View
219
Download
0
Category
Preview:
Citation preview
2
Outline of the PaperI. MUSIC MARKET INDUSTRY: HISTORY, SIZE AND DIFFERENT
MUSIC CARRIERS
II. INDUSTRY STRUCTURE: TRANSFORMING VALUE CHAINS AND CHANGING BUSINESS MODELS1. Traditional Record Industry Value Chain, Business models and
Players2. Traditional record industry business model
3. New Online Music Industry Value Chain, Business models and Players
4. Digital Music Value Chain
III. FILE-SHARING DEVELOPMENTS1. The rapid rise of file-sharing and its relationship to broadband2. Evidence of the effect of file-sharing on music sales3. Actions of the Music Industry against file-sharing4. Commercial / legitimate uses of file-sharing in the music industry
IV. OBSTACLES AND POLICY ISSUES
ANNEX: for example: Legal cases involving Filesharing
3
Global Music Sales by Format, in billion units
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Singles LPs
MCs CDs
Music Video
I. MUSIC INDUSTRY: HISTORY, SIZE AND MUSIC CARRIERS
On one hand, strong growth of the music industry has been influenced to large degree by the rise and fall of different music sale formats
On the other, the introduction of new technology was often disruptive to music markets, and well-established distribution mechanisms
Balance of interest has yet to be achieved in face of digital technology
4
Advent of digital technology: Opportunity and challenge for the music industry
Drop in music sales after 1999 which is not universally shared across all OECD marketsMusic industry reactions: Lawsuits, first commercial online music offerings and CD price cuts2003 continued fall in music sales but first signs of recovery2004 as year of turnaround of the music industry?Rise of the online music market– More than 130 online music stores / 150 million downloads through
Apple– Emerging as “meaningful revenue stream” Large additional revenues
accrue to third players – Impact of online music on artists and their discovery, and on users not
captured by these assessments. – Citizens interacting with content and information, making them active
participants in the whole chain of content creation, marketing and distribution (Krasilovsky, Shemel and Gross, 2003).
6
Player Ambition Majors and independent record labels
Trying to receive additional revenue through the digital sales format while avoiding revenue losses due to online piracy, cannibalisation of traditional revenue streams and the “commoditisation” of music.
Artists Trying to receive additional revenue through the digital sales format while avoiding revenue losses due to online piracy. Establish own distribution platforms to gain popularity or to sell music.
Hardware producers Use the interest in content to sell hardware allowing functionality and interoperability. White label services Maximize revenue by catering services to digital music stores solutions. Software producers Aiming to establish player and DRM software as standard for content delivery. ISPs Use the interest in content to attract customers into premium Internet services. Content portals Retain and leverage Internet audience to attract traffic and advertising revenues. Consumer brands Increase customer loyalty through music and use music for promotions. Credit card Earn revenues from fixed- and percentage-based transaction fees.
Different players, Different motives
8
Digital Music Value Chain
CONTENT SOFTWARE / CONTENT MANAGEMENT STORE BILLING DELIVERY HARDWARE Music
Rights / Publisher
Rights clearance and royalties
Proprietary format
Hosting / Aggregation
Jukebox software
DRM Online music store
Network provider
Portable audio players
Sony
ATRAC3 SonicStage jukebox
Sony Open Magic Gate
Connect Store
Sony Network Walkman
Apple
Apple AAC iTunes FairPlay iTunes Apple iPod
Microsoft
WMA Windows Media Player 10
Windows Media DRM
MSN Music Store
Proprietary players from third parties
RealNetworks RealAudio Codec & WMA
RealPlayer / Rhapsody
RealNetworks' Helix format
Compatible with third party devices
Horizontal Integration and interoperability issues
Digital Music Value Chain
9
A la carte downloadsPay per track
Pre-payment credit
Subscription, streamingMonthly SubscriptionPre-payment credit
Business Model and Payment Usage rights / Restrictions
- Number of PCs from which the downloaded tracks can be accessed- Copying on portable devices- Burning of CDs
Changing Business Models
Sales vs. Rentals ?
10
Emerging issues for government and other stakeholders
I. Infrastructure, innovation and technology• Broadband access and policies• R&D and new technologies• Human resources• Standards and Technical interoperability• (Micro)-Payment issuesII. Value chain and business model issues• Securing a competitive environment: Access to content and
networks• Difficult rights negotiationsIII. Business and regulatory environment• Protection of Intellectual Property Rights
– National copyright law and the ratification of WIPO Internet treaties– Government action plans towards piracy, counterfeiting and file-sharing– Efforts to compensate content right holders for unauthorized use– Digital Rights Management– Balance between copyright owners and users
• Fostering adequate legal frameworks• Value-added taxes
11
Revenue Distribution Offline Laing (1996)
Europe IDC (2000)
USA Soundscan (2001) USA1
OD2 (2004) Europe
Reuters (2004) France
Composer and Publisher 9% 8% Artist / Royalty Rate 10% 8% 7% 6%2 5.6% Other rights3 15.3% Studio producer 2% 9% 2.4% Record company 24% 39% 393 26% Manufacturer 8% 8.8% Promotion & Advertising 15% 9% 9% 12.9% General costs 17.7% Design & Packaging Miscellaneous (shipping, etc.) 9% Distributor 20% 15% 27% 17.7% Retailer 27% 15%
31% 12%
VAT 20% 20% Total Percent 100% 100% 104% 100% 101%
Recommended