Business	  Models	  in	  the	  Music	  Industry	         Eurosonic	  Noorderslag	              January	  14th,	  2011	  
Business	  models	  in	  the	  music	  industry?	  
Value	  creation?	  
Firms	  that	  record,	  produce,	  publish,	  distribute,	  and	  market	  music.	  
Fans	  that	  listen	  to	  (or	  experience)	  music.	  
How does the musicindustry create,deliver and capturevalue?	  
What differentbusiness models doexist in the musicindustry?	  
Business	  	  Model?	  
Business	  	  Models?	  
Definition_Business	  Model	  A	  business	  model	  describes	  	  the	  rationale	  of	  how	  an	  organization	  create...
Self	  Published	  www.businessmodelgeneration.com                                      14	  translations	                ...
THE     	  BUSINESS	  MODEL	  	  CANVAS	  
1.	  CUSTOMER	  SEGMENTS	  
2.	  VALUE	  PROPOSITION	  
3.	  CHANNELS	  
4.	  CUSTOMER	  RELATIONSHIPS	  
5.	  REVENUE	  STREAMS	  
6.	  KEY	  RESOURCES	  
7.	  KEY	  ACTIVITIES	  
8.	  KEY	  PARTNERS	  
9.	  COST	  STRUCTURE	  
Key        Value           Client             Activities!   Proposition!      Relationship!    Key                        ...
PARTNER            KEY       OFFER     CUSTOMER         CUSTOMERNETWORK         ACTIVITIES           RELATIONSHIPS      SE...
The	  The	  Music	  Industry	  	  Industry
A	  dynamic	  market	  a	  global	  industry	  	  characterized	  by	  many	  players	  and	  fierce	  competition	  
A	  product	  or	  service	  with	  a	  mass-­‐market	  potential	  
The	  role	  of	  music	  in	  peoples’	  lives	  “Music is something most people love,that no one dislikes and that touch...
A	  global	  industry	  
Something	  for	  everyone	  
The	  creative	  genius	  
Lots	  of	  good	  advisors	  
Enough	  players	  
Technology	  advancements	  
Declining	  sales	  
Global	  music	  sales	  Global	  music	  sales	  	  (physical	  and	  digital)	  excluding	  VAT	  1997:	  38	  billion	 ...
Business	  models	  in	  the	  music	  industry	  
A	  record	  company	  
The	  big	  4	  
Independent	  labels	  
1	  main	  activity	  
The	  business	  model	  of	  a	  record	  company	  
PARTNER                        KEY                                    OFFER                           CUSTOMER            ...
Piracy	  
The	  dominating	  phenomenon	  
The	  big	  discussion	  
The	  business	  model	  of	  piracy	  
PARTNER                           KEY                      OFFER                   CUSTOMER               CUSTOMERNETWORK ...
iTunes	  
“Rock	  and	  Roll	  will	  never	  die.	  It	  is,	  however,	  being	  reborn.”	  
A	  new,	  successful	  business	  model	  
Very	  successful	  
1	  billion	  songs	  sold:	  February	  23,	  2006	  1.5	  billion	  songs	  sold:	  September	  12,	  2006	  2	  billion...
Steve	  Jobs	  announced	  in	  his	  	    "Its	  Showtime"	  keynote	  	             that	  Apple	  had	  	           88%...
The	  business	  model	  of	  iTunes	  
PARTNER                               KEY                                OFFER                        CUSTOMER            ...
Spotify	  
“We	  are	  going	  to	  	  provide	  music	  to	  everyone	  	  (any	  time,	  any	  place)	  for	  free	  in	  a	  legal...
“Our	  dream	  is	  to	  collect	  all	  the	  world’s	  music	  and	  make	  it	  accessible	  to	  everyone.”	  
Spotify	  aggregates	  content	  from	  right	  holders,	  distributes	  it	  to	  consumers	  through	  the	  technical	 ...
