Economic Theories and the Music Industry Essay Example | Topics and Well Written Essays - 2000 words

Economic Theories and the Music Industry - Essay Example Musicians have made a living out of selling their music formats and thus the identification of the importance of the industry. However, of contemporary times, the sales of music formats have fallen continuously. It is the fear of many that there will lack and industry in this sector after some years and this can gain attribution to several economic theories. One of the standing economic theories in the identification of this is Market Anomaly. The key aspects of this theory are that there is inefficiency in the sales of a particular product in a given economic sector may depreciate and go against efficient market hypothesis (Fabozzi, 2011, 71). There are two main reasons that lead to market anomaly and they are ranges in two spectrums, the structural factors and the behavioral aspects. Focusing on the structural factors, one of the key components is unfair competition. The music industry is one that has undergone numerous changes over the years and thus the need to keep up with the c hanges. The changes have been caused by the development of Information Technology and thus the necessity to keep up with current trends in the creation of music formats. This necessity has led to different people in the various music sectors to develop a competition culture bases on the goal of most market sales. However, this unfair competition has led to their loss of customers rather than an increase and this is based from the fact that they focus more on the quantity of music produced to outdo each other rather than the quantity (Fabozzi, 2011, 125). The customers do not care about the quantity of music formats produced but rather on the quality. When customers find the quality not appealing to their needs, they decrease their focus on the particular music and spend the money in another manner. Unfair competition also comes up based on other entertainment industries rather than music. A major competitor in entertainment is the movies. The movie industry also started a long time ago and the amount of developments that the sector has witnessed over the past decade goes nothing short of overwhelming. Many movie directors have invented a lot of technology that has drawn more attention to entertainment fans. An example of this is the introduction of 3D films that give the viewer a livelier experience while watching a movie. Upon the introduction of the aspect, the music industry is in a fast search to develop a new concept in terms of music formats that will outdo the theatre developments (Robert, 2012, 153). This form of competition is healthy but of contemporary reports, it has led to various rivalries developing between music producers and movie directors and this has not had a positive impact on music formats. Another factor in the theory that affects the sale of music formats negatively is market transparency. In this case, not many people recognize the various genres of music formats that society is willing to offer due to less publicity made by the respo nsible promoters (Nilsson, 2010, 63). Less promotion by advertisement is one conflict that has hit markets in the 21st century and the credit for this goes to the high amount of inflation that the current global market is facing. The less the promotion made the more anonymous music formats are in society. This is one contribution to the poor music market figures in the 21st century. Moreover, regulatory actions for various music formats by authorities have led to a decrease in the number of sales over the past few years.