Sound and music computing has always been an applied research field quite close to the music industry, thus close to the industries that create, perform, promote and preserve music. These industries involve: composers; performers and ensembles; publishers, record producers, manufacturers, labels and distributors; managers and agents; instrument makers; and some others. But right now sound and music computing technologies have a much broader impact and are present in most of the industries that sit at the nexus of cultural, entertainment, leisure and fast moving consumer goods.
A recent study of the economic impact of the cultural and creative sector in Europe (KEA European Affairs [KEA], 2006) revealed that the annual turnover of the sector (€654 billion in 2003) is larger than that of the motor industry or even ICT Manufacturers. This sector, of which music industry forms a major part, contributed 2.6% of EU GDP in 2003, slightly more than the contribution of the chemicals, rubber and plastic products industries combined. The sector's growth in 1999-2003 was 12.3% higher than that of the general economy and in 2004, about 5.8 million people worked in it, equating to 3.1% of the total employed population in the EU25. In view of the European Council's Lisbon agreement of March 2000, that the EU by 2010 should become “the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion”, reinforced coordination of activities and policies impacting on the cultural and creative sector within the EU should be given a high priority.
Given this context, it is clear that the industries that relate to sound and music computing are in the middle of important changes and most are trying to adapt to the new markets and exploring the potential of these technologies. From the writings and presentations of industry experts, we can identify seven major trends.
Industrial Trend 1: Towards a knowledge-based economy
Modern economies are increasingly based on the production, distribution and use of knowledge and information. Knowledge is now recognised as the driver of productivity and economic growth. From the OECD report (OECD, 2005) it is clear that this long-term trend towards a knowledge-based economy is continuing. Science, technology and innovation have become key contributors to economic growth in both advanced and developing economies. Investment in knowledge (comprising expenditure on R&D, software and higher education) in the OECD area reached around 5.2% of GDP in 2001, compared to around 6.9% for investment in machinery and equipment. The share of knowledge-based market services is continuing to rise and now accounts for over 20% of OECD value added. The share of high and medium-high technology manufacturing fell to about 7.5% of total OECD value added in 2002, compared to about 8.5% in 2000.
Statement 1: Music related activities are part of the new knowledge economy and they should take advantage of the continuing growth of this sector.
Industrial Trend 2: A global economy
Economies have expanded beyond national borders. Production in particular has been expanded by multinational corporations to many countries around the world. The global economy includes the globalisation of production, markets, finance, communications and the labour force.
From the OECD report (OECD, 2005) we learn that this is not a new phenomenon per se, but that it has become more pervasive and driven mainly by the use of information and communication technologies (ICT). In the knowledge economy, information circulates at the international level through trade in goods and services, direct investment and technology flows and the movement of people. According to the American National Science Board (2006) the globalisation of R&D, S&T, and S&E labour markets is continuing. Countries are seeking competitive advantage by building indigenous S&T infrastructures, attracting foreign investments and importing foreign talent. The location of S&E employment is becoming more internationally diverse and those who are employed in S&E have become more internationally mobile.
Statement 2: Both the production and consumption of music related goods is now globalised and international cooperation is more important than ever.
Industrial Trend 3: The development of the ICT sector
In the final decade of the twentieth century, the almost simultaneous arrival of mobile phones and the Internet not only changed the face of communications but also gave impetus to dramatic economic growth. We now speak of the Information and Communication Technologies (ICT) sector to refer to the agglomeration of the communications sector, including telecommunications providers and the information technology sector, which ranges from small software development firms to multinational hardware and software producers.
According to the i2010 report (i2010 - European Information Society, 2007), ICT accounts for a quarter of EU GDP growth and 40% of productivity growth. The digital convergence of the information society and media services, networks and devices is finally becoming an everyday reality: ICT will become smarter, smaller, safer, faster, always connected and easier to use, with content moving to three-dimensional multimedia formats. It has been pointed out (Saracco, 2002) that any economic indicator ties together progress and communications infrastructure, and that the dissemination and progress of culture go hand in hand with the possibility of interacting and sharing ideas, thus putting telecommunications at centre stage.
The American National Science Board (2006) reports that the number of industrial researchers has grown along with rapidly increasing industrial R&D expenditures. Across OECD member nations, employment of researchers by industry has grown at about twice the rate of total industrial employment. For the OECD as a whole, the full-time equivalent number of researchers more than doubled in the two decades from 1981 to 2001, from just below 1 million to almost 2.3 million. Over the same period, the number of researchers in the United States rose from 0.5 million to nearly 1.1 million.
