Are Universities Going the Way of Record Labels?

Martin Smith:

If you spent the 1990s plucking songs from a stack of cassettes to make the perfect mixtape, you probably welcomed innovations of the next decade that served your favorite albums up as individual songs, often for free. The internet’s power to unbundle content sparked a rapid transformation of the music industry, which today generates just over half of the $14 billion it did in 2000—and it’s doing the same thing to higher education.

The unbundling of albums in favor of individual songs was one of the biggest causes of the music industry’s decline. It cannibalized the revenue of record labels as 99-cent songs gained popularity over $20 albums. It also changed the way music labels had to operate in order to maintain profitability. The traditional services of labels: identifying artists; investing in them; recording, publishing, and distributing their work; and marketing them—are now increasingly offered a la carte.

Pressure from labels then had downstream effects on content creators, specifically artists. The top one 1 per cent of artists now take home 77 per cent of revenue, and the rest is spread across an increasing number of artists. The pain of the record labels is forced on artists through smaller royalty payments.