compositions of Aerosmith and Skrillex, respectively.

 

Analog:

The aforementioned divide in the music industry today is not only born out of practicality, that is to say what method of recording an artist or studio feels most comfortable with, but also of style. Analog, put most simply, is any type of recording that is not electronic. The most recent heyday of analog recording was the “classic rock” era of the 70’s and 80’s. Picture the fabled rock stars in the smoky and ambient recording studio with their dedicated team of engineers. The members of this camp cling to the “old ways” as much for comfort as they do for heritage. Unlike other industries such as Healthcare or Personal Computing, the music industry does not relish the idea of immediately relinquishing technology as soon as its successor comes along. In fact, it does the exact opposite. The “legends” of the industry recorded in analog settings. Recording studios, like The Magic Shop, in the SoHo neighborhood of New York City, have been the birthplace of some of the most well-known songs in our pop culture. Notably, these purely analog studios are becoming somewhat boutique in current days and many are facing issues staying open as their clientele dwindles. Many studios are beginning to straddle the line between analog and electronic systems. Purely analog studios are slowly becoming part of a niche of performers that refuse to relinquish the past.

One such studio is Akron Analog, an analog studio in Akron, Ohio constructed from the ground up by Indie-Rock group The Black Keys lead-singer Dan Auerbach. Auerbach was quoted as commenting as follows:

“Most of the equipment is analog. I’ve got tape machines that I use, and my console is custom-made, 1950s tube style. The room was built from the ground up and it’s acoustically correct, you could call it. After I built the studio, I could really record stuff the way I wanted it to sound.”

The studio is boutique in nature and caters to a select group of artists, many of which are brought in selectively by Mr. Auerbach. In 2009, the studio was the birthplace of Auerbach’s 2009 solo album, Keep it Hid. Although it was recorded in-house at Akron Analog, the album require partnership with a larger label, Nonesuch Records, to propel it into view of a larger audience.

Electronic:

Electronically produced music requires a word of clarification before it is fully explored. Upon seeing the word “electronic” in association to music, the tendency is to gravitate toward the idea of electronic or EDM (electronic dance music) music. While Skrillex, an EDM artist, is cited here as the example, it is extremely integral to realize that all genres of music can and are being produced electronically today. That is because the capacity of today’s personal computers makes it easier than ever to record sound and “bounce”, or transfer it, from production software to a shareable medium.

There are multiple electronic platforms that allow artists of today to work. Whether the artist be pre-established or just beginning, the widespread availability of electronic production tools has significantly lowered the barrier of entry to the music industry. Instead of playing every night in small venues and hoping a producer would hand one a break, artists of today can flood platforms like Tumblr, SoundCloud, and iTunes with their original, self-recorded pieces. Software like ProTools and Ableton allow artists to easily record their pieces, master them, and then share them. The implications of these practices are huge.

Namely, it is cost effective at both ends of the process. Electronic recording, especially in a non-professional setting, saves on studio and equipment rentals, engineer costs, mastering costs, and distribution costs. Furthermore, if an artist elects not to tangle with a major label, they aren’t going to loose 60% of their profits to the label. The fan experience is also altered in intense ways. Streaming becomes increasingly easy and an artist’s ability to reach out to a fan base with new material is more efficient than ever.

 

 

Ultimately, the difference between analog and electronic production is that of style, an interesting characteristic of the music industry not shared by any other industry that is examined with the DT&L Blog. A likely trend that we will see continuing is the decline of serious analog recording studios and a rise in boutique, stylized analog studio. However, that rise is what will keep the analog studios around, as most major labels are switching to electronic methods to cut their cost. Electronic production will increase competition within the music industry, as increasingly user-friendly production software is introduced.

Thank you very much for visiting the Disruption Technology and Law Blog. I would encourage the reader to explore the other industries represented here and to look out for increasingly macro takes on the trends of technology within the United States and globally.

Sources:

http://www.nytimes.com/2015/10/11/nyregion/a-beloved-recording-studio-may-be-priced-out-of-soho.html?ref=nyregion&_r=0

“Free and Easy” Disruption Dismantles Music

When you look at the sudden free fall of the music industry due to disruptive technologies, you can’t help but empathize with an industry that was completely blindsided and not equipped by any means to handle such a sudden alteratiaccon in the way music is made, bought, and distributed.  The question we find ourselves asking is, “What drove this change in the industry?” Music torrent sites like Napster, streaming services such as Spotify, and music production applications like GarageBand are all examples of these disruptive technologies, but I would describe them as the effect of disruption and not necessarily the cause of it.  I think the main ingredient of the music industries spiraling downfall is the consumer. Like all disruptive technologies, the music industries disruption is based on the fundamental question “How can we make the consumer’s life easier?”