According to the KEA report (KEA, 2006) the ICT sector is central to European growth and competitiveness and has been identified as a pillar of the European Lisbon Strategy. It accounts for 5.3% of EU GDP and 3.4% of total employment in Europe. In the period 2002-2003 it was responsible for more than a quarter both of productivity growth and of the total European R&D effort. Darlin (2006) predicts that flat-screen televisions will get bigger and that MP3 players and cell phones will get smaller. And almost everything will get cheaper. But the biggest trend expected is that these machines will communicate with one another.
According to the OECD (OECD – Digital Music, 2005), digital music and other digital content are also drivers of global technology markets, both to consumer electronics manufacturers and PC vendors. The increase in revenues from hardware in the PC and consumer electronics branch resulting from the availability of online music, authorised or not, is potentially greater than the revenues currently generated by paid music streaming or downloads.
Statement 3: The growth of the ICT sector and the innovations coming out of it will be the main driving forces for the music related industries.
Industrial Trend 4: The interdependence of the cultural & creative sector and ICT
The cultural and creative sector generates significant economic performance in other non-cultural sectors, thereby indirectly contributing to economic activity and development, and in particular in the ICT sector. Culture contributes directly to the economy by providing products for consumption, namely the cultural goods and services embodied in books, films, music sound recordings, concerts, etc. But the recent growth of the creative media, according to KEA (2006), is due to the growing diffusion and importance of the Internet. The impact of this development on media consumption has been huge in recent years and will be the major factor for this sector in the future. At the same time, creative content is a key driver of ICT uptake. The consultancy firm PriceWaterhouseCoopers estimates that spending on ICT- related content will account for 12% of the total increase in global entertainment and media spending until the year 2009 (see KEA, 2006). Accordingly, the development of new technology depends to a large extent on the attractiveness of content and the new networks are no exception. The development of mobile telephony and networks is based on the availability of attractive value-added services that will incorporate creative content, to which the sound and music computing may contribute.
However, the KEA report also predicts that the roll out of broadband and the digitisation of production processes will require significant investment for the creative industries to adapt, as well as changes in its management practices. Some industries (notably music) have to go through aggressive cost restructuring programmes and are experiencing consolidation through mergers. Without a strong music, film, video, TV and game industry in Europe, the ICT sector will be the hostage of content providers established in Asia or North America.
Statement 4: Content is a major driver of ICT development.
Industrial Trend 5: New models of exploitation of content
The new ICT technologies have opened up new possibilities for the exploitation of music. Traditionally there have been two distribution channels for media content, namely, physical distribution and analogue broadcasting (radio, TV). Now we also have IP/Internet, Mobile communications (UMTS), Digital TV and Radio.
The OECD report on digital music (OECD - Digital Music, 2005) identifies that network convergence and widespread diffusion of high-speed broadband have shifted attention towards broadband content and applications that promise new business opportunities, growth and employment. Digital content and digital delivery of content and information are becoming increasingly ubiquitous, driven by the increasing technological capabilities and performance of delivery platforms, the rapid uptake of broadband technologies - with 2004 identified as a breakthrough year for broadband penetration in OECD countries - innovative creation and use of content and improved performance of hardware and software.
Through a combination of new technologies, new business relationships and innovative service offers to consumers, the market is developing rapidly in order to realise the potential of online music. Saracco (2002) predicts that in ten years' time nearly all communications (over 90% of it) will be using fixed networks, while most people will be under the impression they are using mobile networks. He observes that in the coming years we are going to see a tremendous increase in communicating entities, be they applications or objects. The amount of communication directly involving humans will keep growing but at a slower pace, fuelled mostly by the dissemination of telecommunications in developing countries.
According to OECD – Digital Economy (2006), users are becoming increasingly active, in such a way we are entering a participatory culture not of consumers but of users. Users are increasingly active and want to express themselves. This is highly relevant to a field such as sound and music computing, which is closely linked to creation and expression.
Statement 5: Interactive broadband networks are revolutionising the way music is distributed and consumed.
Industrial Trend 6: New forms of Intellectual Property protection
Concerning intellectual property protection, there are traditionally two extreme positions to be defended, namely, absolute control of a creation or complete release of the rights to it. However, until recently, there was no easy way to make explicit the rights that an author gives in relation to a creation. Creative Commons (http://creativecommons.org/) is the first example of a system that offers flexible protection of intellectual rights.
Kusek and Leonhard (2005) claim that the issue of protecting intellectual property goes far beyond music and audio technologies. Nevertheless, the crisis started in the music industry. Already, music recording industry revenues are down sharply, despite an overall increase in the distribution of music. The financial crisis has caused music labels to become cautious and conservative, investing in proven artists, with less support available for new and experimental musicians. Kusek and Leonhard note that the breakdown of copyright protection is even starting to impact on musical instruments. Synthesisers, samplers, mixers and audio processors can all be emulated in software. For example they estimate that at least 90% of the copies of Reason, one of the emulation software leaders, are pirated.
