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How the Digital Age is Changing Music


If youstill own a traditional record label, you don’t have a lot of options. You have to find a way to remain competitive in a digital age or go out of business. Before, artists weren’t able to completely bankroll their own endeavors and record deals were their way to go far. Those days are over. With sales of physical CDs dropping, music stores are quickly going out of business, and even FM radio is taking a hit. Mainstream genres like country, R&B/Rap, or pop are still doing well but alternative genres do better on internet, which gives new artists less incentive to seek a deal with a major label.


  • Most labels outsource production of CDs but that’s a waste of valuable resources when ITunes alone made up to 25% of all music sells in 2009, with no signs that it would decrease. It made up almost 70% of all digital sales. Digital sells are far from making up the majority but labels should think of their relevancy as this becomes the norm. They need to offer more than independent avenues.
  • Unsigned bands are taking advantage of companies like TuneCore and CDBaby and their sells are increasing faster than established artists. Popular software programs like ProTools and Logic can run on mid-range laptops, and with a few plug-ins, many artists don’t need to book time at an expensive studio to produce albums. Sites like Bandcamp allow fans to pay want they want for music from their favorite artists. The site also allows bands to recommend artists to their fans; creating an atmosphere of friendliness instead of ruthless competition.
  • A&R departments have lost some of their relevancy also. There’s not as much of a need to send someone out to a show when popular music blogs will put a spotlight on bands they think deserve attention. This is word of mouth advertising that, from a reliable source, more people will listen to than traditional marketing. Artists no longer need to rely on radio spins or an ad in a physical magazine to get heard; not when magazines are also declining in popularity.


  • Labels must come to terms with the fact that much of what they’re used to providing has been replaced by ease of access to the internet. There’s more and more cost effective ways to drive traffic to their main site and social media pages every day. From there they can grow their email lists and send any relevant information directly to fans.
  • As labels continue to lose money, many try to restructure. But taking out another loan on top of previous debts can be crippling in itself. It can be a sign that you aren’t making enough money to be worth keeping around; years of history or not, which puts extra stress on remaining labels to pick up the slack. Some companies are using apps in creative ways that allow them to be more innovative than before.
  • Saving your label is still possible if you’re willing to make changes and are able to make them in time. While artists are making their success independently, there are still bands who view signing with a label as giving them a legitimacy they couldn’t gain alone. The internet’s accessibility is also a fault. There are a lot of bands to filter through. And a lot of them want to get their songs in commercials, which is easier to do with backing from a label. But there’s also a fear that artists will end up thousands of dollars in debt with a major label if they don’t make it big.

Music Streaming – the Issue of the Music Industry

Music Streaming

Five years ago a graphic designer from San Francisco GitambaSayla-Ngita spent $ 100 a month for the purchase of CD and music to iTunes. Today, he spends less than $ 10 per month for the music. Cause? He can listen to his favorite songs with online services such as or for free or for a little money (monthly Pro account on is only 2.5 dollars). These services allow people to listen to music more than ever before. And this opportunity is absolutely free.

There is a problem with the Internet in the music industry. More recently we have witnessed a confrontation between music labels and such popular pirate services like Napster and LimeWire. Partly because of the still existing real threat of piracy, partly from the fact that sales of CDs have been falling for a long time, the music industry has decided to start cooperation with online services that allow you to listen to music on a PC, mobile phone and home stereos without downloading it to your device.


Now People Listen to Music in a New Way

The idea was that services such as Imeem,, as well as Pandora will allow people to listen to music anywhere. And the record companies will get a percentage of the sales of paid services. And the percentage of the advertisement in the case where the users listen to music for free. The labels hope that the provision of music in the open access will reduce the volume of piracy.

But the idea did not work. Music provided in the public domain in the network, has not led to an increase in sales. Yes, users began to listen more, but they do not pay for it. An example at the beginning of this article with a graphic designer GitambaSayla-Ngata is revealing. Previously, he spent about $ 100 a month for the purchase of music, but now this amount is less than $ 10.

The sales of the musical products continued their long decline. Yes, the sales of digital-music stores such as Apple iTunes and Amazon MP3 are growing rapidly. But this does not change the overall picture, as CD sales are falling even faster.


There Are No Simple Ways

Most experts believe that there are no simple ways that will enable companies to make money on the Internet music. The model which is used by companies today is very popular with users, and it indeed corresponds to their current needs. Nevertheless, that is a little consolation for the record companies. They continue to lose money. And the bright prospects that can change it are not visible yet.

