Computer Technology Effects on United States

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                  RECORD INDUSTRY SALES

                                     GOMAR CHARLTON

         Abstract. This paper discusses a brief history of the growing record industry
         and the various effects that personal computer technology is having on its sales.
         The individual trends in the sales of three separate music genres, pop, rock,
         and hip hop; will be discussed and analyzed. The future of music and the ever
         expanding technology world will be discussed as well.

                                     1. Introduction
   The music industry is one that has grown tremendously in the past couple of
decades. It has gone from a million dollar industry to a billion dollar industry to
the multi-billion dollar business it is today over a seemingly short period of time.
   With the growth of sales has come new genres such as rap, pop, and techno.
There has also been the formation of the Record Industry of America Association
(R.I.A.A), which was formed to further the growth and distribution of music around
the world as well as protecting its artists from all types of infringements upon
their rights as artists. Also it rewards the artists with plaques certifying a certain
number of records sold, gold plaques for 500,000 copies sold; platinum plaques for
1,000,000 copies; and diamond plaques for 10 million and over sold. Software such
as SoundScan has been created to systematically and accurately keep track of all
the records sold all around the world on a daily, weekly, monthly, and yearly basis.
   With the growth of the music has come the many obstacles. There have been
many changes to the primary form of music distribution from eight-tracks to tapes
to compact discs. With each one of these advancements came the availability of an
individual to copy and redistribute music for his or her own personal gain. With
the increase in sound quality of compact discs over tapes came better sounding
bootleg/illegal tapes, but the sound quality of these tapes was still significantly
lower than that of a cd.
   In the last five years a new obstacle has arisen and caused the rate of bootlegging
to reach an all time high. This obstacle is a combination of things, the internet and
its increasing use, recordable cds and cd burners, and digital files called mp3s and
wave files that can be used together to create a cd exactly like the one you would
buy in a retail store except you get it all for no charge at all.
   The following sections will show the effects of this new technological obstacle on
the record industry sales for a number of its most popular genres. In this report,
the Analysis will contain the analysis of record sales trends across pop, rap, and
rock genres showing how each has been affected by these recent advances. Results

    Date: April 28, 2000.
    This link gives you the opportunity to contact the author regarding this paper. Click on the
link here: grc.
2                                   GOMAR CHARLTON

detailing the percentage of growth or decline in sales across each genre will be
detailed in the Results section. The significance of the results and their meaning
for the future will be discussed in the Discussion section. Finally, the Conclusion
will contain the overall conclusion of what findings were acquired in this study.

                                        2. Analysis

   In this section 1 , the total record sales for the United States was studied to begin
analyzing how, if at all, the technology of the late 1990’s is affecting music on a
whole. The total record sales has increased greatly over the years. The graph of
total sales shows these data collected using SoundScan. The data begins in 1981
when this technology began being used. For each analysis there is a there are a pair
of regression fitted line plots. For the total records sales each year in the United
States there is a quadratic fit and a cubic fit to show how the sales total sales as well
as individual sales have progressed over the years. The formulas for the quadratic
fit and the cubic fit are:

            Y    = 1707571 − 1749.55X + 0.448078X 2
            Y    = 1.80E + 09 − 2714857X + 1363.48X 2 − 0.228257X 3
   respectively. These formulas simply show the mathematical trend of the natural
record sales created by consumers.
   The important part of our analysis is to see if the new technology that is being
used today is actually hurting the record industry as it is feared. First we take a
look at what is called ”pop” music. In the early eighties pop was a formidable put
still very young force in the music industry. The graph provided shows the sale
of pop music through the eighties to today. This industry as you can see has seen
nothing but growth over the years. In the past year alone two pop albums have
shattered the sales record for one week sales. The record set back in October of
1999 was 1.12 million record sold in a week set by the Backstreet Boys. Recently
this year in April 0f 2000, Nsync sold 1.2 million records in ONE DAY and went
on to set the new record at 2.4 million records sold in a week. Fitting the data
using regression calculations gave us these formulas and graphs for the quadratic
and cubic fits:

