Earlier in the year, we learned how Napster disrupted the music industry. However, we barely touched on the oligopoly that did and still does dominate this industry.
The music industry is dominated by three major firms: Universal Music Group, Warner Music Group, and Sony Music Entertainment, which together control over 70 percent of the output of commercial music. The majority of record labels belong to one of these three firms. (Before 1999 there were 6 firms, but half of them were merged into the three remaining firms discussed here.) These three firms are part of a differentiated oligopoly because each produces slightly different music and has ownership over different artists. However, these firms work together, both explicitly and tacitly, to make decisions that impact the entire industry.
As the world becomes more and more digitized, the music industry is changing drastically. Overall, the industry is decreasing in value. Physical recordings, like CDs and vinyl, are nearly obsolete as streaming services are now the dominant way in which consumers listen to music.
In the digital world, consumers are generally benefitting from the oligopoly of the music industry. With only three major firms, companies like Spotify or Apple only have to get three contracts signed to make available nearly all of the music being commercially produced. That means that as consumers, we get access to basically every song, artist, and album at one price.
When small, independent record labels, notably Taylor Swift's Big Machine label, interact with streaming services, they do not have to follow the same rules as the major record labels. Small firms can offer different deals to different services, unlike large labels. This is problematic for these streaming services and is inefficient to work out. This is why nothing comes up when you search Taylor Swift on Spotify!
In general, oligopoly in the music industry has ultimately benefitted the consumer as the consumption of music becomes digitized. It allows consumers to have access to basically all the music that is commercially produced for one price (or no price).
Works Cited:
https://themusicbusinessnetwork.wordpress.com/2010/05/08/an-overview-of-the-recorded-music-industry-market-structure-major-players-technological-changes/
https://medium.com/bull-market/in-praise-of-oligopoly-63c586d5c8b4
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I really like how you focused on the trend of labels being the biggest players in the music industry to the artists themselves. The internet has really leveled the playing field when it comes to artists being able to sell their music fairly and receive far more free advertisement through social media. Slowly, the reduction in the power of the music industry oligopoly has made the market accessible. Soundcloud rap, however, stereotyped it may be, is the result of this. Artists like the late XXXTentacion and Lil Pump have all made it because of the increased competition and accessibility of the music market.
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I think that the digitized aspect of the industry is really important, because the new trend of streaming music has disrupted the traditional methods for album sales and physical album sales that make up the main parts of the market for the three main companies that are involved in music. What is also interesting is that Taylor Swift actually put her music on Spotify a few months ago, signaling that even her record has recognized that publicity and money aren't coming from physical album sales and are becoming more reliant on streaming because the large majority of music listeners stream their music now.
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