Business models for music distribution after the P2P revolution

Brazilian Journal of Operations & Production Management

Goal: to describe the current configuration of digital music distribution, and to give an overview of the business practices adopted by digital music outlets. Design/Methodology/Approach: Longitudinal study using descriptive statistics and cluster analysis on two datasets collected in 2011 and 2018. Results: Three clusters were identified in 2011: paid download, music streaming, and video streaming. Data shows that, in 2018, although streaming was the predominant technical mode, many outlets still applied the paid download business model (BM), and that cluster presented the highest survival rate. Large outlets used streaming, but the specialized ones still adhered to download, and catalog specialization and consumer behavior are the explaining factors. Limitations of the investigation: Data was gathered from 70 digital outlets operating in two major digital markets, USA and UK, but some large ones, such as Korea and Japan, were not analyzed. Practical implications: While a dominant ...

The aim of this research is to assess the role of digital music distribution services in the downturn and restructuring of the music industry. The research was bound by the systems of innovation conceptual framework and explores the dynamics between the technical, social, legal and economic dimensions with the purpose of understanding how the traditional supply chain has changed. The cases of MP3.com, Napster and Kazaa are studied for their historical significance and the sheer breadth of issues they bring to the fore. Data was collected using documentation review and interviews. The findings of the research show that the creation of digital music distribution services initially resulted in disintermediation. However, it was not long before record companies reintermediated into the supply chain with pay-per-download (PPD) and subscription payment schemes. Today, the law seems to be catching up with entities that illegally distribute music but it has not ceased the development of newer online establishments that are technically not in breach of legislation.

2006

The digital revolution and the new way of thinking in the 21st century (as a result of the rapid evolution of technology) inevitably affect the music industry. Innovative kinds of e-business, which are virtual and evolve dynamically in a digital environment, tend to prevail the traditional retail stores. The traditional models should be revised, and new business models should be created, in order the electronic business to succeed. Information technologies (IT) would have the main role in the new business models, while new features will reconstruct the processes and the relations that constitute the music industry value chain. The new face of music e-commerce requires new strategies and new B2C and B2B models. Such a model is the advertisement model (ad-based model). Advertisements could be used as an alternative way of making profits, instead of selling music, since Internet users are yet quite familiar with free music downloading. The core idea of the proposed model of the paper is the distribution of free music with embedded sound advertisement spots of sponsors over the Internet. Certain improvements on the model design can lead to an integrated combination of the two most promising models: the ad-based and the subscription model.

Proceedings of the Fourth International Conference onWeb Delivering of Music, 2004. EDELMUSIC 2004., 2004

The online music market has changed significantly and fundamentally over the past few years, as more and more new players -many of them originally from other sectors -enter the market space of the original media companies. Although these new entrants provide the media companies with the opportunity to adapt their business to the new demands of the Internet, they are also competitors who are themselves able to offer music over the Net. In this paper we describe the current state of play in the online music sectors in Europe at May 2003. The outcomes are based on "expert talks" and an online survey. After initially discussing the justification for our chosen research approach, we describe the research design. We then report our findings. Finally we identify the key driving factors for online music today: the new competitive environment, the appropriate payment systems, the focus on core competences, end devices and the consumers.

2004

With the aid of P2P technology, the vast and ever growing cyber populace has the competence of unauthorized sharing of digitized copyrighted works such as music, films and computer software without bothering to pay for them. This unauthorized sharing of copyrighted works, which is termed as online piracy, has led to massive distribution and exchange of valuable stuff, which was hitherto unknown on such a scale and magnitude. When such piracy takes place at the instance of ordinary people, copyright law is once again challenged by the latest in the series of technological innovations, i.e., digital and communications technology. In an environment where the producer-middleman-consumer chain has reached a fragile point, it becomes imperative to find a legal solution to promote creative activity in an organized manner, which secures the interests of both producers and consumers. Towards this end, this paper focuses on the sharing of works through various P2P networks such as Napster, Gn...

… Journal on Media Management, 2004

This article provides a strategic analysis using a services marketing framework of 3 business models in the music industry: the traditional music industry; renegade peer-to-peer music file trading; and new, legitimate online downloading services. Key recommendations are made on how new, legitimate services can succeed using convergent marketing strategies. Finally, a conclusion is provided addressing the future of the music industry and other media-related industries.

