The shift to digital technology is a profound change from today's music industry because record companies currently profit by selling music as a hard good and not as a service. They get paid by selling discs, not musical experiences. But this business model is only perhaps 150 years old.
Historically, music has been a service industry. Before recent technologies, you could not buy the experience of melody, harmony and rhythm in the form of a hard good. Instead, music had to be performed by musicians each time it was heard.
Technologies began to convert music from a service into a good in the sixteenth century by introducing notation that standardized the performance of music over a greater geographical distance. Much music throughout the world was improvised and loosely interpreted until approximately the Renaissance period. Melodies and lyrics were often improvised on a theme, and even that theme was passed through oral tradition. The printing press changed all that, producing volumes of sheet music for the middle class. The madrigal, for example, became popular because it could be performed by amateurs and professionals alike. For the first time, musicians were literally reading on the same page. This began the sheet music industry, but live musicians were still needed to produce the experience.
Key technologies in the nineteenth century brought the experience of music home in a new way. The player piano and the music box competed for space in middle-class homes. Once the hardware was purchased, people could buy cylinders or discs to get new music in their homes, though lack of standardization between companies prevented any economies of scale and development of a consolidated music industry.
Also important was the railroad, which for the first time had people in a large geographical region listening to the same tunes in about the same time. People in Boston, Georgia, and Utah could be heard humming "Camptown Races" by Stephen Foster.
The Victrola was a more serious step in the direction of the modern music industry. Instead of a crude digital interpretation of music found in the player piano, the wax discs played on this early phonograph provided the analog interpretation of the actual live experience of a performance. Soon, wax became vinyl, and records could be sold to millions of recordplayer owners all over the world.
By the 1920s and 1930s, the record industry combined rapidly evolving mass-production techniques with new information technologies-especially radio. The convergence of these trends allowed sharp, technologically savvy, business-minded individuals to develop a music industry that exploded in popularity. At the same time, the fundamental business model for musicians had not changed in 10,000 years, and musicians were not prepared to enter into negotiations over the value of their work.
Entrepreneurs began negotiating contracts on international distribution, copyrights, and exclusivity with people who knew how to sing, dance, and entertain. Many musicians simply did not understand how much money was at play and how much was soaked up by the various companies involved in recording, distribution, sales, marketing, promotion, legal services, and so on. Even today, only a small fraction of the money from an $18 compact disc goes to musicians.
At the dawn of a new century, musicians now look forward to greater control of their product, and more money in their pocket, as music technology approaches the next step in its evolution