1. Innovation in the music industry:
Impact of technology and
changing consumer behavior
Prepared by:
Daniela Bartos
January 2016
2. Lecture structure
! New ecosystem
! Impact of technology
! Impact of changing consumer
behavior
! Innovation in the music business:
new digital music services/products
! Success strategies
! Conclusion
4. Impact of disruptive technologies
on the music business
Technology
innovation
Music
business
innovation
5. Disruptive technologies have
changed the music industry
! Digitisation
! Internet
! Advanced mobile communication
networks (3G, 4G)
! Self- publishing and distributing
software (Web 2.0)
! Multi-platforms & smart-digital devices
! Easy creation of a perfect copy
6. Impact of changing consumer
behavior on the music business
New
consumer
behavior
Music
business
innovation
Disruptive
technologies
7. Technology drives innovation in the music
sector in several ways
1
2
3
finding the right music
" the long tail allows everyone to access their
perfect niche
connecting with an artist
" through social networking sites and official
artist websites, fans feel more connected to
artists than ever before
time and place
" music is more fluid, sharable and portable
than ever before
technology
4 access to tools of the business
" the internet allows artists to promote their
music, sell it, connect with fans, and
collaborate
Evidence of this statement has been confirmed by the MTV Music Experience 2 Study (14-34 year olds), 2010
9. Changing consumer
behavior - expectations
! 24/7
! Everything & everywhere
! Free
! On demand
! Access (not owning)
! Mobile
! Social media sharing
! Intuitive
! Value for the money
12. Resulting in innovation of
their products and services
New wave
of digital
music
services
Technology
innovation
Changing
consumer
behavior
13. New wave of digital music services
! Licensed on-demand audio streaming services
! Licensed personalised radio services
! Music discovery
! Music identification
! Music recommendations
! Audio + visual on-demand streaming services
! Social media and UGC platforms
! Self- publishing and collaborative platforms
! Music as apps – “album as a service
! Location-based services
! And many more ‘musicpreneurship’
14. Demand for digital music content has
increased
Digital
music
Radio
Broadcasters
Streaming
Services
TV
broadcasters
Advertisers
Film, Video and
Games
Applications
developers Online
publishers
Social media
and UGC sites
Telcos and
ISPs
Device
manufacturers/
software
houses/
Artists and
Creatives
15. New digital music service providers have to
harmonize expectations of several different
‘components’
Users
Market
forces
Labels
&
Artists
16. Many users/consumers are
almost professionals
! Possibility of direct interaction
between artists and their fans
! Music fans create their own content:
Blogs, Playlists, Forum posts, etc.
! Intermediaries become less important,
the digital value chain is often much
shorter
17. New digital music services have to find
sustainable business models
New
business
models and
management
practice
Consumer
behavior
Technological
innovation
Market
forces
New players
18. New business models
! ‘Freemium’
! Subscription
! Triple-play
! Social commerce
! Mobile and tablet apps
! Multimedia services
! UGC aggregation
! Music discovery and identification
! Crowdfunding
! new models are been developed and
commercially tested as we speak
19. Different models appeal to different consumer needs
Survey: Main reasons for using legal services, average across all countries
Source: Ipsos MediaCT | The Digital Music Consumer – A Global Perspective (February 2013)
20. The formula of success for
digital media players:
! Collaborative partnerships (technology, artists,
labels, users, etc)
! Global expansion & localisation
! Free and pay content services in a right proportion
! The end-user: greater satisfaction and ease of use
! Personalised, targeted services
! Provide quality and variety of content with value-
added extras
! Multi-platforms and devices (mobile-first)
! But above all, an ability to monetise their offering
(value creation)
21. Combining value creation
and value capture
Value
creation
Value
capture
A success
formula for
the music
industry
players
22. Creating value for a consumer:
content, technology, commerce
AccessibilityChoice and variety of content
Price
Targeted and Personalized
Package
Added features
Multi-devices
Quality
Technical interoperability
23. New business models within the music
industry - relationship of ‘action’ and ‘impact’
New
business
models
Consumer
satisfaction
Competitive
advantage
Product/
Service/
Industry
Innovation
Securing
revenues
24. CHANGINGSITUATION
New ecosystem
(due to
technological
innovation and
changing
consumer
behaviour)
REACTION
New music
business
models and
innovative
entrepreneurial/
management
practices
RESULT
Establishing
sustainable
future for the
music industry
To conclude:
Evolving transformation of the music
industry leading into a prosperous
future