The Filipinos dedication and love to music started during pre-Hispanic period. Early Filipinos love to express themselves through ethnic musical instruments. These early settlers played diversity of musical instruments which includes flutes, nose flutes, gong and guitar to play appropriate songs in commemoration of courtship, marriage, and harvest. Even during the hardest time of Philippine revolution when we were invaded by several countries, Filipinos cling to music as outlet of entertainment and leisure to put off hassle, stress and frustrations. This is the reason why kundiman, sarswela, and the like exist in our music history. At present, you can stumble on different kinds of music in our modern music industry from contemporary, jazz, bossa nova to pop and alternative music which is an adaptation from different countries. The music industry endured and adapted many changes throughout time and is facing massive challenges like substantial drop of sales of recorded music, quick change of market, advent of technology and piracy.
Because of these complications, music industry is tasked to provide a range of music that can satisfy diverse scope of tastes of the consumers, face the challenge of meeting a changed market and respond to such changes which is going to be crucial in their success and continued development of the music industry as a whole. Today, music progresses unpredictably. This is the main reason why the researchers takes you to the mystery of how music industry in the Philippines works from the time of developing singers to composing songs, towards the process marketing and overcoming the risk and challenges involved in this business. The researchers also hope that they can give encouragement to those who plan to engage in to music industry in the future.
The study entitled “Philippine Music Industry: Its Operations and Challenges” has the following objectives: * To determine the structure of the music industry;
* To known how technology affects the music industry – the good and bad effects; * To known the preventive measures the music industry is using in order to limit the bad effects of technology; * To know if the availability of new technology has been an evidence of growth or an existence of burden in the sales of CD’s; * To find out piracy operations that might be responsible for the quantity of fake CD’s and digital copying in the market; * To come up with a recommendation that would help limit the risks involved in the music industry; and * To arise with a proposal that would help solve the challenges that the music industry is currently facing.
Statement of the Problem
The study entitled “Philippine Music Industry: Its Operations and Challenges” aims to answer the following questions:
1.What is the relationship or interface between the talent, the manager, the recording company and other people behind the industry in terms of: 1.1Sharing of Profit;
1.2Effective sales and marketing plan; and
2.How the music industry generates sales on album and live performances in consideration to:
2.1 Price range of an album;
2.2 How much is a song worth; and
2.3 Earnings and commissions on live performances?
3. What are the effects of technology in the acquisition and distribution of music through: 3.1 Official downloads; and
3.2 Anti-copying technology?
4. How the music industry tries to overcome the issues that piracy is the major cause of theproblems that the industry faces with regards to:
4.1 Effects of music piracy; and
4.2 Restrictive practices?
Significance of the Study
The research study may be able to draw understanding about the operations of the music industry and the role of every person involved in the business and also, to know how they create and sell the music to the consumers. Moreover, the researchers aim to help them know how to limit the risks implicated in engaging to this kind of business and to solve the challenges they are currently facing in order to generate more sales and for the industry to develop and be productive.
Scope and Delimitation
The study was completed for a span of 4 months, from June 2012 to October 2012. The study is limited to the operations, risk and challenges within the Philippine music industry. The consumer’s education regarding music is not part of the study. The researchers used interview as their research method in gathering data.
Definition of Terms
The following terms below were defined in this section to better understand this study: 1. Music industry is business of performing, recording, and selling music through a number of different methods. It is consist of companies and individuals that make money by creating and selling music. 2. Challenges are general term referring to things that are imbued with a sense of difficulty and victory. 3. Record company is a company that makes and sells musical recordings. 4. Label or record label is a brand and a trademark associated with the marketing of music recordings and music videos. Most commonly, a record label is the company that manages such brands and trademarks, coordinates the production, manufacture, distribution, marketing and promotion, and enforcement of copyright protection of sound recordings and music videos; conducts talent scouting and development of new artists and maintains contracts with recording artists and their managers. 5. Track is the term used in the music industry which refers to the song of the artist.
