The Changing Nature of Music Industry
BOX 1. 5 (3rd Edition) Case 1.1 (4th Edition)
THE CHANGING NATURE OF THE MUSIC INDUSTRY
One of the less visible but highly challenging aspects of the Internet is the impact it has had – and is having – on the entertainment business. This is particularly the case with music. At one level its impacts could be assumed to be confined to providing new ‘e-tailing’ channels through which you can obtain the latest CD of your preference
– for example from Amazon.com or CD-Now or 100 other websites. These innovations increase the choice and tailoring of the music purchasing service and demonstrate some of the ‘richness/reach’ economic shifts of the new Internet game.
But beneath this updating of essentially the same transaction lies a more fundamental shift – in the ways in which music is created and distributed and in the business model on which the whole music industry is currently predicated. In essence the old model involved a complex network in which songwriters and artists depended on A&R (artists and repertoire) to select a few acts, production staff who would record in complex and expensive studios, other production staff who would oversee the manufacture of physical discs, tapes and CDs and marketing and distribution staff who would ensure the product was publicized and disseminated to an increasingly global market.
Several key changes have undermined this structure and brought with it significant disruption to the industry. Old competencies may no longer be relevant whilst acquiring new ones becomes a matter of urgency. Even well-established names like Sony find it difficult to stay ahead whilst new entrants are able to exploit the economics of the Internet. At the heart of the change is the potential for creating, storing and distributing music in digital format – a problem which many researchers have worked on for some time. One solution, developed by one of the
Fraunhofer Institutes in Germany, is a standard based on the Motion
THE CHANGING NATURE OF THE MUSIC INDUSTRY
One of the less visible but highly challenging aspects of the Internet is the impact it has had – and is having – on the entertainment business. This is particularly the case with music. At one level its impacts could be assumed to be confined to providing new ‘e-tailing’ channels through which you can obtain the latest CD of your preference
– for example from Amazon.com or CD-Now or 100 other websites. These innovations increase the choice and tailoring of the music purchasing service and demonstrate some of the ‘richness/reach’ economic shifts of the new Internet game.
But beneath this updating of essentially the same transaction lies a more fundamental shift – in the ways in which music is created and distributed and in the business model on which the whole music industry is currently predicated. In essence the old model involved a complex network in which songwriters and artists depended on A&R (artists and repertoire) to select a few acts, production staff who would record in complex and expensive studios, other production staff who would oversee the manufacture of physical discs, tapes and CDs and marketing and distribution staff who would ensure the product was publicized and disseminated to an increasingly global market.
Several key changes have undermined this structure and brought with it significant disruption to the industry. Old competencies may no longer be relevant whilst acquiring new ones becomes a matter of urgency. Even well-established names like Sony find it difficult to stay ahead whilst new entrants are able to exploit the economics of the Internet. At the heart of the change is the potential for creating, storing and distributing music in digital format – a problem which many researchers have worked on for some time. One solution, developed by one of the
Fraunhofer Institutes in Germany, is a standard based on the Motion