The	  business	  model	  of	  Spotify	  
The	  Business	  Model	  of	  Spotify	  PARTNER                               KEY                               OFFER     ...
The	  artist	  
“I	  just	  want	  to	  sing	  and	  perform.”	  
Crowd-­‐funding	  paves	  the	  way	  for	  the	  independent	  artist	  	  
€	  40.000	   11	  days	  
€	  24.000	  promotion	  
The	  business	  model	  of	  Hind	  
PARTNER                                 KEY                                      OFFER                          CUSTOMER  ...
Looking	  back	  at	  some	  major	  shifts	  in	  the	  music	  industry	  
A	  fragmented	  copyright	  industry	  made	  it	  impossible	  to	  set	  up	  legal,	  sustainable	  business	  models....
The	  gap	  of	  legitimate	  business	  models	  for	  customers	  paved	  the	  way	  for	  the	  rise	  of	  piracy.	  ...
The	  unbundling	  of	  the	  album	  killed	  significant	  revenue	  streams	  impacting	  the	  whole	  music	  industry...
Looking	  at	  some	  current	  shifts	  in	  the	  music	  industry	  
Legislation	  around	  piracy	  
Music	  distribution	  
Shift	  from	  ownership	  to	  access	  
Technology	  capacity	  
Customer	  in	  charge	  
What	  do	  customers	  want	  (tomorrow)?	  
The	  Big	  Challenge	  in	  Business	  Modeling	  
Who	  is	  my	  customer?	  
What	  does	  he	  or	  she	  wants?	  
What	  is	  he	  or	  she	  willing	  to	  pay	  for?	  
Different	  needs	  
Market	  split-­‐up	  
Multi-­‐party	  scene	  serving	  customers	  needs	  
More	  questions?	  
www.businessmodelsinc.com	  
www.businessmodelgeneration.com	  
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
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Business Models in the Music Industry
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Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
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Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
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Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
Business Models in the Music Industry
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Business Models in the Music Industry

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Business models in the music industry. A dynamic market, a global industry, characterized by many players and fierce competition. How does the music industry create, deliver and capture value? What different business models exist in the music industry?

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Business Models in the Music Industry

  1. 1. Business  Models  in  the  Music  Industry   Eurosonic  Noorderslag   January  14th,  2011  
  2. 2. Business  models  in  the  music  industry?  
  3. 3. Value  creation?  
  4. 4. Firms  that  record,  produce,  publish,  distribute,  and  market  music.  
  5. 5. Fans  that  listen  to  (or  experience)  music.  
  6. 6. How does the musicindustry create,deliver and capturevalue?  
  7. 7. What differentbusiness models doexist in the musicindustry?  
  8. 8. Business    Model?  
  9. 9. Business    Models?  
  10. 10. Definition_Business  Model  A  business  model  describes    the  rationale  of  how  an  organization  creates,  delivers    and  captures  value  
  11. 11. Self  Published  www.businessmodelgeneration.com 14  translations   70.000  sold  copies  
  12. 12. THE  BUSINESS  MODEL    CANVAS  
  13. 13. 1.  CUSTOMER  SEGMENTS  
  14. 14. 2.  VALUE  PROPOSITION  
  15. 15. 3.  CHANNELS  
  16. 16. 4.  CUSTOMER  RELATIONSHIPS  
  17. 17. 5.  REVENUE  STREAMS  
  18. 18. 6.  KEY  RESOURCES  
  19. 19. 7.  KEY  ACTIVITIES  
  20. 20. 8.  KEY  PARTNERS  
  21. 21. 9.  COST  STRUCTURE  
  22. 22. Key Value Client Activities! Proposition! Relationship! Key ClientPartners! segments! Cost RevenueStructure! Key Streams! Resources! Channels!