6. Album is a collection of recordings, on long-playing record, cassette, or compact disc, issued as a single item. 7. Publishing the activity of preparing and issuing music album or tracks in the public for sale. 8. Distributor is responsible for shipping units of records from warehouse to shops which include different online music shops. 9. Stream refers to any flow of data from a source (or sender, producer) to a single sink (or receiver, consumer). A stream usually flows through a channel of some kind, as opposed to packets which may be addressed and routed independently, possibly to multiple recipients. Streams usually require some mechanism for establishing a channel or a connection between the sender and receiver. 10. Globalization is the process increasing the connectivity and interdependence of the worlds’ markets and businesses. 11. Piracy is the unauthorized reproduction or use of a copyrighted book, recording, television program, patented invention, trademarked product. 12. Optical Media are storage media that hold content in digital form and that are written and read by a laser; these media include all the various CD and DVD variations.
REVIEW OF RELATED LITERATURE AND STUDY
According to the article of Leloy Claudio entitled, “OPM is dead, so sue me” last August 28, 2012, he stated that, “People should complain about the state of the arts in the Philippines. And this is not just an injunction for the culturally-omnivorous bourgeois who can feed both their stomachs and their souls. The arts, canalized properly, can serve as a lingua franca that fosters public solidarity, while challenging class boundaries.” “I fear the instinctive defensiveness of many old hands about the death of OPM belies a lack of willingness to have a discussion about structural issues that impinge on the arts. Of course people will always make music, but that isn’t a sign of life. Until the government and the media industries decide that local audiences deserve better, OPM will stay dead. And if I’m being whiny, sue me.” (http://www.gmanetwork.com/news/story/271491/opinion/blogs/opm-is-dead-so-sue-me) This article has been the trending topic from the day it was released. It is correlated to the study because it is one of the main issues the Philippine music industry faces nowadays. This will talk about the state of OPM and the legitimate buying of local Artist’s album or a ticket to their concert.
Also, by knowing how the recording companies can take risks when they don’t have as much revenue. Meanwhile, the study will also identify how the foreign acts have an effect on the existence and growth of OPM. According to the article in www.musicradar.com, there are different sections involved when it comes to the music industry; the record company, cutting of the artist’s music, publishing the music, the television, movies and the distribution. The record company is the traditional path to the music industry. It is also known as the record label. It all starts when a record heard by a record label will sign a person as their artist in order to release its album. Effectively, the label acts as an investor in the artist, paying for studio time, mixing and mastering. Publishing is exploitation of the track in any form and publishing income can be gained from a wide number of sources.
The term dates from when songs were literally ‘published’ and sold as printed sheet music. Television, movie and the like are the major growth areas in the music publishing. A progressively more significant revenue booster for artists releasing their own material is having music synced to television, film and video projects. A distributor is responsible for shipping units of records from warehouse to shops which include different online music shops. (http://www.musicradar.com/tuition/guitars/how-the-music-industry-works-444731/2) This article is related to the study because it contains some of the key issues on how the music industry operates and how business decisions can often overshadow artistic merit and endeavor. The goal is to construct an understanding of some of the business aspects of the music industry and to look at how artists attempt to survive and also to know the success lane, the processes involved, the influences and the overall performance of the people behind the Philippine music industry. According to www.hypebot.com, the music industry is confronting different issues; the death of the album, the music taxes, mobile, and 1000 true fans.
The death of the album is one of the issues of the music industry. Today, individual track downloads are more saleable and slowly killing the revenue of the album. The music industry is taking into consideration of taxing music downloads but the problem is the burden it would put to the customers might trigger their sales. The technology in the mobile phones is also affecting the music industry. Instead of buying the album, people now prefer to download music directly to their phone. With technology, the true music lovers are demanding for more. It is now the problem of the music industry if they can cope up with the demand of these people and how long they can cope up with their demands. True Fans are no longer about records. It is about artist and fans; how to cultivate fans and how to harvest them.
Democratization of music also reveals. It’s a democratic way for artists and bands to profit from their music, both in terms of financial remuneration and fame. Artists could play gigs at any place that would have them and try to create some buzz and word of mouth publicity. (http://www.hypebot.com/hypebot/2008/08/10-issue-facing.html) This article contains different challenges that the music industry is now facing. This is noteworthy to the aim of the study which is to know what are the pros and cons in the operations of the music industry here in the Philippines. These were basically some of the key factors that need to be measured and considered in order to determine the success of Philippine music industry on the later years.
