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Music industry as a whole faced disruption by the Internet. Traditionally pre-recorded music was distributed and sold. That was substituted by file sharing, downloadable tracks and more recently cloud-based streaming. This has affected the revenues of the music industry.

The MP3 Format

In the mid 1990s, the MP3 format provided a means to store audio in a compressed format that was far smaller than uncompressed audio . In those days, hard-drives and portable music players had lesser storage capacities. The compressed format enabled people to store music tracks on their personal computers and portable devices. It became easy to create your own compact discs (CDs) mixed compilations .

File Sharing Platform

There was national progression from music CD’s to the Internet-based peer-to-peer file sharing applications. Napster launched it in 1999. Such applications proliferated. Mostly these were illegal. It cannibalized sales of traditional music distributor platforms. There was litigation against the offending companies and individual customers. Still, the pirated music gets downloaded.

Apple : iTunes

Apple is one of the first companies to try to legitimize downloading of individual tracks. It opened its  iTunes music store in 2002 to complement its iPod device. It was an immediate success. Five million plus songs were downloaded in the first two months. It was an attractive proposition to the customers–they can download legally and have access to preferred songs without buying an entire album.

Cloud Computing

The rapid rise in broad band speed and penetration in recent years has opened up the possibility of cloud computing, which allows access to files without the need for local storage. There are start ups such as Spotify and Groove Shark which allow access to an almost endless database of music to users, which can be pushed to computers and other devices which are internet–connected .

The business model is based on subscription services and advertising while a user listens. Spotify technology development began in 2006. The founding company is based in Stockholm, Sweden. The technology was launched for public access in 2008. It was by invitation. In 2009, it launched free registration. The parent company has moved from Stockholm to London. It has now tied up with social media sites. Unlike Napster, Spotify owns music rights, through agents. However, Spotify is over -dependent on social media.
Convincing users to pay for music, any music , has been a growing challenge since the introduction of the cassette tape. (Isacc Dinner kenan – Flagler Business School)

Ethical Issues in Advertising

     There are wide variety of ethical issues in advertising –- marketing unhealthy products , advertising to children and using puffery .

Unhealthful Products

          There are products that cause harm to human health e. g  tobacco , alcohol , pan masala  . Should they be allowed to advertise ? Some countries have banned such advertisements whereas some restrict such advertising . The companies feel that as long as the products are legal ,there should not be any restriction on advertising them . Critics , however , disagree .

Advertising to Children

    Can we direct the commercials to children ? TV advertising to children poses an ethical dilemma . There are issues of cartoon channels and advertising . The young mind will not be able to distinguish between the programme content and  advertising .

Using  Puffery

     Puffery is exaggerated subjective praise of the product without any substantiation . Some puffery is harmless , and cannot be proved or disproved . Puffery should not be misleading , and should not be used as a license to lie . Mostly people can understand when an advertiser is exaggerating.

YouTube

Time magazine described YouTube as the beast with a billion eyes. It is just 14 years old, but is growing at a fast pace. Every minute several hours of video get uploaded to YouTube. It gets a trillion page-views a year. Google bought YouTube in October 2006. Its massive size is a mixed blessing. TV has limited options of viewing whereas YouTube sifts through billions of options . An average user spends 15 minutes on YouTube , whereas he watches on average TV for 3 hours. The upkeep of YouTube is expensive. YouTube tries to tap the ad revenue, but since YouTube does not get the kind of attention the advertisers want, it is not a preferred medium. The advertisers would not like their reputed brands to be near the random stuff , at times weird too . Google, therefore, cannot charge as much as a satellite channel for the ads. But cleaning YouTube is not the answer. It thrives on its anarchy. YouTube is based in San Bruno , California , south of San Francisco. YouTube gets a billion search queries a day. After Google, it is the second largest search engine on the Internet. But video search is not similar to web pages search. Web pages can be read, as there are words. But a computer cannot watch a movie. It cannot look at the huge string of 1’s and 0’s that make a video file. The solution is verbal description of the videos depending on user behaviour. YouTube will survive, but there should be a totally new strategy for it. The designing work is always in progress. The contents should be easily navigable. Its background colour is therefore made gray. Formerly there was a grid of videos. Now, there is a list of channels on the left hand side and the feed informs you the recent videos from those channels. Each channel has a bunch of videos grouped together on to one page. This is done by an individual user. The users organise the videos to overcome the chaos. There is a limitation to the fragmentation of cable TV. YouTube can do it infinitely. Yet, you cannot watch YouTube on TV. YouTube, however is producing its own content. By organising content, any individual can run a channel. The individual channels have subscribers. YouTube is attempting to beat TV, but in doing so it will become TV. It the dilutes its anarchic character.

YouTube Monetisation

YouTube runs ads on user-generated content and shares a portion of the revenue with the creators once they have got monetised. It keeps 45 per cent while the creator receives the balance 55 per cent. The company faced significant pressure from advertisers and users as the ads were placed alongside the offensive content. They introduced new policies that restrict monetisation of the channel. They changed YouTube partner programme which now requires many more subscribers and viewership to earn money. Earlier, a YouTube video creator was required to have only 10,000 views to become eligible for monetising his content on YouTube. Now a video creator becomes eligible only if he garners 4000 hours of watch time within the past 12 months and has at least 1000 subscribers. This should weed out spammers and bad actors.

Seasoned YouTubers with a large number of subscribers remain unaffected. Multiple channels may be a casualty or the new policy. Time and energy will be devoted to the channel that has the best prospects crossing the monetisation threshold.

There are other possibilities of earning revenue apart from Adsense. These included affiliate marketing, sponsorships and merchandising. In affiliated marketing, a link is put to the product/service that is being reviewed. If the link is clicked by the viewers and they go to the site, the creator receives a commission. Sponsorship can be built by developing a reach. They get the attention of brands. Brands are inclined to sponsor bloggers and YouTubers with an impressive reach. They pay the creator to review their products. Those who produce advertising-friendly content receive more adds.

Trailer Marketing on YouTube

The first look of the movies or trailers are released on YouTube these days. In yester years TV and theatres were used to screen trailers. These days the emphasis is on digital releases of the trailers. These are used to set down a set of expectations for the film’s run at the box office. The like and dislike ratio is observed. If dislike ratio is 8 to 10 percent, the sentiment is positive. If the ratio goes beyond that, the sentiment towards the film is mixed, or may be even negative. There are several million views for a good movie trailer, several million likes and several lac dislikes. This is leveraged to create interest in the product. Movie makers make a marketing strategy to get views, and they do not spend anything for distribution of the trailer. Making of a trailer is taken seriously. The production budgets are decent. The bits of storyline, songs and catchphrases are used to build up the launch of the first look. The cost could reach from Rs. 1 million to 10 million. It should be cut properly. On YouTube, the trailer reaches a huge audience in a very short span of time. Even the overall marketing of the movie has become digital. It is cross promoted on social media where the star cast is popular. Some trailers are launched simultaneously on TV and YouTube. It is, however, rare. Marketers learn a great deal from the feedback, of the audiences. The back end analytics help the marketer gauge the response and likeability.