Growth of Social Networks

David Fishman

Digitalization of Entertainment

Consumers have moved rapidly to adopting digital formats for consuming entertainment-related content. The most obvious example of this is music and video downloads, with Apple’s iTunes and YouTube as leading examples. Apple has sold more than one billion songs via its iTunes music store and it continues to demonstrate a spectacular rate of growth. Over 30,000,000 individuals have purchased an iPod portable music device, and tens of millions of other consumers use one of dozens of other portable devices to listen to music. Other platforms for listening to music are equally successful, and in the case of Microsoft’s Windows Media Player even more dominant with over 90,000,000 systems running the software globally. Real Networks Rhapsody, and Yahoo! Music represent other major entrants in this space. In addition to those companies selling licensed music downloads for a fee, peer-to-peer networks such as Limewire and Morpheus claim to have tens of millions of users sharing music and other files on a continual basis.

As consumers have become comfortable purchasing (and stealing) music online, they are now beginning to download other digital forms of entertainment, including music videos, short-subject films, television shows, and even full-length Hollywood pictures. Traditional media companies have recognized the opportunity to establish new revenue streams and leverage old assets by enabling consumers to download television programming for a fee, and the adoption rate appears to match the early days of music downloading. The increasing penetration of broadband connections (over 50 million homes in the US), advances in software that enables high-quality downloads, and content companies recognizing an enormous opportunity to distribute directly and inexpensively to consumers has created a tidal shift in the number of digital media assets available for download to computers, handheld devices, and even cell phones.

Companies such as YouTube are at the forefront of the intersection of video entertainment and the fragmentation of media due to the empowerment of the consumer. Hundreds of millions of videos are downloaded weekly from YouTube (as well as dozens of competitors), and a significant portion of those videos are not “professionally” produced. More importantly, new talent in various entertainment fields are being discovered through these distribution platforms and forever changing how entertainment is conceived, produced, distributed, and valued.

Consumption of Music on a Rise

Music is being consumed in more ways than one and at a higher rate then every before. The MTV generation is use to not only hearing their music but seeing it as well. If they see a song that they like they can then buy that songs in multiple media forms from vinyl and CD to digital with DRM (digital rights management) and Mp3 without DRM. If they like the video and the song then they can go to Youtube and view it there until their hearts content. But the digitalization of music has done more. Not only is it easier to view videos but it easier to find and discover new music, acts and bands as well.

MySpace has built a multi-billion dollar network on the backs of up-and-coming acts and unsigned bands and their friends. Myspace and sites like this have exposed many people to new and unheard music and continue to do so at an astonishing rate each day. As a band or act it is now seen as a smart business move and cool to be associated with a brand or land a sync-license in a TV show or commercial. This twenty years before was a direct threat to your artistic vision and classified as “selling out”. But now these things are all used to innovatively expose music to the masses and making it easier to discover it.

Technology has created mega-channels of distribution. Peer-to-peer networks have opened the floodgates to obtaining free music.  Furthermore, because digitized music takes of bytes instead of floor space you are now given a wider range of music to choose from at digital retailers. And of course copying CDs have never been easier and soon the CD will be wiped from that equation level just the transfer of bytes in order to obtain your music.

What this means is that music consumption is increasing. Production cost is lowering. Distribution is widening and more acts and bands are being heard. There is a need out there for making the discovery and sharing of music simpler and easier. Music is an identifier for many people and these people are getting larger and larger iPods that just simply need to be filled.