According to the article “The Music Industry’s Biggest Problem” by M. Frascogna, the music industry is now in big mess. The industry is booming with new potentials but everyone experiences growth and pain in different ways. Record companies are still gasping for air since the piracy punch to the gut, Indies battle for their share of the marketplace, and musicians fight the daily grind to be heard; and the entire industry has two massive pills of mess on their plate: streaming & globalization.
Streaming is listening to the song/album for free to different sites where you can stream music. Streaming isn’t necessarily illegal rather it is a bit of a grey market. Because it isn’t illegal, consumers argue streaming services are functioning as an essential means of marketing/promotion for musicians. When marketing and promotion works properly, the musician will see a return on his investment. Streaming does not provide a return on the investment.
Globalization is a problem in the music industry. In the advent of technology followed by the very close competition, recording companies must think globally and invent different marketing strategies that would help generate more revenue. Fierce competition means thinking more efficiently, and being more efficient is thinking global. (http://www.musicglobalization.com/2009/10/music-industrys-biggest-problems.html) This article is relevant to the study for its tackles about one of the objectives of the study which is to know the different challenges the music industry is now facing. The main topic of the article is about the two main problems of the music industry; the streaming and the globalization. Likewise, this article solely talks about the two predicaments of the Philippine music industry – streaming and globalization. According to the research paper of Chang Liu, entitled “Music Piracy and Illegal Downloading – A survey of Chinese students in The Netherlands,” the music, software and film industries are facing a big issue today when it comes to technology.
The current growth in the utilization of internet and the persistent development in the digital technology are greatly affecting these industries. Piracy and illegal downloading are greatly distressing their sales. Many previous studies that have considered music piracy have focused on the impact of file sharing on market and music consumption, and these have shown that music piracy has become a major concern and threat to the recording industry. The aim of this recent study is to investigate the factors that influence Chinese students to engage in music piracy.
This is relevant to the study because the researchers would like to know the different challenges that the music industry is facing right now. Piracy is the most popular problem that its impact can be felt by the other industries. The former study also has the same objective with the present study; it is to know the different factors that influence the music piracy. With the use of these factors, the researchers will determine the different reasons why these factors greatly affect the customers of the Philippine music industry. However, the present researchers will not be focusing to Chinese students; they will focus to the Filipinos and the music market in the Philippines.
According to the research study of by Rayan Ebardo entitled “The Business Performance of Pirated Optical Media Vendors in Davao City,” despite the Government’s massive campaign of eradicating this industry, Piracy in our country is still existing and even growing. By being in this kind of business, there are positive and negative effects to the vendors. Positive because this is the source of income for most of the vendors, through Pirated Optical Media, they earn money to obtain properties and support their dependents. Vendors stay on the business and others keep on coming back because of its income potential.
It has negative effects to the vendors because it a very risky and unstable business, considering the constant apprehension and massive campaign of the government to eradicate this industry. The pirated industry despite of being illegal is seen to be performing well in terms of sales and product sold annually. Because of the pirated optical media, the income of manufacturers, producers and artists reduces. This was connected to the study for it tackles about the main problem of the music industry which is piracy. It also deals with the objective of the study which is to know the reasons why people prefer pirated cd’s and dvd’s aside from the fact that it is cheaper.
The researchers used Descriptive Method of research. It is because they aimed to gather data that would describe the operations of the music industry and the risks and challenges involved in such business. The descriptive method of research develops knowledge by describing observed situations, events and objects. It is used to obtain information concerning the current status of the phenomena to describe “what exists” with respect to variables or conditions in a situation.
The method of collecting data is interview. The researchers utilized semi-structured interview wherein a number of specific major questions will be asked by the interviewer and beyond these, he is free to probe as he chooses. These are prepared key questions to be asked and once these are asked and answered, the interviewer is free to ask any question as he sees connected for the research topic.
The researchers will interview seven persons involved in the music industry; three (3) artists, two (2) producers, two (2) managers and one (1) distributor. Their answers, opinions and experiences will be relevant to the objectives of the study.
Method of Data Analysis
The researchers will analyze the data by using direct quotes from the interviews necessary to support the analysis and compare the answers of the persons to be interviewed. Meanwhile, this is done to know certain facts about the industry’s operations, to come up with a recommendation that would help limit the risks involved in the music industry and to arise with a proposal that would help solve the challenges that the industry is currently facing.
PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA
The researchers use qualitative method in gathering data for the study. Semi structured interview was used wherein the researchers provided guide questions. They conducted an interview with the people behind the music industry composed of three (3) musicians, two (2) talent managers, two (2) producers and one (1) distributor.
Below are the guide questions for the artist, talent manager and producer. * What is their role in the music industry?
* What are the processes involved in doing business in music industry? * What are the risks and challenges involved in doing business in the music industry? * What are the measures that they use in order to eliminate or limit the effects of these risks and challenges?
Below are the guide questions for the distributor.
* What is their role in the music industry?
* How do they determine the strategy to be used in order to sell more cd’s? * What are the risks and challenges that they are currently facing? * What are the preventive measures that they use in order to lessen or eliminate the impact of the challenges like piracy and technology?
Summary of Data Gathered
The researchers interviewed three musicians about the operations and challenges involved in the music industry. Their responses are vital in clarifying what the research problems of this study need to know and find out in order to answer such questions and be able to help in some way, the industry in their operations and also in preventing dilemmas on piracy and technology.
* Role in the Music Industry
Interviewees: Musician A, Musician B, and Musician C
* Musician A is the bassist of a band under the record label, Universal Records. He is also a professor at Informatics. * Musician B and C are vocalists of a band under the record label, MCA Music.
* Processes Involved
According to Musician C, 20% of the money they get from gigs and other performances goes to their manager. Meanwhile, the share of the recording company varies from one artist to another and is quite confidential. In line with that, the recording company or simply the record label is the one in charge of paying for the album to be produced, manufactured and marketed. The revenue received from the sales of the album goes to cover the cost of producing the CD. When asked what do they think are the key issues in how the music industry operates, the Musician B stated, “If you’re talking mainstream or pop, or radio airplay, well, the issues involve things like marketability, catchiness, image, and other factors. For example, you have a band then your manager will send your songs on record labels. The record label decides whether you suit the market or not.”
Artists usually promote their music or their album through airplays in radio stations, Radio tours, TV guestings, Mall shows, Album Launch and other live performances. Also, they create fan pages on Facebook and Twitter to cater their fans online. They strategize by making fansigns for their supporters for every purchase of their song which is around P30 at mymusicstore.ph. This download is legal as long as you pay for it, and it is also called digital downloading.
“The traditional way is to get radio and TV advertisements and/or ask help from local event organizers. However, with the internet, (online) publicity and promoting the band is readily and freely available, not to mention easily accessible. Also, the power of word of mouth remains reliable.” Musician A mentioned during the interview.
When asked how can you get publicity for your band or gig, Musician B explained, “You should have machinery and venue; you can promote your band or gig on Facebook; it’s quite easier now yet you also need some organization to back you up, like a production that could hold it together; you should be friends with people in the music business so that it would be easier for you to get introduced. Of course, you need a manager to keep sight of those things. That’s how it works.”
According to Musician C, an album of an OPM artists or bands ranges from P200 – P400. It may vary from artists’ popularity and numbers of tracks in an album. And if the album has been repackaged, the price may increase.
The researchers also asked the three musicians the question, how lucrative is a ‘hit song’ in the business of music? Musician A said, “It is very lucrative in that, if one is able to make a hit song, it opens up a lot of opportunities for the artist.”
On the other hand, the Musician B explained that, “It depends. If a big company taps your song as a soundtrack to some commercial, then you’ll be making money. Once it becomes huge, you’ll get a reasonable amount of royalty. Mind you, a hit song doesn’t always mean you become rich right away, especially in this country. Maybe in the US or Europe, but here, it doesn’t work that way.”
Lastly, Musician C answered, “Yung hit song mo ay nakatatak na sa pangalan ng artist. Dadami din ang gigs pag may hit song.” When asked how much money they get from live performances, one of the interviewees said, “Malaki ang kita sa out of town gigs. Kapag sa bars, pamasahe lang pauwi.” * Risks and Challenges Involved
In the interview, Musician C mentioned the good effects of downloading online. He said, “Malaki ang tulong ng internet sa mga musicians kase nari-reach out nila ang mga supporters sa buong mundo. Naida-download ng mga supporters ang mga kanta na gusto nila kahit nasa ibang bansa sila.”
