As the presence of the internet becomes more predominant as an everyday activity in people’s lives, the way consumers access, select, buy and listen to music continues to evolve, being the likely cause of the fall of the traditional record industry (Barfe, 2004).
One key aspect that is influencing these changes is technology. Technology has been a major characteristic of the music industry throughout the last century as to how music has been and is being accessed: from acoustic, through electronic to digital recording techniques, going through vinyl, tape and CDs (Murray, 2012). However, the emergence of the Internet has created a new channel of music provision (Dilmperi and King, 2012) that enables individuals accessing and downloading music files more easily and efficiently (Bockstedt et al., 2005). Therefore the music industry is a marketplace that is in transition from physical to digital (Barnes, 2009).
Although we already find an established online music retail market, given the large illegal activity, in the form of digital music piracy that took place through the peer-to-peer websites (Dilmperi and King, 2012), and streaming sites (Miravos TV, 2009), the music industry has seen the internet as a threat to the business (Kunze and Mai, 2007). Consumers, on the other hand, have been fast in adopting the new tools of exchanging music via the internet with file-sharing platforms such as Napster and KaZaA that quickly emerged allowing users to exchange digital music with one click (Kunze and Mai, 2007). While the industry placed most of the efforts in trying to reduce the illegal usage of the internet, by placing law suits against the most popular platforms such as Megaupload (Miravos TV, 2009), the steadily increasing number of consumers became more accustomed to download music for free (Walsh et al., 2003). The growth in file-swapping systems forced the industry to readdress how it will derive its future revenue streams (Meisel and Sullivan, 2002) in the face of the decrease in global CD sales (Edison Media Research, 2002). Additionally, other non-traditional competitors such as Apple and Microsoft also became present in the industry (Kunze and Mai, 2007) with electronic music players such as the iPod, which engaged a younger generation of consumers who saw in these devices a trendy and fashionable item, which also implied new patterns of music consumption (Kunze and Mai, 2007). With music consumption as strong as ever, and even more so in the form of streaming (McGlade, 2013), the popular saying that “the genie is now out of the bottle” is even more valid as eliminating such services will have little impact in the overall business (Hansen et. al., 2000). However, the appearance of a wide range of compelling products out there, such as Spotify, Pandora or Songza, that are free and catering for its users, are getting consumers hooked and even transforming them into paying customers when they were initially “stealing” (Parks, 2013).
As consumers are looking for ways to maximize the utility and benefits that come from shopping and minimize the costs related with it, not only in terms of money, but also time and energy spent (Dilmperi and King, 2012), the internet has become a preferred platform that adapts to these needs. As the Chief Content Officer of Spotify, Ken Parks (2012), explained during the panel on “The Future for the Music Industry” at the Creative Content Summit, due to the diverse platforms available through the internet, consumers have experienced music at a speed of light, and having tried this, will not want to stop. He also explained that companies and artists need to find a model that adapts to this new behaviour and that only those business models which do not force users to change how they consume music, but look at what they are doing and satisfy those needs, will become successful.
While any change in music format presents a significant challenge to the industry and consumers...
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