The impact of music downloads and P2P file-sharing on the purchase of music in Canada

This study measures the extent to which free music downloads, including the use of P2P file sharing networks, act as substitutes or complements to music purchase in markets for CDs and electronic delivered music (such as MP3). The analysis uses representative micro-data from the Canadian population. We find that those who participate in free music downloading and P2P file-sharing do not purchase more or less music compared with those who do not engaged in such activities, but that, indeed, very active file-sharers purchase more music relative to file-sharers who download fewer songs. Thus, the market substitution effect between freely acquired music and purchased music is smaller than the market creation and market segmentation effect from free music downloading. In essence, the behavioural incentives underpinning free music downloading are the effects of ‘unwilling to pay’ (market substitution), ‘hear before buying’ (market creation), ‘not wanting to buy whole album’ (market segmentation), ‘not available in the CD format or on electronic pay-sites (market creation)’

Scale-free law: network science and copyright

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An Economist's Guide to Digital Music

In this guide, we discuss the impact of digitalization on the music industry. We rely on market and survey data at the international level as well as expert statements from the industry. The guide investigates recent developments in legal and technological protection of digital music and describes new business models as well as consumers' attitude towards music downloads. We conclude the guide by a discussion of the evolution of the music industry

The Digital Revolution: an Analysis of Technological Innovation in the Music Industry

Since the inception of the recording industry, in the early twentieth century, one fact has remained constant: technological advances will always affect the way music is both created and heard. The introduction of two completely different advances in technology, Edison\u27s phonograph and the Internet, have caused the most dramatic changes in the production of music. Many dubbed the twenty-first century transformation the digital revolution. This digital revolution, and its resulting consequences, are the focus of the author\u27s analysis

Pirate or subscriber? An exploratory study on italian consumers' music habits

Purpose of the paper: This paper analyzes Italian consumers’ music habits in terms of online piracy behaviors and their interest toward subscription-based music services (SBMS), i.e. services that for a small monthly fee give users legal access to vast music libraries across multiple devices. The objective is to try and profile a piracy-prone consumer and explore if SBMS could be a viable alternative to online music piracy in Italy, where the general piracy rate is very high. Methodology: The study is based on an empirical quantitative analysis through the collection of 505 questionnaires completed by Italian consumers. Findings: The paper highlights how Italian consumers reflect the ‘attitude-behavior gap’ in music consumption, as they perceive online music piracy as ethically wrong, yet they still show low preference for the legal, reasonably priced choice (such as SBMS). Younger, male, lower education, students have the highest propensity towards online piracy. In addition, consumers’ awareness, familiarity and interest in subscriptionbased music services are still very low. Research limitations: The limitations of the paper are linked mainly to the adapted scales, to the omission of alternative determinants of attitude towards piracy, to the composition of the sample and for analyzing only two subscription-based music services (Napster and Spotify). Managerial implications: The results call for greater efforts by music industry actors and public institutions to educate Italian consumers about the consequences of their online piracy behavior and the possible solutions offered by SBMS. Originality of the paper: This paper is the first to focus on Italian consumers’ music habits, their attitude and behavior towards online piracy and their interest toward subscription-based music services as a viable alternative

Dynamic analysis of an institutional conflict within the music industry

Peer-to-peer technology has made massive music piracy possible, which, in turn, has arguably had a significant economic impact on the recording industry. Record labels have responded to online piracy with litigation and are also considering self-help measures. It is currently not obvious whether or not these counter-piracy strategies will ultimately stifle online file sharing in the long term. With this paper we attempt to add to our understanding of the conflict within the institution that is the commercial music industry. We conduct an institutional analysis of the industry in transition and extend the traditional pattern modeling methodology with a formal resource-based model of a representative online music network. The model accounts for complex causal interactions between resources, private provision of common goods, free riding and membership dynamics. The numerical implementation of the model is the basis of a decision support system, which is used in a series of computer experiments that emulate anti-piracy scenarios. We show that a peer-to-peer system may be quite resilient to outside disturbances. The experiments also demonstrate that policies rank differently in their effectiveness based on a selected yardstick.Peer-to-peer (P2P) networks; Online File Sharing; Copyright; Simulation

An Economist’s Guide to Digital Music

In this guide, we discuss the impact of digitalization on the music industry. We rely on market and survey data at the international level as well as expert statements from the industry. The guide investigates recent developments in legal and technological protection of digital music and describes new business models as well as consumers' attitude towards music downloads and audio-streaming. We conclude the guide by a discussion of the evolution of the music industry.music, internet, file-sharing, peer-to-peer, piracy, digital rights management, copyright, e-commerce

