Information, Technology, and Innovation: Resources for Growth in a Connected World

CHAPTER 18

Music Business Models

The business model disruption framework as it applies to music has multiple moving pieces: Tastes change, attitudes toward intellectual property sharing differ significantly by demographic, and the place of recorded music in modern life is also in a period of deep transition. The Recording Industry Association of America (RIAA), which began as a standards body, became perhaps the most disliked lobbying group in the country by suing music lovers, which was a curious strategy, to put it charitably. Music is a small but visible industry (moving and storage was about the same size, but Mayflower never had the Grammy Awards), and it was also disrupted early in the Internet's life cycle, before telecom or newspapers, for instance. How did technology-related events and trends disrupt the music industry's business model to such an extent that its trade association felt compelled to adopt such an extreme position?

Incumbent Model Pre-2000

It is tempting to say that Napster changed everything, and peer-to-peer (p2p) file sharing is clearly a hugely important factor in the media landscape. It is not the only factor, however, and a series of services have in fact disappeared, sometimes permanently: In addition to Napster, Pirate Bay and Limewire have been subject to legal challenges. But as we will see, the music industry business model had a number of problems before the Napster watershed.

Customer Value Proposition

The goal before the Internet era was to ...