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    Business Models in The Music Industry

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    Mayank Dixit
    The document discusses different business models in the music industry, including those of record companies, piracy, iTunes, Spotify, and independent artists. It provides details on the key activities, resources, partnerships, costs, customer segments, channels, and revenue streams for each model. Global music sales have declined significantly from 1997 to 2009.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Business Models in The Music Industry

    Uploaded by

    Mayank Dixit
    544 views142 pages
    The document discusses different business models in the music industry, including those of record companies, piracy, iTunes, Spotify, and independent artists. It provides details on the key activities, resources, partnerships, costs, customer segments, channels, and revenue streams for each model. Global music sales have declined significantly from 1997 to 2009.

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    Business Models in the Music Industry

    Original Title

    Business Models in the Music Industry

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    The document discusses different business models in the music industry, including those of record companies, piracy, iTunes, Spotify, and independent artists. It provides details on the key activities, resources, partnerships, costs, customer segments, channels, and revenue streams for each model. Global music sales have declined significantly from 1997 to 2009.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    544 views142 pages

    Business Models in The Music Industry

    Uploaded by

    Mayank Dixit
    The document discusses different business models in the music industry, including those of record companies, piracy, iTunes, Spotify, and independent artists. It provides details on the key activities, resources, partnerships, costs, customer segments, channels, and revenue streams for each model. Global music sales have declined significantly from 1997 to 2009.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 142

    Business

    Models in the Music Industry


    Eurosonic Noorderslag
    January 14th, 2011

    Business models in the


    music industry?

    Value creation?

    Firms that record,


    produce, publish,
    distribute, and market
    music.

    Fans that listen to (or


    experience) music.

    How does the music


    industry create,
    deliver and capture
    value?

    What different
    business models do
    exist in the music
    industry?

    Business
    Model?

    Business
    Models?

    Denition_Business Model

    A business model describes


    the rationale of how an
    organization creates, delivers
    and captures value

    Self Published

    www.businessmodelgeneration.com

    14 translations
    70.000 sold copies

    THE
    BUSINESS MODEL

    CANVAS

    1. CUSTOMER SEGMENTS

    2. VALUE PROPOSITION

    3. CHANNELS

    4. CUSTOMER RELATIONSHIPS

    5. REVENUE STREAMS

    6. KEY RESOURCES

    7. KEY ACTIVITIES

    8. KEY PARTNERS

    9. COST STRUCTURE

    Key
    Activities!

    Value
    Proposition!

    Client
    Relationship!

    Key
    Partners!

    Cost
    Structure!

    Client
    segments!

    Key
    Resources!

    Channels!

    Revenue
    Streams!

    PARTNER
    NETWORK

    KEY
    ACTIVITIES

    KEY
    RESOURCES

    COST STRUCTURE

    OFFER

    CUSTOMER
    RELATIONSHIPS

    DISTRIBUTION
    CHANNELS

    REVENUE STREAMS

    CUSTOMER
    SEGMENTS

    The
    The
    Music
    Industry
    Industry

    A dynamic market
    a global industry
    characterized by
    many players and
    erce competition

    A product or service
    with a mass-market
    potential

    The role of music in peoples lives

    Music is something most people love,


    that no one dislikes and that touches
    everyone throughout their lives

    BrandAmp study, Millward Brown, 2007

    A global industry

    Something for
    everyone

    The creative genius

    Lots of good advisors

    Enough players

    Technology
    advancements

    Declining sales

    Global music sales


    Global music sales
    (physical and digital)
    excluding VAT
    1997: 38 billion USD
    2009: 17 billion USD

    Business models in the


    music industry

    A record company

    The big 4

    Independent labels

    1 main activity

    The business model of


    a record company

    PARTNER
    NETWORK

    KEY
    ACTIVITIES

    OFFER

    CUSTOMER
    RELATIONSHIPS

    CUSTOMER
    SEGMENTS

    Marke:ng &
    promo:on
    Distribu:on
    channels

    Detec:ng &
    building talent

    Manufacturers

    Mass market

    Hits and
    wannabee hits

    KEY
    RESOURCES

    DISTRIBUTION
    CHANNELS

    Por@olio of star
    ar:sts

    TV

    Retailers

    Copyrighted
    content

    Radio

    Digital

    COST STRUCTURE
    Marke:ng &
    promo:on

    Subsidizing
    unsuccessful
    ar:sts

    REVENUE STREAMS
    Royalty
    payments

    Tours and
    concerts

    Huge sales
    from a few
    ar:sts albums

    Merchandising

    Piracy

    The dominating
    phenomenon

    The big discussion

    The business model of


    piracy

    PARTNER
    NETWORK

    KEY
    ACTIVITIES

    OFFER

    CUSTOMER
    RELATIONSHIPS

    CUSTOMER
    SEGMENTS

    Upload
    Developers of
    illegal
    applica:ons
    and soGware

    A network of
    commiLed
    users

    Peer-to-peer
    Download

    All the worlds


    music

    KEY
    RESOURCES

    DISTRIBUTION
    CHANNELS

    User skills,
    interest and
    commitment

    Digital

    COST STRUCTURE

    REVENUE STREAMS

    Mass market

    iTunes

    Rock and Roll will


    never die. It is,
    however, being
    reborn.