Retrieved May, 2006

This explorative paper examines the impact of online piracy on the emergence of innovative, legitimate business models. While often dismissed by academics and professionals alike, online piracy has shown to be a valuable source of innovation to both industry incumbents and entrepreneurs. The paper briefly summarizes the evolution of piracy technologies and associated online communities. Then, the paper explores piracy in the media industry and discusses the means by which it has influenced innovation. Finally, the paper observes the Torrent phenomenon and suggests its potential impacts on the emergence of new business models.

The music recording industry is a highly-concentrated five firm oligopoly. Much of the dominance achieved by larger firms in the industry results from control over the distribution and promotion of the pproducts of the industry. Alexander (1994b), predicted that new compression routines would facilitate the efficient transfer of digital music across the internet. MP3 compression routines have made such transfers relatively simple and efficient. While smaller new entrants have not yet been able to exploit this new technology in terms of market share, an element of uncertainty exists regarding the sustainability of the prevailing structure, due to large scale non-sanctioned file sharing. Despite the industry's legal efforts to suppress non-sanctioned file distribution, peer-to-peer networks may render these efforts futile. However, peer-to-peer networks must overcome structural and institutional problems, in particular, free-riding.

European Journal of …, 2009

Sounds of then, sounds of now: Popular music in …, 2008

Recent publications have reached conflicting conclusions on whether allowing users to have unlimited free access for downloading music and films is beneficial or not for the content production industry (CPI). Not only do models differ in their conclusions, but there has also not been an agreement on the validity of data on the impact of free access to music and films using P2P on the profits of the CPI and on the demand for CDs and DVDs. We provide in this paper a model that allows to study this question using elementary mathematical tools. In particular, it includes the effect of sampling on the willingness to buy. Preliminary numerical experiments show that benefits are maximized by avoiding any control measures against unauthorized sampling over P2P networks.

Digital piracy, although negatively altering the recorded music market, has a positive impact on other segments of the music market, such as live music or ancillary goods, because it generates a positive externality benefiting those activities. Through a 2-player strategic game between a record company and an artist, this study shows that a renegotiation of music contracts could allow the internalizing of this positive externality, while being welfare-improving for both record companies and artists. This study also shows, however, that pervasive piracy is not desirable for an artist. According to the Recording Industry Association of America, digital piracy explains most, if not all, of the 10% annual average drop in the number of CDs sold in the United States over the 2000 to 2007 period. 1 Record companies, as well as some artists, claim that music file sharing on peer-to-peer (P2P) networks generates a replacement effect (free music downloads and CDs are substitutes) and point out the concomitance of the decline in recorded music sales and the growing number of broadband Internet subscribers and music file sharers. As a result, following pioneer works on software piracy (Conner & Rumelt, 1991), music piracy has become a specific topic for economists, who mainly focus on comparing, both theoretically and empirically, the negative effect of piracy on music sales with two potential positive effects: a network effect, increasing legal demand for a widely pirated product; and, above all, a sampling effect, prompting some consumers to purchase a legal copy of a product they already get for free in a low-quality pirated version. The positive effects of piracy and of the digitization of music, in general, are either partial, when favoring emerging artists to the detriment of " stars "

ACM SIGecom Exchanges, 2002

Digital rights management has become a pressing concern for the online music business. Existing digital rights management systems are backed by two license management models, the tethered model and the untethered model. These two license management models focus on the management of payments and usage rights. The problems with these models are that the tethered model forces consumers to be online, while the untethered model provides relatively less security to the license residing locally. This paper proposes an enhanced license management model for the online music business, which integrates both models together and thus enables online and offline purchasing.

Digital distribution has surpassed physical distribution in key markets and will soon be the dominant music distribution model in Australia. Four different business models (free, ad-funded, pay-per-use and subscription-based) and two different music delivery methods (downloading and streaming) currently compete in the market place. The author analyses each distribution model available in Australia and evaluates advantages and disadvantages from the content provider's perspective. The most striking development is the blurring line between promotion and distribution. Content providers can either lower the barriers to access music in order to facilitate rapid music circulation and create a strong promotional effect to support various revenue streams; or heighten the barriers to access music in order to install an artificial scarcity through excludability, which is essential to implement a business model based on selling musical recordings. In this regard, the variety of different digital distribution models provides a flexible toolbox for content providers to coordinate their overall marketing strategy.