Question

3. Explain the economics of the music industry in the 1970’s and explain the issues that confronted them. please explain me in detail.

Answer 1

The economics of the music industry in the 1970’s and their issues :-

The 1970s market development was less enthralling. In the USA, recorded music sales revenues grew less than they did in the 1960s. They even decreased in 1974 and 1975 a bit, adjusted for currency effects during the oil crisis. In contrast, 1976-1978 were successful years, due to the Disco hype in these years (Gronow 1983; Lopes 1992). As the record industry did not experience a decreasing market for more than 30 years, the recession in the first half of the 1970s was a big problem for the industry. Rock music as the big music style of the 1950s and 1960s could not delight the audience any more as it did before. The new and fresh style ‘Disco’ was the new hope of the music industry, which caused that a large amount of Disco artists and releases, even by artists of other genres. Because of this hype, Disco quickly lost its popularity after a few successful years .

From 1979, the music industry had to cope with a new bigger recession, which did not only affect the US market but the music market worldwide. The crisis derived from content, demographic, structural, economic and technological problems:

(1) Content: The music industry did not have a strong genre anymore, as Rock in its several sub-genres lost its attraction, and the Disco hype did not last for long (Brewster and Broughton 2006).

(2) Demographic Structure: In the 1970s, the ‘baby boom’ generation matured, which changed the demographic structure. These consumers were at the age, in which music is less important, or which the youth-focussing music industries could not handle appropriately (Degenhardt 2010).

(3)Market Structure: The demographic structure was a problem for the market system because the target group of the media companies did not fit with the target group of the music industry anymore. Consequently, promotion on these media channels was less efficient, because it did not appeal to the target group as well as it did in the decades before.

(4) Economy: An economic recession period from 1979 until 1982 was triggered by the Second Oil Crisis in 1979, which affected the music sales negatively. Additionally, higher oil prices caused increasing vinyl production costs, because oil is needed for the production of vinyl.

(5)Technology: Comparable to the digital music files or CDs albeit more time-consuming, audio cassettes were easy to copy. Although tape copying was less extensive than digital file sharing is today, the record industry was worried about the introduction and quick success of Sony’s portable tape player ‘Walkman’, because tapes became more popular (Degenhardt 2010).