Welcome to the machine? :changing music industry value frameworks and the key characteristics of new music industry business models

Abstract

This thesis examines changing value frameworks in the early 21st Century music industry, and the key characteristics of successful new music industry business models. Traditional music industry business models were built upon a linear value chain in which the record label had control over most if not all of the value adding and creating processes, in particular manufacture, reproduction, distribution and promotion. Artists without a contract with a record label faced significant challenges in generating sufficient funds to support investment in these capital intensive and expensive processes, in order to get their music distributed to a commercial audience. New technologies introduced at the end of the 20th Century and in the first decade of the 21st Century changed the environment within which record labels conducted the business of music, making it harder for them to capture value from their ownership of copyright. These technologies reduced the capital costs of creating, manufacturing, reproducing and distributing music and thus significantly lowered the barriers to entry of the music industry for individual and own-label artists. In parallel, new technologies gave simple and free access to music for a large audience of digitally connected consumers. This combination of factors resulted in a turbulent environment within which record labels and artists have experimented with new ways to derive value from this changing landscape. This dissertation proposes a new music industry value framework and proves the various linkages and relationships throughout the framework. Music industry business models are decomposed using Osterwalder’s business model ontology, in which is embedded the new value framework. This analysis reveals key characteristics of successful music industry business models. The dissertation concludes with recommendations for the application of these characteristics for the benefit of consumers, artists and record labels in the early 21st Century music industry.