Term Paper: Latin American Music Industry

Pages: 10 (2994 words)  ·  Bibliography Sources: 1+  ·  Level: College Senior  ·  Topic: Music  ·  Buy This Paper

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[. . .] "Consumers increasingly are seeking the instant gratification of free downloads, and the ability to burn those downloads to blank CDs offers even more personalization and choice. The primary message of the CD burner is the consumer doesn't want to be straight jacketed into buying a prepackaged CD. I think what we're seeing is not only the death of the physical form factor, but the death of the prepackaged concept.," said Phil Leigh, an analyst for Raymond James & Associates.

In the same report from CBS News, the chief executive of the Recording Industry Association of America, Hilary Rosen, testified at a congressional hearing regarding music piracy and peer-to-peer networks, saying public education about the illegality of unauthorized file-sharing was of the utmost importance. Regarding the issue of music piracy via free downloading services, Steve D'Onofrio, RIAA Executive Vice President and Director of Anti-Piracy said "The RIAA's aggressive enforcement measures over the years against counterfeit cassette pirates have paid off. The reality of spending years in jail and paying large fines is deterring piratical activity. This is not a risk-free business. And, as the trend moves toward new technologies and the Internet, as well as CD piracy, we're extending our educational and enforcement efforts to the ever-changing pirate marketplace." (RIAA.com, 1997)

Music Piracy

While the two preceding factors affecting the music industry are universal to all sectors of the music spectrum, the influence of music piracy has been particularly strong in the latin american countries. Accorsing the IFPI, 53% of all CDs sold in Argentina during 2002 were counterfiet. While a large number, it's not as bad as in other Latin American countries. The International Federation of the Phonographic Industries estimated that pirated CDs increased to 300 million in 2002 from 260 million in 2001. In Paraguay 99% of CDs sold are counterfeit. These statistics are followed closely by Venezuela (75% pirated), Mexico (68%), Colombia (65%) and Brazil (53%). (IFPI.org, 2002)

Total piracy in the region rose from 260 million units in 2001 to 300 million units in 2002, which is an increase of 15%. Mexico, Brazil and Paraguay continue to be major distribution channels for pirated music, but the whole region suffers from high piracy levels. Fro example, in Venezuela the legitimate market has largely disappeared due to turmoil surrounding the current politically corrupt Chavez administration. Police resources are diverted by political unrest and public demonstrations, therefore anti-piracy efforts toward the music industry have had to be postponed until the overall political unrest in Venezuela is resolved. The latest estimate is that more than 75% of the music market is pirated recordings.

Colombia also suffers the turmoil of political unrest, and while pirate units reached 17 million, at a rate of 65%, the government has paid little attention to the industry's calls for stricter enforcement. The limited federal government resources have been stretched addressing ongoing battles with terrorist activities, so counterfeit music CDs in the marketplace have been a low, to nonexistent priority. Argentina has also suffered a crushing political and economic crisis in 2002 that fuelled piracy growth. The piracy rate jumped to 60% in 2002, which equates to some nine million illegal music products. There have been some successes by customs authorities, but more assistance is needed to fully investigate and raid major pirate labs. Current criminal penalties provide little no deterrent in the country, and need to be urgently amended. (IFPI.org, 2002)

Overall Sales Figures

Overall, the sales figures in the latin american markets have dropped by up to 25% over the last 2 years. The latin ameican mucis market dropped 20% in value in the 2001 fiscal year. In 2002, a continues decline was measured at 10%. Similarly, Mexico sustained a decline of 20% in 2002, while sales in Columbia dropped almost 30%. According to the same study, Piracy levels in Brazil, Mexico and Columbia currently control between 50% and 70% of the market. In Paraguay and Peru, the market is almost entirely pirated merchandise. The avialablity of digital copying equipment, and the ongoing lack of involvement by local governemnt to get involved in pursuing pirated music vendors have created an open market for pirated music.

