Law of Demand and Supply in the Production, Distribution, and Consumption of Music

Law of Demand and Supply in the Production, Distribution, and Consumption of Music
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November 8, 2017
Introduction
These days, Music could be regarded as one of the greatest commodities while the music industry is one of the biggest markets reaching each and every corner of the world. According to Statista.com (n.d.), as of the year 2016, the music industry in the United States has reached about 17.2 billion USD. As for the whole world, estimates say that the same industry would be worth about 47.5 billion USD. However, these numbers are projected to experience a steady rise by the incoming years, with estimates saying that the US Music Industry would even hit about 57 billion USD by the year 2021 (Statista.com, n.d.). However, while these statistics might be promising, the music industry just as any other digital media industries, have always been troubled by Piracy and related illegal activities (Brown, 2014). In a recent survey done by Frontier Economics, they identified that annually, an astounding amount of $7 billion USD to 20$ billion USD is being lost due to the illegal consumption of pirated recorded music (Musicbusinessworldwide.com, 2014). However, while most musicians, recording companies, and even businessmen who profit from this industry would condone the pirated use of music, some would see that piracy, in itself has its own benefits. Particularly this benefits is related to a concept of economics which is the Law of Demand and Supply (Brown, 2014).
Mainly, the Law of Demand and Supply is defined the fall of price relative to the amount of supply and/or demand, that’s available for the market. Specifically, what this law shows is that as the price of the demand rises higher than the supply available for the market, the price rises, otherwise, if it falls then the price decreases (Ehrbar, 2008). In this article, the relationship between this concept as well as the market price of music would be discussed in further details. More particularly, the author would focus on piracy (pirated music vs non-pirated music) and its effects on the demand and/or supply for music as a commodity. Nevertheless, he believes that the main reason as to why the Music industry is estimated to grow its revenues much further in the coming years is due to (1) the licensing of original music and increase of live performances and (2) the consumption of music through pirated means.
Demand, Supply, and Equilibrium Point
When talking about the effects of Law and Demand to the music industry today, one of the most apparent case at hand is its effects to the price for music consumption (Franke, 2010). In the previous decades, music lovers would have to buy physical copies of their own music, either by buying CDs, vinyl, or even tape cassettes, which would only feature some of the music that they want. Also, to be able to do this, they would have to physically visit their local music store and checkup whether the album that they want is available or not. Following the concept of demand and supply, it could be said that during those days, the demand for music has always been high while the supply is low. This makes music consumption for music listeners more costly as compared today, where...