But on the other hand, the 2 other interviewees answered disapprovingly. When asked if downloading music can be called a piracy, Musician A said, “I’d prefer it if people purchase the music artists put so much effort in like records and songs.” While Musician B said, “If people do not pay for it then it is piracy. But if they paid for it through a legal downloading website then it is not.”
The researchers furthermore asked the interviewees on how technology affects the sales of CD’s in the market, Musician B believed that, “Since technology is being used right now for purposes of illegal downloading, torrents and piracy then it really affects not only the record label but also the artists who worked blood sweat and tears to get the album released. Due to that, labels and record distributors will weaken, it will also affect CD sales of the artists, and the labels might stop investing when it comes to distribution and promotion, leaving the artists with a dilemma.” “Nahihirapan ang music industry na talunin ang piracy. Yung pirated cd’s medyo nawala na. Pumalit naman ang youtube at online piracy.” said Musician C.
Meanwhile, when asked if how much damage does music piracy do, he also states that, “Konti ang gigs at syempre yung pinagpaguran mo na kanta, makukuha lang ng libre.” Also, Musician A stated that, “So far, it has encouraged some (if not many) people to not purchase stuff that artists put out in the market.” Lastly, Musician B said, “It affects the distribution of our album (especially in provincial stores); there is also a risk that we might not be able to record a next album because our label won’t take risks anymore. We don’t want that to happen.”
“May mga ways naman na ginagawa gaya ng digital downloading at mga cd na bawal ma burn o makopya.” Said Musician C. But, these practices might not be enough in order to control piracy.
In addition, the researchers asked who gets hurt by music piracy more. Is it the label, the artists, or the consumers? Musician A believed that, “In the current stage of things, I think artists and record labels are the ones that are hurt most.” While Musician B said that it is all of them. “The label cause of the financial aspect, the artists for the distribution and the consumers because they will have a hard time finding their favorite artists’ CDs because the music stores are already closed, leaving them with no other choice but to illegally download songs.” Role in the Music Industry
Interviewee: Manager A and Manager B
* Manager A is a road manager of 3 OPM bands. He also has a management of his own. * Manager B is a management of bands and artists.
According to Manager A, a road manager is responsible for taking care of the talent and making sure that everything that happens while on tour is smooth and no hassle. He must also plan where the band will be staying if they are going to be in the area for any length of time. Booking hotels and securing in-town transportation are important aspects of a road manager’s job as well.
As for Manager B, their management’s role is to have overall direction of the band and planning in terms of marketing the band/planning their careers.
* Processes Involved
Manager B answered the question, what are the procedures for having gig schedules? She said, “Entertaining inquiries and looking for gigs for each band. Lahat ng ways na pwedeng magkaron gagawin po. From booking until the performance itself, basically, it’s just coordination with the producer. You get all details from the producer and you give details to the road managers, as they are in charge in executing everything. Also, profit sharing is being managed and apportioned depending on the agreement of the band and the manager.”
* Risks and Challenges Involved
According to Manager A, piracy is a serious matter to them. The music industry has able to cope up with the presence of Pirated CD’s, but the major problem now is the Online Piracy which leads to low sales of the CD’s of the bands under his management.
Meanwhile, for Manager B, she said that they are using the advantage of technology to be able to use it appropriately. Their bands are very active online to promote their respective albums and to acquire desired publicity. One of their artists also said during the interview that it would be better if radio stations and music inclined TV shows to promote OPM by playing more OPM songs than foreign ones.
As for Manager A, they are using certain strategies in order to beat the existence of piracy in the industry. Together with the recording company they are into, they are looking for more live performances and sponsors to uphold and promote their artists’ songs and album. As for Manager B, they plan to interact well with the fans in order to gain more publicity and followers as well. * Role in the Music Industry
Interviewee: Producer A and Producer B
* Producer A is a producer of a popular band. He is also a sound engineer at an audio production and a lecturer at De LaSalle University. * Producer B is a producer of a well known band. He is at the same time a guitarist of two bands and a vocalist of another band.
According to Producer A, a producer is responsible for some or most outcomes of a musical production; he can be the mover, the plotter and the subject. Producers are usually considered the extra member of the band during the production.
From Producer B’s point of view, producer is the one assigned to all things related to recording, from the type of music that they will adapt to the marketing strategy that they will use.