The founders of the Imeem project plan to make most of the money on advertising. As an additional income project, they are considering options such as selling ringtones, concert tickets and more paraphernalia. Today, the service used by more than 100 million people. This is a real crowd, which has not yet become a real profit.

For the music industry, the only consolation in all this may be that some people find new bands and singers through these streaming video services and sometimes even buy their albums. For example, Sayla-Ngita recently discovered a Swedish band “Fashion” this way. After repeated listening to their songs online, he bought one of their albums on iTunes for $ 10. “I know that these guys make a living with their music and therefore, it should be paid.” These are the words of Gitamba. It is possible that he is not alone in his opinion…

Changing With the Digital Age


Major labels used to have a lock on how things were run in the music industry. And while it’s not the “end of days” just yet, major innovations have to be made. Before, if you wanted some degree of success you needed to manufacture discs or vinyl and make a deal with a distributor (who would act as a middle man between the artist/label and music stores). Any payments you got would be slow and unused products would be sent back for you to dispose of at your own expense. Now everything can be recorded in print with shipping becoming less and less relevant, but now you’re competing with every album that’s been printed since this system came about. You’ve got to change if you don’t want to be one of the labels who will disappear.

Streaming services are changing the way people listen to music. Now they can listen to most artists’ discography for free and without much risk. Spotify alone has over twenty-four million active members, with six million of those people paying a subscription fee. It doesn’t take much to come to the conclusion that the biggest music stores are no longer physical, but digital.

Sara Bareilles Album Release Concert

Many artists continue to seek out labels because of a sense that will make them legitimate, and you could take advantage of that. But you must also take advantage of social media and put your artists in direct contact with their fans; who expect frequent updates or they will move on. What else are you offering? Free or exclusive downloads? Are you letting fans know of merchandise in a timely manner? This is just some of what labels are expected to do for their artists now.

New technology has given labels new avenues of distribution that must be used though record labels still have the best methods for discovering, developing, and promoting new artists. That’s by no means cause for overconfidence. The same technology also allows artists to bypass you if you’re not offering a deal they find acceptable.

There’s three major labels left and they all operate on a model based on the production of physical CDS, which has absolutely no bearings on digital sales; nothing needs to be manufactured, packaged, or shipped. Not changing from this model is what gets artists such bad returns from streaming services like Spotify. In turn giving it a bad rap.

Another upper hand labels have over independent artists is connections to licensing companies around the world, clout to hold publishers and right holders responsible to the artist. Labels also have the ability to promote their artists over multiple online sites, something that’s integral to an artist’s long term survival.


  • Truly independent labels are in a slightly different position. Because they’re seen as run by genuine music fans instead of a corporation, these labels may have fans willing to help support them; not just their artists. Since they have fewer employees and can make drastic changes at a quicker rate than major labels, independent labels are better at adapting. Though it doesn’t guarantee an individual business has a greater chance than a major label at surviving.
  • Many labels are now including merchandise sales and pretty much anything else an artist touches in contracts to stay afloat. Record sales are not cutting it by themselves anymore. These deals are called 360 Deals and allow labels to wiggle their way into artist management and tour promotion. They can also make their way into branding (celebrity “products”) and licensing. Some artists are not sold on this because they think, with no middle man, bands will set themselves to be taken advantage of even more.

Digital Challenges for the Music Industry


Today, with the development of IT-technologies, it becomes much more difficult to distribute a CD-album to the market. That is why most of the album sales are made through Internet portals: iTunes and Google Play Music.

Unfortunately, there is no information about how much money an Artist gets when each song is sold. However, if the artist signs a contract with the iTunes, he gets 70% of sales, and if with the label – 20-30%. However, do not forget that iTunes and Google Play Music – these are projects that do not belong to the owners of record companies. For Apple and Google, it is just an additional source of income. According to the various reports, BitTorrent annually uses more than 1 billion people. This number allows us only to roughly estimate the damage caused by music piracy. Objectively, it is very difficult to calculate: International Federation of the Phonographic Industry, IFPI, and the RIAA report large financial losses.