          Y = 7273403 − 7316.47X + 1.83994X 2 (click here for graph)
 Y = −2.4E + 09 + 3627328X − 1824.16X 2 + 0.305786X 3 (click here for graph)
   Rock is the only form of music in this comparison that was fully developed and
booming in 1982. Looking at the graph of rock music shows how dominant it was
through the eighties but it also shows its steady decline with a slight resurgence
during the 90’s. The appeal of rock was very great but as other music forms were
created and became popular during the nineties its effect has declined. Even still,
a rock group named Metallica is in the midst of a suit against an internet mp3
search engine provider called Napster. This shows that even though its popularity
has declined a bit, there are still fans who want the music and are willing to get
    1 All data used for this analysis represents data stemming from January 1982 when SoundScan

software became the primary entity for documenting record sales.

it through the internet if not through the store. The quadratic and cubic fits are
shown below:

        Y = −1523176 + 1533.69X − 0.386029X 2          (click here for graph)
 Y = −1.2E + 09 + 1763648X − 885.652X + 0.148248X 3 (click here for graph)
   The last genre of music that was studied has been dubbed ”hip hop” which
encompasses rap and r&b. This genre was also in its beginning in the early 80’s.
Into the 90’s it ran parallel to pop in sales until the recent year in which pop sales
have significantly surpassed it. The graph of hip hop music shows how its steady
increase through those years has slowed a bit in the last few years. The technology
game has always been a thorn in hip hop’s sales. There has rampant bootlegging
from the days of tape players. Just recently an artist by the name of Jay-z has, so
far, calculated a loss of almost 2 million records in sales that were bootlegged over
the internet. The quadratic and cubic fits are shown below:

          Y = 6307551 − 6354.02X + 1.60021X 2        (click here for graph)
Y = 3.11E + 08 − 465768X + 232.404X − 3.87E − 02X 3            (click here for graph)

                                    3. Results

   The total music sales since 1981 have increased. Looking at the graphs it is
clear that as more genres were created and accepted the sales across the use soared.
There is also a leveling off of the increase in sale towards the end of the century.
Pop and Hip have both seen tremendous growth through the 80’sand 90’s. Hip hop
has shown signs of slowing a bit towards the end of the century but pop is still
rolling full steam ahead as can be seen by the graphs in the above section. Rock
is the only genre that saw a decline over the years. Even though it has shown a
resurgence in the past two years it will take a few more years of that type of growth
for it to regain its 1980’s status.

                                   4. Discussion
    On a whole the total music sales have increased as well as the genres of hip hop
and pop. The only genre that has decline has been rock. I feel music on a whole
has grown because of all of the new genres that have been created to offset the
decline in other older genres. With the increase in technology has also come more
affordable ways to make music which is making it possible for more artists to put
out there music.
   Pop has seen the most increase over the years. This is because of the recent
introduction of teen pop groups that are selling tens of millions of records per year
in the U.S. alone. This genre has seemed to suffer the least from the technology
craze as well. As stated earlier pop artists are the ones breaking all of the sales
records right now.
   Hip hop has also increased tremendously in sales despite the rampant theft of
the music electronically and otherwise. Hip hop has recently suffered a bit of a
loss to the new technology due to the fact that it is now easy to get a cd burner
4                                GOMAR CHARLTON

or ripper and hook it up to your computer and get the cd quality music off of the
network or another disc and sell it to others or distribute it freely on a website
or through a search engine like Napster. These have been the major causes of the
decline in the sales of hip hop today. How much these things have contributed to
the declined pace of hip hop sales is hard to tell, but it has done some noticeable
   Rock has decline greatly over the past decade and a half or so. The reason seems
to be laid more in the introduction of new genres such a pop and hip hop which are
more club and dance friendly and therefore are more appealing to young energetic
audiences who yearn for a dance floor and a heavy rhythmic beat. Even still the
old rock is still being circulated over the internet as well as the new. It is highly
doubtful that there is a large decreases in sales due to this new technology seeing
as most of the older rock is very hard to find on today’s shelves anyway.

                                 5. Conclusions
    The following conclusions are supported by the results of this study. First,
music sales on a whole and the genres of hip hop and pop have grown since 1981.
Only rock has declined and it is currently experiencing a resurgence of sorts. The
effect of the new technology has not yet started to take its toll on the heavy hitters
in music sales. The decline in rock is also most likely not due to the technology
because the decline began before the technology became common knowledge and
now that it has rock has also seen a resurgence. I feel that the new technology will
make new opportunities available to those bands that do not have the capital to
make a record that large labels do. In doing this the music industry will grow again
but also the quality of music will increase because only those who make new and
innovative music will be able to survive in this technology savvy community. I am
looking forward to this bright future.

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