  23. 23. PARTNER KEY OFFER CUSTOMER CUSTOMERNETWORK ACTIVITIES RELATIONSHIPS SEGMENTS KEY DISTRIBUTION RESOURCES CHANNELS COST STRUCTURE REVENUE STREAMS
  24. 24. The  The  Music  Industry    Industry
  25. 25. A  dynamic  market  a  global  industry    characterized  by  many  players  and  fierce  competition  
  26. 26. A  product  or  service  with  a  mass-­‐market  potential  
  27. 27. The  role  of  music  in  peoples’  lives  “Music is something most people love,that no one dislikes and that toucheseveryone throughout their lives” BrandAmp  study,  Millward  Brown,  2007  
  28. 28. A  global  industry  
  29. 29. Something  for  everyone  
  30. 30. The  creative  genius  
  31. 31. Lots  of  good  advisors  
  32. 32. Enough  players  
  33. 33. Technology  advancements  
  34. 34. Declining  sales  
  35. 35. Global  music  sales  Global  music  sales    (physical  and  digital)  excluding  VAT  1997:  38  billion  USD  2009:  17  billion  USD  
  36. 36. Business  models  in  the  music  industry  
  37. 37. A  record  company  
  38. 38. The  big  4  
  39. 39. Independent  labels  
  40. 40. 1  main  activity  
  41. 41. The  business  model  of  a  record  company  
  42. 42. PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS Marke:ng  &   promo:on   Distribu:on   channels   Detec:ng  &   Mass  market   building  talent   Hits  and   wannabee  hits   KEY DISTRIBUTION RESOURCES CHANNELSManufacturers   Por@olio  of  star   TV   Retailers   ar:sts   Copyrighted   Radio   Digital   content   COST STRUCTURE REVENUE STREAMSMarke:ng  &   Royalty   Tours  and   Merchandising  promo:on   Subsidizing   payments   concerts   Huge  sales   unsuccessful   from  a  few   ar:sts   ar:sts’  albums  
  43. 43. Piracy  
  44. 44. The  dominating  phenomenon  
  45. 45. The  big  discussion  
  46. 46. The  business  model  of  piracy  
  47. 47. PARTNER KEY OFFER CUSTOMER CUSTOMERNETWORK ACTIVITIES RELATIONSHIPS SEGMENTS Upload   Peer-­‐to-­‐peer  Developers  of   illegal   Download   All  the  worlds   applica:ons  and  soGware   music   Mass  market   KEY DISTRIBUTION RESOURCES CHANNELSA  network  of   commiLed   users   User  skills,   interest  and   Digital   commitment   COST STRUCTURE REVENUE STREAMS
  48. 48. iTunes  
  49. 49. “Rock  and  Roll  will  never  die.  It  is,  however,  being  reborn.”  
  50. 50. A  new,  successful  business  model  
  51. 51. Very  successful  
  52. 52. 1  billion  songs  sold:  February  23,  2006  1.5  billion  songs  sold:  September  12,  2006  2  billion  songs  sold:  January  10,  2007  2.5  billion  songs  sold:  April  9,  2007  3  billion  songs  sold:  July  31,  2007  
  53. 53. Steve  Jobs  announced  in  his     "Its  Showtime"  keynote     that  Apple  had     88%  of  the  legal    U.S.  music  download  market     on  September  12,  2006  
  54. 54. The  business  model  of  iTunes  
  55. 55. PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS Hardware/ soGware   Lovemark   Record  labels   design   Seamless  music   Marke:ng  &   Supply  chain   experience  and   Mass  market   Sales   management   Switching  costs   great  design   (music  and   hardware)   KEY DISTRIBUTION OEMs   RESOURCES CHANNELS iTunes   iPod   iTunes   Apple   soGware   hardware   store   stores   Content  &   agreements   Talented   Retail   stores   apple.com   Apple  brand   people   (designers)   COST STRUCTURE REVENUE STREAMSPeople,  design   Marke:ng  &  &  development   Sales   High-­‐volume   High-­‐margin   content   hardware   Hardware   Music  royal:es   revenue   revenue   manufacturing  
  56. 56. Spotify  
  57. 57. “We  are  going  to    provide  music  to  everyone    (any  time,  any  place)  for  free  in  a  legal  way”  
  58. 58. “Our  dream  is  to  collect  all  the  world’s  music  and  make  it  accessible  to  everyone.”  
