Question

Traditionally, the music industry signed multi-year contracts with artists and sold copyright-protected music through established distribution channels. A shift to the digital format and the rise of Internet technology have resulted in the sharing of music over peer-to-peer networks, a practice the industry calls "piracy." In recent years, the music industry has seen a rapid decline in the number of CDs sold. At the same time, the ownership of the distribution rights of musical content under copyright laws remains clear. Attempts at innovation by individual record labels to offer music as direct downloads to consumer are quickly copied by other labels. Based on these factors, the best assessment is that the music industry has shifted from a __________ to a __________ cycle market.

Answer 1

Answer:

The music industry has shifted from a Markup/Peak market cycle to a Distribution/Contraction cycle market

Explanation:

There are four phases in the market cycle.

1. Accumulation or Expansion

2. Markup or Peak

3. Distribution or Contraction

4. Markdown

- Accumulation occurs as a result of economic growth in the market

- Markup or Peak occurs when the buying pressure reaches it highest level.

- Distribution or Contraction occurs when there is weakening in the market, that is, weakening of the market but not total collapse.

- Markdown occurs when the market has sung down to the lowest possible point, that is when there is total collapse of the market.

The market has a cycle that rotates round like a cycle. The moves from Accumulation to Markup then to the Contraction cycle then to Markdown market cycle.

From the scenario given, the music industry was at the Markup cycle market during the time when the music industry could sign multi-year contracts with artists and sell copyright protected music through establish distribution channels.

However, the music industry experienced the Distribution or Contraction market cycle when there was a decline in the number of Compact Disc sold as a result of a shift to digital format and rise of internet technology which allowed sharing of music over a peer-to-peer network without visiting the music shops to buy Compact Disc from recognized distributors.