“Free” and “easy” are the words driving the changes in the music industry.  Why pay for music when I can get it for free? Why drive to a store and purchase my favorite artist’s album when I can do that with just a few clicks of the mouse? It was these concepts that anyone could get music for free through file sharing that drove Napster to such prominence that wounded record sales to such an extent that they never fully recovered. Napster of course would not have been able to thrive without the internet and file sharing capabilities that were becoming a big presence in the late 90’s and early 2000’s. Not only did Napster give society the chance to obtain artists’ albums for free, but also it popularized the idea of downloading music on your computer without the hassle of going to the store and purchasing music.  It’s no coincidence that Apple’s iTunes really took off after Napster disbanded in 2002.  Society became enamored with the ease through which you could purchase a song and add it to your MP3 player with just a few simple clicks of a mouse.  With Napster no longer an option to illegally obtain music for free, other peer-to-peer file sharing services such as Limewire and BitTorrent began to emerge, along with Youtube to MP3 websites after 2005, to satisfy the consumer’s need to not have to pay for music.

As technology increased its capabilities, so did the ease through which music could be created, distributed, and bought.  Why pay $1.29 per song on iTunes when you can pay a monthly fee on Spotify or to stream music on Pandora radio?  Nowadays the area of the music industry that is feeling the powerful influence of disruptive technologies are recording studios.  Popular Recording studios such as this one in Soho in Manhattan may soon go by the wayside with the lack of use by artists. But this begs the question, “why pay incredibly high rates to use a recording studio when GarageBand and other recording services are available right on your own computer?”  It is very likely that we could soon see more recording studios and even record labels become a thing of the past. http://www.fastcompany.com/3032642/why-the-music-industrys-next-big-disruption-is-in-the-recording-studio

So what is to come for the music industry? What new products are going to make life easier for consumers to have access to their favorite artists? A new platform of music streaming called Direct-to-Fan has made it possible for independent artists to bypass record labels and sell their music or merchandise directly to their fans through websites such as Musicglue.com  or Nimbit.com.  The logic here is, if you’re an artist, why give record labels and music/merchandise distributors a significant cut of your revenues, when it would be much cheaper to use one of the aforementioned websites?  Another new product consumers are beginning to use is Periscope.  Periscope is a live streaming app that allows the user to view live videos that other users are uploading and the user can upload their own live stream.  Periscope has come under fire as some users are using the service to stream live concerts or sporting events, which violates broadcasting copyright law.  Once again the consumer is finding new ways to avoid paying expensive ticket prices for events that they can watch for free from the comfort of their own home.

The question the music industry is asking itself, was there a way its collapse could have been prevented? Is there anything that can be done to stop this downward spiral?  According to this article there is still something that can be done to prevent further collapse but this Forbes article does a great job explaining why the music industry is “beyond all recognition” thanks to disruption. Finally this video also gives a brief description about the causes of disruption in the music industry.

 

 

 

Piracy: Negative or Positive?

Most people understand that piracy is something that harms the music industry. When something has a copyright and you download it, leeching, from another source for free, you are pirating and this is illegal. Seeding, or sharing this illegally received content is also a violation of a copyright. The RIAA acknowledge that piracy is an ongoing problem and that it has caused revenues to the music industry to drop, due to the rapid increase in technology since around 2000.

The chart from MusicBuinessWorldwide.com shows the decrease of the global recorded music income from 1999-2014.

One of the ways that the industry has tried to make up for the $12 billion loss is to due the individuals that they can find that are illegally obtaining and distributing music. The second way is to lay off workers that the industry to stay on top of their financial standing. So far there have been layoffs that have led to around 71,000 people without jobs.

The increasing cost of music is a factor in why people have started to illegally download music. Although the availability of sharing websites have contributed to a large part of why people have chosen to pirate music.

The difference between sharing that is legal and sharing that is illegal is if what you are sharing has a copyright. Most problems occur because some people that are downloading and sharing these filed don’t recognize when something is copyrighted or not. A good way to know is if it could be purchased somewhere else. There are many websites that give useful information for people that have questions pertaining to illegal vs. legal sharing as well as copyright information. One good example is computerhope.com.

On the other hand, there are some people that believe that piracy is not always a bad thing.

Two faculty members from Foster School of Business that had done research and come up with some interesting results. They created an economic model, from an in depth study of software, game, and entertainment producers and this exposed information that led them to believe that piracy has some sort of positive effect as well. Lahiri, one of the faculty members, says that it is because piracy injects competition into the market and this is good for customers. This could lead to better products at lower prices. They have also discovered that the world’s most substantial producers of digital goods has increased their innovation instead of it disappearing. Companies are investing in the quality of their work to offset piracy. They acknowledge that piracy is not a good thing and they do not encourage it but they believe that consumers and society actually benefit when there is a small amount of piracy.