  59. 59. Spotify  aggregates  content  from  right  holders,  distributes  it  to  consumers  through  the  technical  platform  and  monetizes  both  through  a  free,  ad  funded  service,  and  a  subscription  service.  
  60. 60. The  business  model  of  Spotify  
  61. 61. The  Business  Model  of  Spotify  PARTNER KEY OFFER CUSTOMER CUSTOMERNETWORK ACTIVITIES RELATIONSHIPS SEGMENTS Pla@orm   Automated   development   online   and   rela:onship   Adver:sing   Adver:sers   maintenance   Rightholders   3rd  party  APIs   Communi:es   (labels  and   publishers)   KEY Access  to   DISTRIBUTION RESOURCES music  via   CHANNELS streaming  and   Global  music   Licensing   download   Internet  +     fans   agreements   services   PC   SoGware  and   Internet  +   Pla@orm  and   network   mobile   brand   engineers   COST STRUCTURE REVENUE STREAMS Subscrip:on  Royal:es  to   Bandwith  costs   Ad  fees   fees  PC  +  rightholders   Subscrip:on   mobile   Salaries   fees  PC  
  62. 62. The  artist  
  63. 63. “I  just  want  to  sing  and  perform.”  
  64. 64. Crowd-­‐funding  paves  the  way  for  the  independent  artist    
  65. 65. €  40.000   11  days  
  66. 66. €  24.000  promotion  
  67. 67. The  business  model  of  Hind  
  68. 68. PARTNER KEY OFFER CUSTOMER CUSTOMER NETWORK ACTIVITIES RELATIONSHIPS SEGMENTS Musicians  &   Singing  &   Songwriters   Songwri:ng   performing   (Social)  media   Producers   Music  CD  produc:on   Promo:on  &  distribu:on   Music  fans   Videos   Artwork  &   KEY (performance)   DISTRIBUTION Studios   RESOURCES CHANNELSManagement   Concerts   Online   The  Brand  Hind   Radio/TV   pla@orms   Tech  &  tour   team   Brand   Hind.com   Music  archive   Events   Band   experience   COST STRUCTURE REVENUE STREAMS Investment   IT,  website  and   concerts,   Concerts   Merchandising   marke:ng   transporta:on   Salaries   Music  sales  
  69. 69. Looking  back  at  some  major  shifts  in  the  music  industry  
  70. 70. A  fragmented  copyright  industry  made  it  impossible  to  set  up  legal,  sustainable  business  models.  
  71. 71. The  gap  of  legitimate  business  models  for  customers  paved  the  way  for  the  rise  of  piracy.    
  72. 72. The  unbundling  of  the  album  killed  significant  revenue  streams  impacting  the  whole  music  industry.  
  73. 73. Looking  at  some  current  shifts  in  the  music  industry  
  74. 74. Legislation  around  piracy  
  75. 75. Music  distribution  
  76. 76. Shift  from  ownership  to  access  
  77. 77. Technology  capacity  
  78. 78. Customer  in  charge  
  79. 79. What  do  customers  want  (tomorrow)?  
  80. 80. The  Big  Challenge  in  Business  Modeling  
  81. 81. Who  is  my  customer?  
  82. 82. What  does  he  or  she  wants?  
  83. 83. What  is  he  or  she  willing  to  pay  for?  
  84. 84. Different  needs  
  85. 85. Market  split-­‐up  
  86. 86. Multi-­‐party  scene  serving  customers  needs  
  87. 87. More  questions?  
  88. 88. www.businessmodelsinc.com  
  89. 89. www.businessmodelgeneration.com  

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