The Music Industry - what's broken (excerpt of a keynote)

Experimenting with Business Models in the Music Industry (part I) Alexander Osterwalder, Phd AlexOsterwalder.com Twitter: business_design 1

the following slides are a very brief excerpt of a 60 minute keynote Iʼm giving at Eurosonic Noorderslag, Europeʼs most important live music industry conference

business models

The Business Model Canvas

to describe, challenge, design, and invent business models more systematically

9 building blocks

The Business Model Canvas KEY KEY OFFER CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS KEY CHANNELS RESOURCES COST STRUCTURE REVENUE STREAMS

the “old”  record label  model

The “Old” Record Label Model KEY KEY OFFER CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS nnabe mass hits & wa hits market KEY CHANNELS RESOURCES COST STRUCTURE REVENUE STREAMS huge sales from few artists’ albums

The “Old” Record Label Model KEY KEY OFFER CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS nnabe mass hits & wa hits market KEY CHANNELS RESOURCES Retailers TV “new” digital Radio channels COST STRUCTURE REVENUE STREAMS huge sales from few artists’ albums

The “Old” Record Label Model KEY KEY OFFER CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS nnabe mass hits & wa hits market KEY CHANNELS RESOURCES Retailers TV “new” digital Radio channels COST STRUCTURE REVENUE STREAMS huge sales tours & from few merch andisin g concerts artists’ albums

The “Old” Record Label Model KEY KEY OFFER CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS marketing & promotion detecting & nnabe mass building tale hits & wa nt market hits KEY CHANNELS RESOURCES Retailers TV “new” digital Radio channels COST STRUCTURE REVENUE STREAMS huge sales tours & from few merch andisin g concerts artists’ albums

The “Old” Record Label Model KEY KEY OFFER CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS marketing & promotion detecting & nnabe mass building tale hits & wa nt market hits KEY CHANNELS RESOURCES portfolio of Retailers TV star artists copyrighted “new” digital content Radio channels COST STRUCTURE REVENUE STREAMS huge sales tours & from few merch andisin g concerts artists’ albums

The “Old” Record Label Model KEY KEY OFFER CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS marketing & promotion detecting & distribution nnabe mass building tale hits & wa nt market channels hits KEY CHANNELS RESOURCES manufacturers portfolio of Retailers TV star artists copyrighted “new” digital content Radio channels COST STRUCTURE REVENUE STREAMS huge sales tours & from few merch andisin g concerts artists’ albums

The “Old” Record Label Model KEY KEY OFFER CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS marketing & promotion detecting & distribution nnabe mass building tale hits & wa nt market channels hits KEY CHANNELS RESOURCES manufacturers portfolio of Retailers TV star artists copyrighted “new” digital content Radio channels COST STRUCTURE REVENUE STREAMS royalt y huge sales ing & payme tours & market subsidizing nts from few merch andisin ion g promot unsuccessful concerts artists’ albums artists

buzz group

? assess the business model building blocks of the “old” model / where are the weaknesses?

The Old Record Label Model KEY KEY OFFER CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS marketing & promotion detecting & distribution nnabe mass building tale hits & wa nt market channels hits KEY CHANNELS RESOURCES manufacturers portfolio of Retailers TV star artists copyrighted “new” digital content Radio channels piracy COST STRUCTURE REVENUE STREAMS royalt y huge sales ing & payme tours & market subsidizing nts from few merch andisin ion g promot unsuccessful concerts artists’ albums artists

The Old Record Label Model KEY KEY OFFER CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS marketing & promotion detecting & distribution nnabe mass building tale hits & wa nt market channels hits KEY CHANNELS RESOURCES manufacturers portfolio of Retailers TV star artists copyrighted “new” digital content Radio channels unbundling of COST STRUCTURE price of songs REVENUE STREAMS into single albums tending towards songs (iTunes) royalt y huge sales ing & payme ZERO tours & market subsidizing nts from few merch andisin ion g promot unsuccessful concerts artists’ albums artists

but piracy is the wrong battle to ﬁght!

