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From the early 20th through the early 21st century, the music industry maintained roughly the same business model. This traditional model included the mass production, promotion, and distribution of recorded material. Record labels would identify and develop artists, record music in professional recording studios, manufacture physical albums (vinyl, cassette, or CD), promote the albums in traditional media, and distribute the albums via physical record stores. Record labels of this time typically promoted their products using large budgets spent on heavy advertising, encouraging radio airplay, and television spots.


This business model had a sales-oriented philosophy, focusing efforts on making transactions (i.e., selling CDs) with little concern for developing and maintaining long-term relationships with the customer. The consumer was subject to a slow, inefficient process of purchasing music where they had to travel to a physical record store (prominent retailers included Tower Records and Best Buy), search the shelves for desired music, and then wait in line to check out (Vaccaro & Cohn, 2004). For the greater part of the 20th century, the record industry had an oligopoly over how music was distributed to customers.


The period from 1999 to 2000 has been regarded as the turning point of the industry. After consecutive years of growth and record high U.S. sales in 1999, CD sales throughout the United States and the world began to decline. Many industry executives (at least in part) blame this decline on digital piracy, which began in 1999 with Napster. From 1999 until 2002, CD sales worldwide plummeted 19.8 percent, or about $7.7 billion (Janssens, Vandaele, & Beken, 2009). CD sales have continued to decline.