    A new, successful
    business model

    Very successful

    1 billion songs sold: February 23, 2006


    1.5 billion songs sold: September 12, 2006
    2 billion songs sold: January 10, 2007
    2.5 billion songs sold: April 9, 2007
    3 billion songs sold: July 31, 2007

    Steve Jobs announced in his


    "It's Showtime" keynote
    that Apple had
    88% of the legal
    U.S. music download market
    on September 12, 2006

    The business model of


    iTunes

    PARTNER
    NETWORK

    KEY
    ACTIVITIES

    Record labels

    Hardware/
    soGware
    design
    Marke:ng &
    Sales

    OFFER

    iTunes
    soGware

    Supply chain
    management

    Seamless music
    experience and
    great design
    (music and
    hardware)

    Mass market

    Switching costs
    DISTRIBUTION
    CHANNELS

    iPod
    hardware

    iTunes
    store

    Content &
    agreements
    Talented
    Apple brand
    people
    (designers)
    COST STRUCTURE

    Apple
    stores

    Retail
    stores

    apple.com

    People, design
    & development
    Music royal:es

    CUSTOMER
    SEGMENTS

    Lovemark

    KEY
    RESOURCES

    OEMs

    CUSTOMER
    RELATIONSHIPS

    Marke:ng &
    Sales
    Hardware
    manufacturing

    REVENUE STREAMS
    High-volume
    content
    revenue

    High-margin
    hardware
    revenue

    Spotify

    We are going to
    provide music to everyone
    (any time, any place)
    for free
    in a legal way

    Our dream is to collect all the


    worlds music and make it
    accessible to everyone.

    Spotify aggregates content


    from right holders, distributes it
    to consumers through the
    technical platform and
    monetizes both through a free,
    ad funded service, and a
    subscription service.

    The business model of


    Spotify

    The Business Model of Spotify


    PARTNER
    NETWORK

    KEY
    ACTIVITIES

    OFFER

    Pla@orm
    development
    and
    maintenance

    CUSTOMER
    RELATIONSHIPS
    Automated
    online
    rela:onship

    Adver:sing

    Rightholders
    (labels and
    publishers)

    3rd party APIs


    KEY
    RESOURCES
    Licensing
    agreements
    Pla@orm and
    brand

    Access to
    music via
    streaming and
    download
    services

    SoGware and
    network
    engineers

    Communi:es

    DISTRIBUTION
    CHANNELS
    Internet +
    PC

    Global music
    fans

    REVENUE STREAMS
    Bandwith costs

    Salaries

    Adver:sers

    Internet +
    mobile

    COST STRUCTURE
    Royal:es to
    rightholders

    CUSTOMER
    SEGMENTS

    Ad fees
    Subscrip:on
    fees PC

    Subscrip:on
    fees PC +
    mobile

    The artist

    I just want to sing and


    perform.

    Crowd-funding paves
    the way for the
    independent artist

    40.000
    11 days

    24.000

    promotion

    The business model of


    Hind

    PARTNER
    NETWORK
    Musicians &
    Songwriters

    KEY
    ACTIVITIES
    Songwri:ng

    OFFER

    Singing &
    performing

    Producers
    Promo:on

    Artwork &
    Studios

    KEY
    RESOURCES
    The Brand Hind

    Tech & tour


    team
    Band

    Music archive

    Music fans

    Videos
    (performance)

    Concerts

    Brand
    experience

    DISTRIBUTION
    CHANNELS
    Radio/TV

    Online
    pla@orms

    Hind.com

    Events

    COST STRUCTURE
    Investment
    concerts,
    transporta:on

    REVENUE STREAMS
    IT, website and
    marke:ng

    Salaries

    CUSTOMER
    SEGMENTS

    (Social) media

    Music

    CD produc:on
    & distribu:on

    Management

    CUSTOMER
    RELATIONSHIPS

    Concerts

    Merchandising
    Music sales

    Looking back at some


    major shifts in the
    music industry

    A fragmented
    copyright industry
    made it impossible to
    set up legal,
    sustainable business
    models.

    The gap of legitimate


    business models for
    customers paved the
    way for the rise of
    piracy.

    The unbundling of the


    album killed signicant
    revenue streams
    impacting the whole
    music industry.

    Looking at some
    current shifts in the
    music industry

    Legislation around
    piracy

    Music distribution

    Shift from ownership


    to access

    Technology capacity

    Customer in charge

    What do customers
    want (tomorrow)?

    The Big Challenge in


    Business Modeling

    Who is my customer?

    What does he or she wants?

    What is he or she willing to pay for?

    Dierent needs

    Market split-up

    Multi-party scene
    serving customers
    needs

    More questions?

    www.businessmodelsinc.com

    www.businessmodelgeneration.com

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