2000s in music industry

In the first decade of the 21st century, the rise of computers as the primary means to record, distribute, store, and play music caused widespread economic changes in the music industry, fundamentally changing the relationships between artists, record companies, promoters, retail music stores, the technology industry, and consumers. The rise of digital music consumption options contributed to a few fundamental changes in consumption. First the decline of album sales. With the A la carte sales models increasing in popularity, consumers no longer download entire albums but rather choose single songs.

The initial stage (from approximately 1998 to 2001) of the digital music revolution was the emergence of peer-to-peer (P2P) networks that allowed the free exchange of music files (such as Kazaa and Napster). By 2001, the cost of hard drive space had dropped to a level that allowed pocket-sized computers to store large libraries of music. The iPod and iTunes system for music storage and playback became immensely popular, and many consumers began to transfer their physical recording media (such as CDs) onto computer hard drives. The iTunes Music Store offered legal downloads beginning in 2003, and competitors soon followed, offering a variety of online music services, such as internet radio. Digital music distribution was aided by the widespread acceptance of broadband in the middle of the decade. At the same time, recording software (such as Avid's Pro Tools) began to be used almost exclusively to make records, rendering expensive multitrack tape machines (such as the 1967 Studer) almost obsolete.

The chief economic impact of these changes was a dramatic decline in revenues from recorded music. In the 21st century, consumers spent far less money on recorded music than they had in 1990s, in all formats. Total revenues for CDs, vinyl, cassettes and digital downloads in the U.S. dropped from a high of $14.6 billion in 1999 to $9 billion in 2008.

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