* Processes Involved
With regards to the processes in the music industry, according to Producer B, “We decide everything that would help them achieve popularity. We determine the direction that they would follow; we decide what marketing strategy to adapt.”
When asked, “In an album worth more or less 300 pesos, how much money goes to the label, the producer, the manager, the artist and the record bars?” Producer A said, “Nothing goes to the producer here in the Philippines. I don’t ask much about the deals of other artists.”
When asked how lucrative is a ‘hit song’ in the business of music? Producer A believes that “A good song is a good song, when a good song hits well through marketing, money is good, very good. Live performances also get a lot of money.” While Producer B said that nowadays, OPM hit songs are lucrative in popularity but not in money.
* Risks and Challenges Involved
The interviewers asked Producer A with the question, “What do you think does the music industry lose from piracy?” he undoubtedly said, “Money, but come to think of it, the labels must remember that not all business models stay forever.” When asked, “Music piracy is at the peak now. How can it break the backbone of music industry?” he believed that, “It already has broken the music industry. The industry must come up with a cure and a new treatment to the decaying system.” Lastly, for the question, “How technology affects the sales of CD’s in the market?” Producer A said, “Technology does affect a lot. People these days are not very particular with the physicality of the product.”
* Role in the Music Industry
Interviewee: Distributor X
* Distributor X is from a famous record bar. She is working as an assistant to the supervisor for almost one year to one of the record bar’s branch. The record bar where she is working is a pioneer record store.
According to Distributor X, the main purpose of record bars in the music industry is to distribute the album of the artist. As what their slogan says “your only entertainment lifestyle store,” the distributors bring music that would surely fit the lifestyle of every music lover.
* Processes Involved
Once the artist already has an album, the producers will present a proposal to the distributor in order to put their cd’s in the stores. The proposal usually includes percentage of the profit sharing between the producer and the distributors, marketing strategy, prices and other relevant things. When both parties agreed with the terms and condition, contract will then be signed and the album will be displayed in their stores.
In determining the price, it is usually set by the producer, sometimes negotiation happens. Same with the marketing strategy, it is usually set by the producer. Some of the marketing strategy that happens in coordination with the record bar is having an album launch conducted usually in malls where there branches are located. That would require fans to buy the album first, giving free posters and freebies and eventually have it signed by the artists.
* Risks and Challenges Involved
According to the interviewee, the sale of cd’s is unpredictable therefore it is very crucial to choose what cd would be available to their store. Proper deliberation with the head distributor is strictly implemented.
Piracy would always be the main issue on the part of the distributors. This lessens the sale of cd’s since pirated ones are cheaper. Illegal downloading is also an issue for most people prefers to download via internet.
Distributor X pointed out that it is very hard for them to prevent people from doing illegal downloads. That is why it is so tough for them to dispose old cd’s that might not be sold because the consumers merely buy the latest ones. Aside from coming up with more events, they are also continuing their support for the OPM Industry. They welcome independent local acts that are not signed under major record labels to also make an album that can be sold by the store.
SHARING OF PROFIT ON ALBUM SALES
SHARING OF PROFIT ON MANAGEMENT OF ARTISTS
SUMMARY, CONCLUSION AND RECOMMENDATION
In this study, the researchers aim to understand the process involved in the music industry in order to know and understand the challenges and risk that the industry is currently facing and to come up with a recommendation that would help eliminate or limit the effect of those.
The research method that the researchers used is descriptive method. It is because they aimed to gather data that would describe the operations of the music industry and the risks and challenges involved in such business.
The method used in collecting data is interview. The researchers utilized semi-structured interview wherein a number of specific major questions will be asked by the interviewer and beyond these, he is free to probe as he chooses.
The researchers interviewed seven persons involved in the music industry; three (3) artists, two (2) producers, two (2) managers and one (1) distributor.
From the data gathered, results show the following:
Not finding an efficient manager is one of the risks that the artist is facing in their field. As the representative of the artist, managers must be efficient and effective in selling their artist in different recording company.
Wasting their talent, time and money just to be popular in the music industry is one of the risks in the side of the artist. Some artist invest their money just to n enhance their talent but still they don’t click in the market resulting to wasted time, talent and money.
Not being able to find a recording company that would hire their talent is the risk on the side of the manager. When this happens, their talent won’t have a career in the field of music.