A Vertical Integration in the Music Industry - A Stakeholder Analysis

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  • A Vertical Integration in the Music Industry - A Stakeholder Analysis

    1. 1. Vertical Integration in the Music Industry A Stakeholder Analysis Hugo Amsellem
    2. 2. Introduction • Purpose : Highlight the developments of relationships between the stakeholders in the music industry • Problematic : “Will a new vertical integration happen in the music industry?” Hugo Amsellem for http://MidemNetBlog.com
    3. 3. Pre-Internet Era Governments Majors Relationship Type : Trusting Consumers Opportunistic Deteriorated Antagonistic Hugo Amsellem for http://MidemNetBlog.com
    4. 4. Pre-Internet Era • The Music Industry is at its peak, the Government collects VAT on CDs sales • Consumers feel cheated by the poor quality of many CDs, with only one or two hits per LP • No alternative to the CD/Singles duo Hugo Amsellem for http://MidemNetBlog.com
    5. 5. The Emergence of Internet ISPs Governments Majors P2P Relationship Type : Trusting Consumers Opportunistic Deteriorated Antagonistic Hugo Amsellem for http://MidemNetBlog.com
    6. 6. The Emergence of Internet • Consumers now have an alternative to CD • ISPs benefit from attractiveness of illegal downloading to sell internet access • Majors labels are trying to break the ISPs/ P2P/Users circle by suing and lobbying Hugo Amsellem for http://MidemNetBlog.com
    7. 7. The Emergence of Streaming ISPs Governments Majors P2P Relationship Type : Trusting Streaming Consumers Opportunistic Deteriorated Antagonistic Hugo Amsellem for http://MidemNetBlog.com
    8. 8. The Emergence of Streaming • ISPs realize that P2P traffic consumes a lot of bandwidth and represents a shortfall. • Streaming plateforms earn the trust of users and gain market share against P2P networks. • Majors accuse these platforms not to generate enough revenue while cannibalizing CD sales. Hugo Amsellem for http://MidemNetBlog.com
    9. 9. A Vertical Integration? ISPs Governments Majors P2P Relationship Type : Trusting Streaming Consumers Opportunistic Deteriorated Antagonistic Hugo Amsellem for http://MidemNetBlog.com
    10. 10. A Vertical Integration? • Majors labels, ISPs and streaming platforms have antagonistic relationships with P2P. • From that, comes a business opportunity through a common enemy and common interests. • The “Majors” model’s survival is inevitably linked to the transition from a concentric b u s i n e s s m o d e l t o a mu l t i c e n t r i c (multiheaded) one. Hugo Amsellem for http://MidemNetBlog.com
    11. 11. A Vertical Integration? Vertical integration of multiple value chains model Hugo Amsellem for http://MidemNetBlog.com
    12. 12. Equilibrium ISPs Governments Majors P2P Relationship Type : Trusting Streaming Consumers Opportunistic Deteriorated Antagonistic Hugo Amsellem for http://MidemNetBlog.com
    13. 13. The Limits • Artists will be chosen for their potential to reach the largest audience possible, consequently music diversity will be impacted • Higher investments on fewer artists will impact the number of releases •A vertically integrated company will be forced to reinvest in its infrastructures in order to keep up with competition by innovating Hugo Amsellem for http://MidemNetBlog.com

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