For example, after a response to piracy in France, the iTunes sales for singles (individual songs from the album) increased by 22.5% and 25% – for digital albums. Do not forget about the resources such as Spotify and Pandora. Spotify – one of the music services that allows you to legally listen to music in streaming mode, and Pandora can be characterized as the work of the radio. These sites pay royalties to artists, but the payments are so low that the actor does not repay the debt for the company – the label holder. Google bought the YouTube. Many people can earn on their hobby. Through this site, the world has learned about the author of Harlem Shake, and other famous artists today. YouTube allows artists not only to find their audience but also to earn money for their work. So what do the new artists have to do in order to generate income from their hobby? If this is a true musician, then he can find the strength to be independent and to control their royalties. Yes, it is difficult, but if the product is good, it is possible to make good money.


There Are Some Options For Cooperation:

However, these musical giants like Universal Music, Warner Music, and Sony Music Entertainment, will not collapse overnight, and will work, until the music is there. Therefore, we can suggest a few options on how to improve the position of both sides:

  • make a contract so that the actor has creative freedom with the minimal label in its activities;
  • have full information about the rights and obligations of the label and the artist;
  • to ensure full respect for these rights and responsibilities;
  • rationally (adequately) evaluate label share in royalties an artist;
  • to increase the sales of licensed albums offer a variety of additional services for the fans.

For example, Coldplay put several tickets for the concert in their albums «Ghosts Stories», which were held in several cities. In addition, group members have hidden some letters in the national libraries, and the one who has found them, received an amazing opportunity not only to visit their concert but also to get acquainted with the group and go behind the scenes;

  • develop a better concept promo;
  • selling albums through the official website of the group and other legal representatives of the label;
  • provide a strict control over the proliferation of pirated discs from the state;
  • To participate in the creation of laws that allow the artist to defend in case of copyright infringement and illegal use of works.

If the data points are observed, then it is likely that the music industry will continue to exist and will bring even more beautiful music in the world. Is it worth it to enter a contract with a label holder? The artist has to decide himself, after weighing all the pros and cons.

Music Industry: Problem of Record Companies


Music is quite a successful product on the world market. The demand for it is great, resulting in a clash of interests of economic agents in the desire to make money on the works of artists. Creative complexity replaced by purely financial aspects, put the authors of these works in a very disadvantageous position.

This kind of business is firmly set on large corporations, without the services of which it is practically impossible to achieve economic success with a certain musical product. For several decades, there were four major record labels: EMI, Universal Music (UM), Warner Music (WM) and Sony Music Entertainment (SME), who in their history is almost no problems. In mid-2011, Warner Music has changed ownership, and now this company is owned by Access Industries, but the brand survived. Sony and Universal feel as good as possible in the modern world. Here at the oldest label – EMI, who led the most progressive policies in recent years. Things were not in the best way. Over the years, the company has changed the owners, and artists and all left EMI (for example, the noise went Rolling Stones). As a result, the company, burdened with debt, left many prominent artists and was bought by competitors. Universal offered a catalog of EMI records $ 1.2 billion., Which is 250 million more than was offered Warner Music (Access Industries). The deal meant that 38% of sales in the world, it is Universal will now belong to the recorded music. A consortium led by the Sony posted US $ 1.3 billion.

Problem of Record Companies

Thus, to this day, its original appearance was only in three major labels, who own almost all the recorded music, television and on the radio. To determine the approximate value of the label, it is sufficient to know the number of sold musical albums. Each year consists of different ratings of their sales. Company Media Traffic, specializing in the calculation of global sales in the field of music, has published on its website ranking of the top-selling albums.

The total number of selling copies of albums in 2014 decreased 2-3 times (regardless of the artist) compared to 2004.

If you compare the sales of albums companies over the past 10 years, we can draw a simple conclusion: sales are down. These ratings are taken into account and online-selling albums on resources such as Ozone, iTunes, and other social networks. Do not forget that people get music and more for free, through the “pirate” resources. Accordingly, if we consider these facts when counting the number of albums sold, we obtain other figures.

However, despite how much albums and concert tickets it was sold, sometimes it happens that a musician still owes the company – holder of the label. How is it? Let’s look at the process of working for the average music company.


