Since it became an official standard in 1991, Moving Picture Experts Group -1 Audio Layer 3 (or MP3) has proven popular due to the fact that it is easily transferable, good quality and cheaper than hard copies. So far it has been unpopular with record companies as a result of the close links it has to piracy, but recently Atlantic Records said that over 50% of their revenue was coming from digital sales.
This is the first instance where a publisher has made more profit from this type of sale than from CDs of DVDs, so this is definitely a landmark for the music industry. The figure actually stands at 51% (of profit coming from digital sales) which may not sound much, is still a big achievement, and will give other companies confidence to go down this path.
As I said there is a great reluctance to encourage digital media because of the way that it can be easily copied, but this has caused a massive overhaul in the music industry. Whilst many have embraced it by offering their music free over the Internet, others are suffering as people choose to listen/download the music free online rather than pay for a CD. Craig Kallman, Chief Executive of Atlantic Records, explains how the Internet has affected their business:
“It was really important to educate artists about how we had to change the thinking on the release cycle and the type of products we were releasing. Some fans only want to buy the physical disc, some only want to buy a ringtone and a T-shirt, others just want a concert ticket, others want to buy a digital album. Everybody wants something different now … we need to offer them whatever they want, whenever they want.”