TRANSFORMATION OF THE ECONOMIC STRUCTURE OF THE MUSIC INDUSTRY IN THE CONTEXT OF THE DIGITAL TRANSITION

This article examines the transformation of the music industry’s economic structure under the influence of digital technologies. The shift from record labels as central economic entities to artist-driven models is analyzed. Key factors shaping this transition include the rise of streaming platforms, social media, digital aggregators, and Virtual Studio Technology (VST) instruments. These innovations have reduced entry barriers for musicians, enabling independent artists to produce, distribute, and monetize their music without traditional industry intermediaries. The synergy of these technologies has had a revolutionary impact on the music industry, fundamentally changing the ways music is created, distributed, consumed, and monetized. The article presents original models illustrating the industry’s structure before and after the digital transition. The impact of digital piracy on recorded music sales and the industry's response is discussed. The adoption of MP3 technology and the rise of peer-to-peer file-sharing networks initially led to revenue losses for record companies. However, legal streaming services such as Spotify, Apple Music, and Tidal introduced a subscription-based revenue model, shifting industry dynamics. Social media platforms, including YouTube and TikTok, have replaced traditional media as primary promotional tools, making viral trends and algorithm-driven exposure crucial for success. Despite the advantages of digitalization, challenges persist. Increased competition in digital spaces makes visibility difficult for emerging artists, and streaming revenue models disproportionately favor high-streaming musicians. On average, an artist requires 16 to 27 million Spotify streams annually to earn a median U.S. income, forcing many to explore alternative revenue streams such as live performances and merchandise sales. In conclusion, the digital transition has restructured the music industry, empowering independent artists while reducing the dominance of traditional record labels. Future research should focus on sustainable monetization strategies and the role of artificial intelligence in shaping the industry’s future.