Theories related to the future of the industry

There are currently three arguments

1. The industry will be unchanged because of the MP3's less-than-CD-quality sound and its large disk space requirements. In other words, the MP3 technology will be shelved along with other music technologies such as the 8-track.

2. The industry will eliminate traditional record labels by eliminating the need to manufacture and distribute the physical product of CDs.

3. Argument 3: MP3 will simply whet music lovers' appetites for the benefits of a technology that can deliver songs online. Because the majority of music buyers are not willing to sift through thousands of obscure bands, web sites, etc. they are not going to be willing to completely shift to Internet music technology. Internet music technology will have a place in the market, but will not completely dominate it.
Let us talk for a moment about 2 above. As we look to future of music, the most obvious change we can expect is the dismantling of traditional physical music retail operations i.e the music shop. This is not to say that retail sales of music will be obliterated, but to say that retail sales will possibly reemerge in a different form i.e. through the Internet . The Internet is accesible nearly anywhere in the world where music buyers want to purchase music.
Another change is the demise of the manufacturing and distribution infrastructure that currently supports traditional music retail stores. Currently, the Big Five record distributors control the physical movement of CDs. 80% of the resources of these five organizations are devoted to the manufacture of physical CDs and moving them from one place to another. As the Big Five sees 80% of their operations disappear, they will be forced to focus on the remaining 20% which is comprised of developing the careers of recording artists and promoting those careers through radio and TV promotion, tour support, etc. However, as the digital revolution continues to evolve, these functions will become even more important. As more consumers have more access to the Internet, aspiring recording artists will need experienced guidance, financing and promotional resources in order to create quality music that will reach audiences more mature and more sophisticated about music. Record companies will have more distribution opportunities, giving them more ways to expose and distribute their artists' product to the consumers with more precise methods for targeting the ideal customer for their music. More revenue opportunities mean more abundantly available, affordable music. This will be good not just for established artists who will continue to see more money spent to promote their work but for new artists hoping someone will invest in their work. In order to be noticed above all the noise; this marketing expertise will be in high demand.