Commenting on OECD – Digital Economy (2006) they note the existence of sharp disagreement as to whether intellectual property rights (IPR) currently strike the right balance. There are three points of view: some believe that interest- group pressure has led to excessive protection; some adopt an intermediate position, believing that recent court cases such as Grokster have clarified secondary liability and that this has been sufficient to clarify the IPR situation; a third group maintain that levels of protection and enforcement are still insufficient and should be strengthened. That same OECD report proposes a tentative work agenda that might address the following needs: first, putting intellectual property in its proper place, that is, balancing private incentive versus the public good; second, achieving new digital rights definitions which integrate old rights (e.g. fair and legitimate use) and new rights (e.g. access to orphaned and out-of- print works); finally, accommodating new models of production and distribution (Open Source, Open Format, Open Access).
According to KEA (2006), the main beneficiaries in Europe of the digital revolution have been the telecom operators acting as Internet service providers. Broadband access spending has risen very rapidly. This growth is largely due to the availability of free content. Indeed, 95% of music downloads today, for example, are unpaid for.
Statement 6: New models of the control and use of intellectual property rights are impacting on the music industry and opening up new possibilities for the protection and dissemination of music content.
Industrial Trend 7: Revolution in the music business
The whole music business is going through a major revolution, the main cause of which is the development and expansion of the ICT sector. According to OECD – Digital Music (2005) the rise of online music has resulted in product and process innovation, the entry of new players and new opportunities for music consumption and revenues, involving different forms of disintermediation, and the continued strong role of some traditional market participants (especially the record labels). In the new digital model, artists, majors and publishers have so far retained their creative roles related to the development of sound recordings.
Direct sales from artist to consumer or the building of an artist's career purely through the online medium are still rare. Nevertheless, the Internet allows for new forms of advertising and possibilities that lower the entry barriers for artistic creation and music distribution. According to Kusek and Leonhard (2005), ever since the invention of electricity, music and technology have worked hand-in-hand, and technology continues to catapult music to unprecedented heights. Today, the Internet and other digital networks, despite all the legal wrangling, have made music bigger than ever before. Within ten to fifteen years, Kusek and Leonhard claim, the “Music Like Water” business model will make the industry two or three times larger than it is today. They imagine a world where music flows all around us, like water or electricity, and where access to music becomes a kind of "utility". Not for free per se, but certainly for what feels like free. Along the same line, Kurzweil (2003) claims music technology is about to be radically transformed. Communication bandwidths, the shrinking size of technology, our knowledge of the human brain and human knowledge in general are all accelerating. Music will remain the communication of human emotion and insight through sound from musicians to their audience, but the concepts and process of music will be transformed once again.
Statement 7: The possibilities of the ICT technologies are completely reshaping the music business.
To sum up, the identified trends show a rapid development towards a knowledge-based and global economy, with a major role of the ICT sector. Reports indicate a growing interest in the mutual dependency of the cultural and creative sector and ICT, which leads to new roles of content exploitation and dealing with intellectual property issues. All these developments accompany the revolution that is currently taking place in the music business. The sound and music computing field is expected to play a crucial role in these developments.
OECD. OECD Science, Technology and Industry Scoreboard - Towards a knowledge-based economy. Organisation for Economic Co-operation and Development. http://hermia.sourceoecd.org/vl=849972/cl=36/nw=1/rpsv/scoreboard/, 2005.
Information Society and Media DG. i2010 - A European Information Society for growth and employment. http://europa.eu.int/information_society/eeurope/i2010/index_en.htm.
R. Saracco. Is there a future for Telecommunications? http://www.singaren.net.sg/library/presentations/21nov02_1.pdf, 2002.
National Science Board. Science and Engineering Indicators 2006. Technical report, National Science Foundation, 2006. http://www.nsf.gov/statistics/seind06/.
D. Kusek and G. Leonhard. The Future of Music: Manifesto for the Digital Music Revolution. Omnibus Press, 2005. http://www.futureofmusicbook.com/.
Ray Kurzweil. The Future of Music in the Age of Spiritual Machines. Lecture to the AES 2003. http://www.kurzweilai.net/meme/frame.html?main=/articles/art0597.html.
D. Darlin. Data, music, video: Raising a curtain on future gadgetry. New York Times, January 2006. http://tinyurl.com/njg3f.
OECD. OECD Report on Digital Music: Opportunities and Challenges. Technical report, 2005.
OECD. The Future Digital Economy: Digital Content Creation, Distribution and Access. Technical report, 2006. http://www.oecd.org/dataoecd/54/35/36854745.pdf.
KEA European Affairs. The Economy of Culture in Europe. Technical report. http://www.keanet.eu/Ecoculture/ecoculturepage.htm.
Creative Commons. http://creativecommons.org/.