The mood was not great when industry representatives from all over the world met at the University of Agder in 2007 to discuss the future of the music industry in digitalised world. Five years later, optimism has returned.
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"The pessimism was strikingly unanimous in 2007. People did not really believe in the future of the music industry, but the industry eventually reached the level of the current digital development," Daniel Nordgård says.
Nordgård is a researcher and a lecturer at the University of Agder (UiA), and recently defended his thesis about how digital changes have affected the music industry.
The basis for the thesis was the until now unknown conversations between music producers, record executives, journalists and academics from Europe and America.
The record industry, the European Commission, digital market participants and others with knowledge about the music industry flocked to Kristiansand during period 2007-2012.
UiA professor and musician Bendik Hofset was the initiator. Together with former Pink Floyd manager Peter Jenner, he gathered several of the foremost international players from the music industry to conversations about its future.
The purpose of the initiative was to find out how a new master’s programme for music managers could be established at UiA. In addition, Kristiansand Roundtable Conferences became a gathering spot where people from the industry could vent their frustration and discuss solutions to the music industry’s challenges in a new age.
The conversations were recorded and form the basis for Daniel Nordgård’s PhD work. The participants are anonymised and still secret in his thesis.
"Secrecy was an important condition for the conversations to be so open and interesting as they are, but the agreements also state that the material can used for research purposes," Nordgård says.
From the end of the 90s to 2009, researchers’ and other analysts’ opinion was that the record industry was stuck in the past. Nordgård, however, believes this is a misconception of the industry.
"It is correct that the record industry appears to be conservative and behind the times during these years, but the situation is more complex. Changes regarding technological advancement have been very common in the record industry. The will to change was likely present in the 90s too, but the industry is complex and cannot be changed overnight," Nordgård says.
A number of people have to be paid for writing, producing and distributing music. The challenge is not a new one for the music industry. It faced a similar situation in the 1950s.
"When the US in the 1950s was going to harmonise payment for music on radio, it took 20 years to develop a system that worked for all involved parties. This underlines the complexity for the players in the current digital reality" Nordgård says.
He estimates that today on the streaming service Spotify, there are about 40 million songs with just as many right holders.
In the years 2007-08, the industry could not see how they were to get paid in the future for music, but this changed, and in 2011-12 the optimism returned.
"Digitalisation of the music industry is not just about switching from selling records in stores to music distribution via Internet and streaming services. It is about a number of complex factors in the music industry and society," Nordgård says.
He stresses that the music industry is not one industry, but several different ones.
"You have to familiarise yourself with these music industries to realise how they are affected by digitalisation," he says.
Nordgård brings up three factors that decide the music industry’s transition and adaptation to the digital reality:
"Especially the last part, as it requires European harmonising, and the EU plays a key role here," Nordgård says.
Certain market participants in the music industry have had an extreme faith in technologic advances bringing higher profits. Others have had equal levels of belief in the music industry collapsing.
"The industry has been far too optimistic or far too pessimistic. I have tried to offer a nuanced analysis of the industry’s development. Today, more music is made and distributed than ever before, and the industry is once again making money," Nordgård says.
"Has the music industry successfully transitioned to a digital world?"
"The music industry is successfully digitalised when it delivers efficient digital goods and services and all parties are paid for their efforts. The industry is getting there," Nordgård says.