Although this is not the most common way to look at it this is the first of ideas that piracy may not be all bad. In the end, pirates take away from a firm’s revenue and make them compete with their own content.

Is piracy all bad or does it create healthy competition?

Apple Had a Great Year

On their fourth quarter earnings call yesterday afternoon, Apple showed that they are still dominant when it comes to technology and music in 2015. Apple has been a leader and innovator in music and technology for years by creating new products, perfecting others, and even joining new markets (streaming). This year, though, has been a record setting year for the company.

According to Billboard.com, revenue was reported at $51.5 billion and net profit was $11.1 billion. This fiscal year for Apple saw revenue growth by 28 percent to 234 billion. Annual net income increased by 35.1 percent to $53.4 billion. Although Apple is not the largest company in the world, the numbers show that they are a powerful entity and are only growing as time goes on. Fortune named the company number 1 on their “Top 10 Most Profitable Companies of the Fortune 50” list this past June.

Apple CEO Tim Cook also briefly talked about Apple Music during the call. He spoke about Apple Music and the number of subscribers using the service, now at 15 million individual and family accounts. In addition to this, there are 6.5 million paying customers. This is about a third of the number who pay for the market leader in streaming, Spotify.

One fact that was not surprising, but definitely worrisome, was that the iPhone accounted for 63% share of revenue. This is obviously a large portion of the company’s revenue. As previously mentioned, Apple does a great job at innovating and adapting to a changing environment. Just five months ago, Apple removed the iPod off their homepage menu bar, a product that sat on the bar for 13 years. iPod sales have been declining for years, and Apple adapted by removing the product from the homepage and replacing it with a Music button. How will Apple adapt to their iPhone taking 63% share?

What will Apple do going forward? How will they adapt? A classic line is, “Once you’re at the top, there is nowhere to go but down.” We’ll see what happens.

 

Pandora and Music Labels Finally Agree?

Since its conception in January, 2000, music labels and Spotify have been at odds. Even last week, Pandora announced it would pay $90 million to settle a lawsuit over royalties for artists who recorded music before 1972. Because of a legal loophole, Pandora was able to play songs on the internet radio services without paying royalties to artists. While Pandora has been at odds with labels, they agree with labels about one thing.

They hate Spotify.

Spotify and other streaming services of its kind have been growing, effecting the music industry in different ways every year. According to Nielsen’s 2014 Report, only 257 million albums, CD or digital, were sold. This was an 11 percent drop from 289 million the previous year. Streaming, however, has 78.6 billion audio streams with 85.3 billion video views. This is an exponential increase from the previous year. The numbers clearly show that consumers are leaning more towards streaming their music, instead of buying digital tracks or albums.

While labels and artists hated Pandora for royalties, they all agree that Spotify’s music service gives consumers too many options. While Pandora allows its listeners to listen to virtually any song, these songs are picked by the service. In addition to this, Pandora breaks up these songs with advertisements. On the other hand, Spotify let listeners listen to ANYTHING they want for AS LONG as they want. Pandora CEO Brian McAndrews said during Thursday’s earnings call, “I think one of the challenges for the industry, I think, and for Spotify is how many of those teens are actually paying for it? And an on-demand model is meant to be paid for and subscribed to.”

McAndrews brings up a point. According to Spotify, there are sixty million overall active users of the service, with fifteen million paying users. Spotify offers a “freemium” option that has advertisements, but users are still allowed to listen to anything they want anytime. This freedom is hurting Pandora, and bringing up not only licensing issues, but questions about streaming in the future. In addition to this, Spotify still isn’t even a profitable. In 2011, Spotify brought in revenue of $236 million, with a net loss of $57 million.

Spotify isn’t the only company facing net loss. Pandora is too, with a net loss of $20 million in 2012. How do these companies effectively pay artists, but still make a profit? Many say that we should get rid of streaming services all together. Others say we should all just “suck it up” and agree to pay $10 a month, helping the industry go and supporting artists, with no “freemium” option.

Peter Kafka of Re/code translated Pandora’s earning’s call, and their issue with Spotify, in a great way. “Look, it would be bad if our free, not-on-demand service had to compete with free on-demand services forever. But those things are as bad for the music industry as they are for us, so we bet (we hope!) they’re going to go away.”

While it’s obvious these services aren’t going away, it’s going to be interesting to see what happens.