Music in electronic markets: an empirical study

Music plays an important, and sometimes overlooked part in the transformation of communication and distribution channels. With a global market volume exceeding US$40 billion, music is not only one of the primary entertainment goods in its own right. Since music is easily personalized and transmitted, it also permeates many other services across cultural borders, anticipating social and economic trends. This article presents one of the first detailed empirical studies on the impact of internet technologies on a specific industry. Drawing on more than 100 interviews conducted between 1996 and 2000 with multinational and independent music companies in 10 markets, strategies of the major players, current business models, future scenarios and regulatory responses to the online distribution of music files are identified and evaluated. The data suggest that changes in the music industry will indeed be far-reaching, but disintermediation is not the likely outcome

Disintermediation and re-intermediation in the music business: the effect of multimedia technologies and E-commerce

Advances in e-commerce and multimedia technologies are becoming inextricably more closer related to society and business. Theoretical insight into these new areas is scarce and that is the gap that this thesis aims to cover. The study uses the music industry as a test-bed for the propositions developed. The literature review summarises and criticises the theories on E-commerce which centre around the "transaction cost economics" branch of management literature. Other theories used to develop the frameworks include "network externalities" and "increasing returns" from economics, "value chain" from industrial organisation and theories on "search costs" and "quality uncertainty" from the economics of information. Special mention is given to the literature on the music industry dealing with the production and commercialisation of music, the resulting and changing structure of the industry, as well as various research approaches to understanding consumer involvement in the industry (cultural/subcultural analyses of user behaviour). The methodology followed is qualitative in nature and concentrates on the case study method. Besides the secondary data, primary data is collected via interviews with key informants in the music industry. Executives in other relevant to e-commerce/multimedia industry firms such as telcos and software firms are also interviewed to give a broader perspective to the study. The data are analysed using the pattern matching method. The data analysis process can be summarised as follows: A primer is offered on the recording and music industry which serves to develop the research questions and propositions. This stemmed from the pilot research and coupled with the theory allows the formation of patterns that are expected to match the data if the theory stands. Three patterns emerged from the literature review: Pattern 1: Labels sell music content directly to the consumer Pattern 2: Artists sell content directly to the consumer. Pattern 3: E-commerce between content owners and consumers will be facilitated by intermediaries. A case study is then built detailing the events in the music industry concerning Music on Demand during the period 1995-1998. The case study is "partitioned" in chapters detailing each of the technological players examined. Other significant events relevant to the study, are included in vignettes in the main body of the analysis. The analysis matches the data in the case studies with the relevant patterns and incorporates interview quotes. Concluding the thesis offers some explanations for the failure of matching theory with data. It also goes one step further by developing a new value system and patterns that can be used to guide further academic research on the subject. The chapter ends with the development and analysis of four scenarios, proposing their value for practitioners such as managers and investors seeking insight into the future of the music industry in a multimedia environment, as well as policy makers interested in the relationship between creativity and economic technological factors. The main conclusion is that concentration of copyright in the hands of the few is hindering rather than promoting new multimedia and e-commerce industries

Disintermediation and re-intermediation in the music business The effect of multimedia technologies and E-commerce

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Increasing returns and social contagion in cultural industries

A formal definition of cultural industries is developed following four distinct features of cultural goods: (a) oversupply, (b) quality uncertainty, (c) network effects and (d) demand reversal. Drawing on economic and socio-psychological notions of ‘network’, increasing returns and social contagion effects are distinguished. Increasing returns may govern the adoption of standards when choices are binary, social contagion explains the diffusion of cultural goods when choices are multiple. Together, the four structural features delineating cultural industries account for curious competitive dynamics prevalent in cultural markets, such as the notorious 10 : 90 proportionality (under which 10% of cultural goods account for 90% of the market), causal ambiguity about the reasons for success, and the formation of fashions. Six managerial recommendations are advanced, focusing on a criticial circulation point triggering self-sustaining diffusion patterns. Finally ‘project-based enterprises’ and ‘network forms of governance’ are identified as the organizational forms most suited to the dynamics of the cultural markets

Contested collective administration of intellectual property rights in music: the challenge to the principles of reciprocity and solidarity

Individual intellectual property right holders in music cannot easily enforce their statutory claims to exclusive usage and remuneration . Since the middle of the 19th century, composers and publishers have responded by creating collective bodies, so-called collecting societies which monitor musical activity in a given territory, and collect and distribute fees accordingly. These societies, first established in Western Europe, operate on two principles : the principle of reciprocity, linking monopolistic national societies and the principle of solidarity, making a collecting service available to all right holders at roughly the same rate . The rise of the global media corporation combined with new digital production and distribution technologies has seriously undermined these principles . The article reports recent trends drawing on over 30 interviews with executives of the five largest multinational music firms and the major copyright institutions in Germany, Japan, Sweden and the UK, including the European Commission, the World Intellectual Property Organization and national and international trade bodies . We conclude that the present structure of music copyright is likely to collapse, skewing the distribution of revenues in favour of big corporate players and global musical products if there is no institutional intervention . Policy implications are discussed