Usually, it is constructed as follows: the company gives the artist, say, $ 250 thousand for the recording of the album. Next, the actor recorded the album. Suppose, 500 thousand copies have been sold, the price of each – $ 10 total revenues of $ 5 million share of the label holder in 85% of all sales. As a result, the actor is 750 000 $. At this point, it would seem possible to put a full stop. However, the actor is not yet final. In practice, the label takes more and their investments (250 000 $), And the actor is now 500 000$. Then the record company reimburses recording costs (300 000 $), Advertising (75 000), Shooting (300 000). As a result, the actor formed a debt in the amount of 425 thousand dollars-. And repeatedly, from album to album, this debt is increasing. This situation happens with artists constantly: they cannot leave the company until the debt is paid. However, this blame, because the actor voluntarily and signed a contract, which specifies the items that reduce the share of the performer.

The Problems with Music Piracy


Nowadays, music distribution is essentially free of charge. Should we feel guilty? Are we always obliged to pay $ 15 for an album of music files, simply because we have done so before?

Free distribution of music has changed our culture, and the value of this achievement is enormous. Some do not seem to understand this: they fear of something, look out for negative consequences. Moreover, the music business is very slow to adapt to new conditions.

As a result, we hear a lot of complaints. However, from a business point of view, the rejection of the current situation because of their own laziness and nostalgic looks is a voluntary destruction of the chances for success. Piracy excuses commercial insolvency and lack of innovation. Having chosen the tactics of burying head in the sand, entrepreneurs avoid adapting to the changing market.


Instead of blaming the audience, get to know them better

iTunes and Spotify – here are the companies that actually provide the music service. They figured what the listeners want, and simply embody their dreams. However, this was preceded by years of discussions and demands of incredible compensations from the part of the music industry.

at the moment imagine that the record companies would have spent these decades to the development of new technologies and the development of services that really interested buyers. Maybe at the moment we would be using an analog App Store from Sony or Warner companies. It is possible that in order to enhance the competitiveness some labels would have started to work on the standard of “fair trade”, knowing that many audiophiles would welcome such a way to support their favorite musicians.

In commerce, we have to deal with reality. You cannot sell music to the abstract “average buyer”. This is the fastest way to fold up. If you have something to sell, it is useful to learn more about your customers. This is called the study of “the circle of potential buyers.”

You find out who brings you money, and who doesn’t. Thus, you will be able to focus your efforts on providing service to the people who are interested in your content. On the other hand, change the assortment to attract more customers from a specific target audience. An advice from a professional: blaming the buyers is the worst way to increase sales.

Students? They are not so easy to sell albums for $ 15 apiece. Nevertheless, they really love the music! They go to concerts, share your products. They can become your loyal customers.

Let’s now look at people over 20 who are working and have a steady income. Many of them spend hundreds of dollars a year on music. And students quickly grow to this category of people.

No more accusations need more innovation

Recording Industry certainly lacks viable business options. This is not a fault of the audience. They also cannot be responsible for the material losses. The profits reduced because the market has changed, but the industry has failed to adapt to these changes.

People will always invest in what they like. They will pay for the convenience, for the new items. They will pay to help those people who they like.

It is not simply intuition. For example, music fans regularly disburse $ 149 for a “lifetime membership” on Ramen. And most of that money will go to the performers themselves.

The new music service must have individual characteristics, be something unique. Especially now when most of the major players in the music market complain about the failures. Come up with something new or attractive. Get creative.

I mean not only the music content, but the way of delivery, format, user-friendliness, target audience, and so on. Make an emphasis on the social-oriented component, which many of the services lack, and the audience will appreciate it.

We are still only at the top of the “music iceberg” drifting in the ocean of the Internet. There are many possibilities, a huge space for innovative experiments. And the problem of its development rests on the shoulders of the music market players. Ideally, the musician has only to create, but do not get bogged down in a slow Whirlpool of commerce, unless doing business in a rush for him too.

Save Your Music Label


An aversion to new technology is not the only thing holding the industry back. There’s also the idea that fans only want to see young artists, when that may never have been the whole truth. But fans are finding a myriad of ways to discover new music without labels pushing a select few. When you’re operating in a market like that your concentration needs to be whose filling venues, not who’s the new young face to market. If you want your label to recover, you’ll need to find creative marketing strategies to turn habitual streamers into buyers.