An Economist's Guide to Digital Music

In this guide, we discuss the impact of digitalization on the music industry. We rely on market and survey data at the international level as well as expert statements from the industry. The guide investigates recent developments in legal and technological protection of digital music and describes new business models as well as consumers' attitude towards music downloads. We conclude the guide by a discussion of the evolution of the music industry.Music; Internet; File-sharing; Peer-to-peer; Piracy; Digital Rights Management; Copyright; E-commerce

Product Launch in a Declining Environment: The Blu-ray Disc – Opportunities and Struggle

Increasingly ICT-based virtual products are challenging physical products and markets. Obsolescence has become a real effect for an augmented number of established industries due to the facilitation of access, consumption, and permanent, immediate availability, which dematerialised products provide. Once again, Schumpeter’s Wind of Creative Destruction intensifies organisations’ permanent struggle for survival (1950). This paper presents long-term research in the optical disc industry, which has presented the optical disc format of Blu-ray as its latest innovation. It is an example of how an established industry launches a new product for finding new opportunities, but fights desperately against market resistance. The degree of innovation, the Blu-ray represents, may not be sufficient in the overarching battle of the physical place versus the virtual space (Kotler et al. 2002, Lam. 2004, Lamont et al. 1993, Scardigli et al. 1988). As the US market research institute In-Stat highlights, the optical disc market has declined for the 10th year in sequence (Kaufhold. 2010, IFPI. 2010). Sufficient evidence is available that the replication industry of optical discs may be confronted with an endgame scenario. The market climate may already be too hostile to support this industry’s desire for a renewal of consumers’ acceptance of the physical product, here the Blu-ray disc, and to create new market opportunities in the struggle against the industry’s potential obsolescence (Harrigan et al. 1983). Despite strong efforts of promotion and powerful market approaches, the Blu-ray disc could not find inroads to markets yet making this format sustainably successful. Evidence is that after a short period of time, Blu-ray discs’ available manufacturing capacities outperform consumers’ demand by >30%, consumer and replication prices fall sharply and many of the Home Entertainment’s content providers have little or no use for this format being a commodity and based on mass production (dvd-intelligence. 2010a, Kaufhold. 2010, Killer-Korff. 2010). Therefore, as research among the replication industry indicates, it presently seems more as though the Blu-ray format may not fulfil this industry’s needs and, with reference to Abernathy et al.’s research, may not lead to the renewal of industrial dynamics in a declining marketplace (1983, 1984). Further explanation for reasons can be found in the theories of innovation based on Utterback’s, Christensen’s and Christensen et al.’s studies of disruptive and discontinuous innovation (1996, 2003, 2003, 2004). Following the paper presented at the Sixteenth Annual South Dakota International Business Conference, this paper presents research about the Blu-ray format’s market problems. The introduction of the Transilience Organisation Innovation Map provided a conceptual approach for the initial explanation of the underlying reasons (Oestreicher. 2009). Research among European replication firms since concludes for Blu-ray that innovation in technology alone is not sufficient, when innovation’s second stream of market linkages is involved (Abernathy et al. 1983, 1984). The paper presents explanations, why the Blu-ray disc may not be sufficiently strong to support the replication industry in overcoming the odds impacting their strategic opportunities in a declining and eventually disruptive environment (Lamont et al. 1993, Yoo. 1992). The research methods applied are grounded theory and case study (Goulding. 2002, Charmaz. 2009, Eisenhardt. 1989, Davies. 2006). The overall intention of this long-term research is to contribute to a theory, which may also be relevant for other industries, like the publishing industry, whose struggle against dematerialisation of content is presently starting (Picard. 2003). Key Words: Radical vs. marginal innovation, Ideal Final Result, endgame strategies, theories of innovation, Blu-ra

How Blockchain technology can monetize new music ventures: an examination of new business models

The paper examines how blockchain technology is disrupting business models for new venture finance. The role of blockchain technology in the evolution of new business models to monetize the creative economy is explored, by means of a case study approach. The focus is on the recorded music industry, which is in the vanguard of new forms of intermediation and financialization. There is a particular focus on emerging artists. The paper provides novel case study insights and concludes by considering how further research can contribute to building a theory of technology-driven business models which apply to the development on the one hand to new forms of financial intermediaries, more correctly referred to as ‘infomediaries’, and on the other hand to new forms of direct monetization by artists