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Physical recordings of music, in the form of CDs, has been an early
success of e-commerce, with companies such as CD Now profiting from
the search capacity of the Internet. Jupiter Communications postulates
that online sales of CDs will generate $2.6 billion in revenue,
representing 14 per cent of the US Music Market by 2003. At present,
online music sales are just 1.1 per cent of the market.
There is a challenging issue for FM Music radio. It could see some
erosion of audience over the next five years (say five per cent to
eight per cent) but a much larger erosion over a ten year period.
There is an argument which says that companies will increasingly seek to
package their offering as a ‘staged experience’ rather than the delivery of
a service. 20 It is postulated that ‘experiences’ will achieve a greater
valuation in the disposition of free time. Esther Dyson also presents the
argument that performance will be the means of capturing the value of
intellectual property, rather than exacting a toll from copying. 21
External dimensions
FM broadcasters essentially package international content for Australian
audiences. There is little value added in this process, although the sale of
air-time to advertisers is of value. It will become easier for people to access
international content via Internet radio and MP3 downloads directly.
Australian music sales will be impacted by the growing popularity of
online stores such as CD Now, with greater direct imports of music.
Australia is the third largest supplier of music content in international
markets after America and Britain. The Australian popular music industry
has been successful in generating a series of artists of world renown. As it
distance becomes less of a barrier, there is likely to be greater interest in
Australian music.
7.5 Film and video production and distribution
The sector
The film and video production and distribution industry generates about
$2 billion in revenue, divided between production $1.1 billion and
distribution $900 million. 22 The production industry received 33 per cent
of its income from television programs, 23 per cent from the production
of commercials, and 11 per cent from the production of feature films.
Distribution obtains 45 per cent of its income from the rental and
26 per cent from sales of video tapes, disks, films and software.
Both businesses are enjoying rapid growth, with distribution’s income up
52 per cent over the three years to 1996–97 and film and television’s
revenue up by 85 per cent over the same period.
Cost savings
Technology is making a big impact upon the physical production of
films. George Lucas likens its effect to that of the introduction of oil
paints in the sixteenth century, which enabled paintings to be worked
and re-worked, rather than each stroke being indelible. Australia is
emerging as a center for the digital reworking of film. It is arguable that
this is not e-commerce.
20 See www.hbsp.com, July–August 1998.
21 See www.edventure.com.
22 See ABS cat no 8679.
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