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Digital transformation in the music industry

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This is a presentation I made for my Digital Transformation course. The class was taught at Carnegie Mellon University by professor Michael D. Smith. In the presentation, I discuss how technology has transformed the role of record companies. I also discuss what record companies must do if they want to continue to add value.

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Digital transformation in the music industry

  1. 1. How Digitization is Transforming the Music Industry Haris Krijestorac October 4, 2010 Twitter: @hariskr
  2. 2. The Early Music Industry: A ‘Perfect’ Business
  3. 3. Limited Storage Space  Market of Hits
  4. 4. Music goes Digital: Everything that made it the perfect business changes <ul><li>Supply </li></ul><ul><li>Creation </li></ul><ul><li>Discovery </li></ul>
  5. 5. From Niches to Riches… 70% of revenue comes from the long tail
  6. 6. Success Strategies for the Music Industry
  7. 7. Strategy #1: ‘Pay What You Want’ <ul><li>‘ You can’t stop piracy, you have to learn to compete with it ’ - Steve Jobs </li></ul><ul><li>Create an Efficient Market </li></ul><ul><ul><li>100% of demand is captured </li></ul></ul><ul><ul><li>Consumers pay their WTP </li></ul></ul>
  8. 8. Strategy #2: Add Value Add value to Physical Package
  9. 9. Strategy #2: Add Value Add value through Website and Social Media
  10. 10. Strategy #2: Add Value Add value through Concert Experience
  11. 11. <ul><li>Spreading the music used to be the SALE </li></ul><ul><li>… now it’s the MARKETING </li></ul>
  12. 12. The Challenge: Creating Sustainable Strategies
  13. 13. Sustaining ‘ Add Value ’ <ul><li>Record companies: </li></ul><ul><ul><li>design tailored digital marketing strategies </li></ul></ul><ul><li>Artists: </li></ul><ul><ul><li>Just create art </li></ul></ul>
  14. 14. Sustaining ‘ Pay What You Want’ <ul><li>Record companies must build cult followings around artists </li></ul><ul><li>Even more important for new artists , since the main goal is to spread their music </li></ul>
  15. 15. <ul><li>Music industry is still ‘The Perfect Business’ </li></ul><ul><li>… . And record companies can survive if they adopt new roles </li></ul>
  16. 16. <ul><li>4 Tips </li></ul><ul><li>for record companies of the future </li></ul>
  17. 17. Tip #1: Find Artists for Niches , not Masses
  18. 18. Tip #2: Help digitally spread music , don’t physically sell it
  19. 19. Tip #3: Deepen artists’ fan base , don’t broaden it
  20. 20. Tip #4: Tailor physical product to niche , not masses
  21. 21. Thank you
  22. 22. <ul><li>I like to share my opinions on marketing, </li></ul><ul><li>media, and technology on twitter </li></ul><ul><li>If you liked this presentation, follow me up! </li></ul><ul><li>www. twitter/com/hariskr </li></ul>

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