Bridging Business and Music: How Economic Trends Shape Industries
From the early days of vinyl records and radio play to the advent of digital downloads and streaming services, economic trends have continually reshaped how music is produced, distributed, and consumed. The Great Recession, for instance, saw a notable decline in physical album sales, prompting a shift towards digital platforms that revolutionized the industry and the world we know today.
Today, streaming services like Spotify and Apple Music dominate the music landscape, fundamentally changing the revenue models for artists and record labels. Social media platforms like TikTok and Instagram have also become powerful tools for music promotion, enabling artists to reach global audiences instantly. However, the challenge of monetizing digital content remains, as artists and labels navigate the complexities of revenue sharing and intellectual property rights.
What’s the first thing you think of when you think ‘commerce’? I bet they center around these three words: money, trading and business. If you think this, you are entirely correct. With the knowledge I have acquired from the past two years of studying Finance and Economics, I would say Commerce is the art of not only money or trade, but rather a multifaceted field that encompasses the strategies, systems, and innovations that drive economic growth and societal progress. My time in university has proven this to be true, lets take the following article for example: “Newmont Acquires Newcrest, Successfully Creating The World’s Leading Gold Mining Business”
Newmont Corporation's acquisition of Newcrest Mining Limited to create the world’s leading gold company marks a significant milestone in the mining industry, with profound implications for the larger environment, ESG (Environmental, Social, and Governance) standards, and society as a whole. This acquisition is not just a business transaction; it reflects a strategic move towards integrating high-quality operations, projects, and reserves in low-risk jurisdictions. This integration is expected to strengthen Newmont’s position as a responsible gold mining leader and generate significant economic synergies and cash improvements.
Newmont’s commitment to maintaining industry leadership in environmental, social, and governance performance is pivotal. The expanded portfolio will support best-in-class sustainability practices, ensuring that mining operations are not only profitable but also socially and environmentally responsible. This move underscores the importance of studying commerce and economics in conjunction with industries like mining, as it highlights the broader impact of business decisions on the environment and society. Understanding these dynamics is crucial for developing strategies that promote sustainable and responsible business practices, which are essential for long-term economic and social stability.
Lornic, Bloomberg 2024
Similarly, the music industry demonstrates balance between creative production and economic sustainability. Just as in mining, where operational efficiencies and strategic acquisitions drive economic value, the music industry relies on the effective management of intellectual property, market positioning, and digital distribution to thrive. Record labels such as Capitol Records and Republic Records, must navigate the complexities of digital transformation, market dynamics, and consumer behavior to generate revenue and maintain relevance. Studying this intersection between commerce and music reveals how economic principles can be applied to enhance creative industries, ensuring that both artist and their respective record labels can achieve sustainable success while contributing positively to society. A great example of this is Beyoncé's partnership with Netflix for her documentary 'Homecoming,' which not only showcased her musical talent but also her business acumen in leveraging streaming platforms for broader reach (and profitability). Similarly, From the early days of vinyl records and radio play to the advent of digital downloads and streaming services, economic trends have continually reshaped how music is produced, distributed, and consumed.
Now we can look at how industry trends shape the economy, my favorite example of this is how Taylor Swift's strategic decisions regarding her music catalog and streaming rights illustrate the importance of understanding commerce in protecting and maximizing an artist's economic interests. In the paper I linked in my previous post, I discussed how in 2014, Swift removed her entire catalog from Spotify, arguing that the platform's free tier devalued music and didn't fairly compensate artists. This bold move sparked a widespread conversation about the economics of streaming and the value of music in the digital age. Similarly, in 2015, she penned an open letter to Apple Music, criticizing their policy of not paying artists during the three-month free trial period offered to users. Her advocacy led Apple to change their policy and agree to pay artists during the trial period.
Conklin, Forbes 2023
By challenging the status quo, Swift's actions encouraged a re-evaluation of how digital content is monetized and how revenue is distributed across the music industry. This has led to more equitable payment structures, benefiting not just high-profile artists but also smaller, independent musicians who rely on streaming revenue. Consequently, this helps to foster a more diverse and vibrant music industry, where artists can sustain their careers and continue to innovate.
“When I woke up this morning and I saw Taylor’s note that she had written, it really solidified that we needed to make a change”
Now let us turn our heads to how the globalization of the economy has opened new markets for the music industry. Artists can now reach audiences in countries they might never have previously considered. This expansion is facilitated by economic growth in emerging markets, where increasing disposable incomes and internet penetration are creating new opportunities for music consumption and fan engagement. The result is a more interconnected and diverse music industry that reflects a multitude of cultural influences.
Globalization has profoundly influenced the music industry by expanding markets, fostering cross-cultural collaborations, and transforming music consumption through digital platforms. It allows artists to reach global audiences and boosts local economies through international tours and festivals. The digital age democratizes access to music and provides valuable data on global listening habits, while social media amplifies artists' reach. Conversely, the music industry impacts globalization by serving as cultural diplomacy, contributing to economic growth, and mobilizing global movements. This symbiotic relationship continuously enriches the global music landscape and drives economic and cultural development.
To conclude, the music industry is a significant contributor to the global economy. It generates billions in revenue annually and provides jobs for millions, including artists, producers, sound engineers, marketers, and venue operators. Large-scale music events like festivals and concerts can stimulate local economies by attracting tourism, increasing hotel bookings, and boosting sales in local businesses.
Commerce truly is everywhere. It is in the check-out line at your local grocery store, in the advertisements on your Instagram feed, and the music we listen to everyday. It shapes our choices, influences our habits, and drives the economy in ways both visible and invisible. Understanding the relationship between commerce and various industries, like music, helps us appreciate the economic forces at play in our daily lives and the broader market dynamics that drive innovation and growth. Bridging two ideas that seem so distant (I.e. money and music) can help us better understand balance of creativity and economics, ultimately allowing us to navigate and influence the world around us more effectively. The interplay between economic trends and the music industry highlights the importance of this relationship in shaping not only the entertainment landscape but also broader economic conditions such as local economies and consumer markets.
