Topic: “The Internet and its Effect on the Music Industry Value Chain”
MGT/602: Strategic Decision-Making in Global Business
July 17, 2009
The purpose of this paper is to explain why the growing popularity of downloading music from the Internet gave rise to a new music industry value chain that differs considerably from the traditional value chain. The internet has helped usher in the "New Age of music/media access”. The internet has it used its technology infrastructure to make this happen. The production of music as a saleable product is a relatively recent phenomenon The market for music began with the sale of music sheets in the nineteenth century, but it was fully developed in the twentieth century when music was sold stored in the form of vinyl records (LPs), cassettes and so on (Graham et al., 2004). One must first consider how the internet moved music from vinyl and cassette to a digital infrastructure and how the infrastructure has evolved to lead enable or address changes in the industry value chain. Through inexpensive distribution methods, the music industry can deliver content with a lower overhead cost structure and enhance consumer experience by offering on-demand downloads, satisfying their emerging need for instant gratification. Online retailers have a set of advantages comparing to brick-and-mortar retailers: brand flexibility, product selection, cost structure, information access. This is particularly apparent in product categories where customers may want more information about the product. Enabling the internet to lay claim to being a new age retailer? The traditional value chain was horizontal and started with artist followed by production, manufacturing, sales/marketing, distribution and retail sales at a brick and mortar store. While the new more accessible digital or online value chain follows the same horizontal path from artist...