  • As a manager or owner you need to get in the mindset of a music lover, not someone who’s just chasing trends to stay on top but with no real care of the quality. Thinking your business will be the exception to this will likely be the death kneel of the company. If you’re label has been closed to certain genres before, consider opening the doors. Research what appeals to those demographics. It may be that you offer something they buy in droves and you weren’t aware of. A lack of music stores, for instance, does not mean there’s a sudden dearth of customers. Find out where they are what they like, and then create a website with an easily maneuverable interface that appeals to them. The more it’s geared towards the general consumer instead of just dry facts about the label, the more popular your site will be.
  • Invest in a catalog. Digital streaming is convenient and allows fans to listen to full albums with little risk, except possibly wasted time. As good as streaming is keeping some things in a physical format will only add to their value. Unreleased music is especially popular whether the band has broken up or not. If you must make a product like that available for streaming, at least give the physical copies a decent run with good promotion. The fans looking for it are willing to pay. And not just for CDs but vinyl has had a sudden explosion in popularity in recent years. Find the right band, never before heard live performances, package it and put it before the right audience and it’s bound to find buyers.
  • Labels have an unprecedented opportunity to interact with fans but this is a fragile trust that can easily be misused. You must differentiate your label in an increasingly crowded marketplace as one who won’t use promotional techniques that feel invasive. Will signing up for your newsletter, which you should have, going to get their inboxes flooded? There’s no quicker way to make someone hit the unsubscribe button. Fans want information as it becomes relevant and not a minute sooner.
  • Both labels and musicians are entering a music world where radio spins are becoming less important, having a clip of your song in a popular TV show or commercial on the other hand is more sought after. Bands are realizing that they’re more likely to make money touring than CDs. And they’re also becoming more aware that labels are seeking to cut into that profit. Having a label will make it easier to get those TV spots they want, but you have to show them that there’s a pretty good reason for them to lose money.
  • If you’re a part of a major label, know that there’s still a lot you can offer even though you’re no longer the only game in town. Professional level recordings with great production, connections to major distributors, anything related to promotion (music videos, photoshoots, advertisements, nationwide or international tours), and the list goes on. Just make it worth their time and everyone wins.

Record Labels and Digital Music


For all the doom and gloom, record labels are not toppling over every hour. It’s more of a slow decay and while that sounds bad, it’s stoppable. Labels can take advantage of the same avenues popping up for artists. The only difference is as a label manager, or owner, you need to start making the changes as soon as possible. You have a lot more at stake than the average artist. You’re responsible not only for yourself but for every band on your roster; and to keep yourself as a viable attraction for to keep those artists and attract new ones. Show that your label makes smart money decisions and loosen the reigns on artist creativity. Experimental bands are not as dangerous to profits as many people used to think they were. People are tired of albums that are practically indistinguishable from the last. Show that you’re willing to let your artists stand out and you’ll immediately stand out in the crowd. Major labels especially are always presented as corporations only bent on bleeding any originality out of a band’s work. Your label must overcome that distrust first and foremost.

How to Solve This

  • Bands are not likely to stop seeking record deals, so innovation is to keep you relevant and everyone making a profit doing what they love. Your artists are not going to jump ship unless you give them a reason to. Going digital opens up doors for band, manager, and label owner; it doesn’t open the door for them and shut it in your face. All artists want to make music, not every artist/band wants to handle the paperwork and prefers to leave it to the experts.
  • The industry as a whole needs to improve royalty rates. Get rid of as many obstacles to trust and goodwill as possible. Be honest about the process involved, which companies will be involved, and how long it will take an artist to get paid for their hard work. Allow your artists to make informed decisions each time. If there’s multiple licenses needed to protect their creative property, let them know. Anything kept from the artists you sign works against you.


  • Most importantly don’t wait until things have hit rock bottom to try and innovate. All you’re going to do is rush and make a lot of avoidable mistakes that will isolate people and drive you faster to irrelevancy. Make your changes now and stand out from the crowd. Attract attention by showing you’re serious about making things better for your business and who you represent. Artists and fans alike will flock to who they think genuinely supports them.
  • Be careful of the marketing strategy you chose to use. What may work for a normal brand may turn a good band into a laughingstock. Sponsorships may help turn a band member (or the whole band) into a household name. But if it conflicts too much with the band’s personality or music, it will fall flat. Music and companies that make consumer products are more entwined than ever before. This is definitely not a bad thing but it has a lot of unseen pitfalls that come with a new strategy.
  • Your label can still recover because independent bands are still operating in a fairly traditional manner. They need to hire manager, an agent(s), a staff to handle promotion, distributors that may/may not want to take a risk, lawyers and accountants. This requires capital they may not have. And they might have to cut corners in important area whether they want to or not. You can attract these bands by incorporating popular incentives to go independent.