The Old Record Label Model KEY KEY OFFER CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS marketing & promotion detecting & distribution nnabe mass building tale hits & wa nt market channels hits KEY CHANNELS distribution is a RESOURCES commodity, attention is manufacturers the new scarcity portfolio of Retailers TV star artists copyrighted “new” digital content Radio channels COST STRUCTURE REVENUE STREAMS royalt y huge sales ing & payme tours & market subsidizing nts from few merch andisin ion g promot unsuccessful concerts artists’ albums artists

The Old Record Label Model KEY KEY OFFER CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS talent will be marketing & discovered by promo on other mechanismsti detecting & distribution nnabe mass building tale hits & wa nt market channels hits KEY CHANNELS RESOURCES manufacturers portfolio of Retailers TV star artists copyrighted “new” digital content Radio channels COST STRUCTURE REVENUE STREAMS royalt y huge sales ing & payme tours & market subsidizing nts from few merch andisin ion g promot unsuccessful concerts artists’ albums artists

The Old Record Label Model KEY KEY OFFER CUSTOMER CUSTOMER social PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS networks are what drive music sales marketing & promotion detecting & distribution nnabe mass building tale hits & wa nt market channels hits KEY CHANNELS RESOURCES manufacturers portfolio of Retailers TV star artists copyrighted “new” digital content Radio channels COST STRUCTURE REVENUE STREAMS royalt y huge sales ing & payme tours & market subsidizing nts from few merch andisin ion g promot unsuccessful concerts artists’ albums artists

The Old Record Label Model KEY KEY OFFER CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS marketing & promotion detecting & distribution nnabe mass building tale hits & wa nt market channels hits KEY CHANNELS RESOURCES manufacturers portfolio of Retailers TV star artists copyrighted “new” digital bloated cost content Radio channels structure (talent discovery/marketing) COST STRUCTURE REVENUE STREAMS royalt y huge sales ing & payme tours & market subsidizing nts from few merch andisin ion g promot unsuccessful concerts artists’ albums artists

The Old Record Label Model KEY KEY OFFER CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS marketing & promotion detecting & distribution nnabe mass building tale hits & wa nt market channels shift of the hits balance of power towards artists KEY CHANNELS RESOURCES manufacturers portfolio of Retailers TV star artists copyrighted “new” digital content Radio channels COST STRUCTURE REVENUE STREAMS royalt y huge sales ing & payme tours & market subsidizing nts from few merch andisin ion g promot unsuccessful concerts artists’ albums artists

The Old Record Label Model KEY KEY OFFER CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS customer marketing & needs are not promotion being satisﬁed detecting & distribution nnabe mass building tale hits & wa nt market channels hits KEY CHANNELS RESOURCES itʼs all about manufacturers hits AND the Long portfolio of Retailers Tail of music TV star artists copyrighted “new” digital content Radio channels COST STRUCTURE REVENUE STREAMS royalt y huge sales ing & payme tours & market subsidizing nts from few merch andisin ion g promot unsuccessful concerts artists’ albums artists

The Old Record Label Model KEY KEY OFFER CUSTOMER CUSTOMER social PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS networks are what talent will be customer drive music sales marketing & discovered by needs are not promo on other mechanismsti being satisﬁed detecting & distribution nnabe mass building tale hits & wa nt market channels shift of the hits balance of power towards artists KEY CHANNELS distribution is a RESOURCES itʼs all about commodity, attention is manufacturers hits AND the Long the new scarcity portfolio of Retailers Tail of music TV star artists copyrighted “new” digital bloated cost content Radio channels structure (talent piracy unbundling of discovery/marketing) price of songs REVENUE STREAMS into single albums COST STRUCTURE songs (iTunes) royalt tending towards y huge sales ing & payme ZERO tours & market subsidizing nts from few merch andisin ion g promot unsuccessful concerts artists’ albums artists

www.businessmodelgeneration.com www.alexosterwalder.com www.businessmodelalchemist.com Twitter: business_design

BusinessModelGeneration.com

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The Music Industry - what's broken (excerpt of a keynote)

by Alexander Osterwalder on Jan 08, 2010

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