In 1998, Billboard announces that the Latin American world music market accounted for 6.5% of overall sales, but today, it accounts for only 2.4%. (IFPI.org, 2003) for the first 6 months of the year, the marketplace fell by 21.1% in value, and units sold declined by 16.9%. Brazil, which stood as the regional powerhouse just 3 years earlier, showed a decline of 21.2% in retail value and a drop of 26% in units sold. Mexico, which was the 8th largest market a few years ago has dropped to 10th, and expereinced a 32.4% drop in market value. (Cobo, 2003) If the local governments do not take steps in the near future to corral the pirated music industry, the results could be complete collapse of the music industy in these countries.

What Steps can be taken

As outlined, the sudden downturn in the Latin American market for music is the result of a combination of factors. Some of these factors are within the ability of the countries to make changes. For instance, the countries hands off approach to identifying and persecuting piracy are a matter of national political priorities. By changing the priorities, and allocation of law enforcement resources, these countries could make significant progress on the piracy problem. While the nation's official stand is that they need to focus their limited resources on higher priority issues, by reigning in the piracy, and redirecting the music buyers into legal channels, the countries would be making steps toward improving their economies. With the improving economy, the countries could create the additional resources they need to more effectively fight crime in other areas. However, the nations' leaders perceive the problem to be a Catch 22. Without the resources to start the battle, they can't invest in the effort. Therefore they will not be able to reap the reward of the economic improvement, which they need in order to fight the crime, and improve business conditions.

A second set of factors influencing the decline in the Latin American music market is the availability of consumer digital recording equipment. This is a global problem. According to Bill board, global sales of recorded music fell by 10.9% in value over the first 6 months of 2003. (Masson, 2003) The multitude of individual consumers who can download and burn their own music is affecting the entire music industry. The RIAA has long held a monopoly on how it offered recorded music to the public, and in any market-based economy, sooner or later market forces shift to challenge the monopoly. In order to address this latest challenge, the RIAA needs to look at how it makes music available. The digital economy is here to stay, and changes in the marketplace necessitate a change in the entire recording industry.

A third force which is affecting the loss in market share for the Latin American music is changing tastes in the world's largest music marketplace, the United States. In the late 90's, stars such ass Ricky Martin, Jennifer Lopez, Christine Aguilera appeared on the music scene. With their initial success, came an increase in Latin style music sales. While their popular songs were not a pure Salsa flavor, their talent brought attention to the Latin American music offerings. A spill over affect which positively affected the entire Latin American market is now passed, and cooling sales pressure has contributed to the overall decline.

In summary, the declining Latin American music market could be compared to the changed in the Tech Stock market in 2000. Riding a high wave of success throughout the 90's the tech industry 'bubble burst' creating a market correction. Many factors contributed to this correction, but in the end, when the dust cleared, healthy companies populated the marketplace, and once again the tech sector of the economy is becoming strong based on realistic assumptions rather than the hype of the early internet revolution. Similarly, the RIAA needs to adjust to the market correction forces if it is to remain a viable force in the marketplace. The Latin American musicians need to continue to bring into the marketplace talent which can continue to energize the Latino music purchaser. Governments also need to enforce current laws in order to stabilize the existing marketplace, eliminating the piracy, and making a safe environment for legitimate business.

Resources

Manuel, Peter. Latin Music in the United States: Salsa and the Mass Media

Journal of Communication, Vol. 41, 1991

Fernandez, Enrique. "Latin Notas." Billboard, June 1, 1985.

Agudelo, Carlos. "Latin Notas." Billboard, April 25, 1987.

Bagdikian, Ben H. "The U.S. Media: Supermarket or Assembly Line"? Journal of Communication 35(3), Summer 1985, pp. 97-109.

Latin/Tejano Music Fact Sheet. American Federation of Music. Accessed 29 Dec 2003 http://www.afm.org/depts/oe/star/factsheet.htm

Bustos, Flavio. Argentina Won't Copy RIAA Tactic Dec.… [END OF PREVIEW]

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Latin American Music Industry.  (2003, December 30).  Retrieved May 20, 2019, from https://www.essaytown.com/subjects/paper/latin-american-music-industry/6607397

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