1. Francisco Bernardo
fbernardo@musiclovers.co
School of Arts
Catholic University of Portugal,
R. Diogo Botelho, 1327,
4169-005 Porto, Portugal
+351 226196200
Vienna Music Business Research Days 2013 – Young scholar’s workshop
Disintermediation effects in the music
business
A return to old times?
Luis Gustavo Martins
lmartins@porto.ucp.pt
CITAR - Research Centre for
Science and Technology of the
Arts
School of Arts, Catholic
University of Portugal,
R. Diogo Botelho, 1327,
4169-005 Porto, Portugal
+351 226196200

2. Francisco Bernardo
fbernardo@musiclovers.co
Background
Vienna Music Business Research Days 2013 – Young scholar’s workshop
• Musician
• Graduate Degree in Computer Science
and Systems Engineering (2006)
• MSc in Mobile Systems (2009)
• Master in Management for the Creative
Industries (expected 2013 – writing
dissertation around topic of the impact
of web technologies in the business
models of independent music artists)

3. 3
Vienna Music Business Research Days 2013 – Young scholar’s workshop
Supplier Consumer
Supplier Intermediary Consumer
Intermediary acts as a conduit for goods or services
offered by them and providing added value to the
transaction.
Intermediation

4. 4
Vienna Music Business Research Days 2013 – Young scholar’s workshop
Supplier Intermediary Consumer
Roles of market intermediaries
• aggregate buyer demand or seller products
to achieve economies of scale or scope and
to reduce bargaining asymmetry
• protect buyers and sellers from the
opportunistic behavior of other participants in
a market by becoming an agent of trust
• facilitate the market by reducing operating
costs
• match buyers and sellers
(Bailey & Bakos, 1997)

5. 5
Vienna Music Business Research Days 2013 – Young scholar’s workshop
Causes of disintermediation
• the supplier’s internalization of activities
traditionally performed by intermediaries
(Sarkar et al., 2006)
• market transparency leads to the buyer's
increased knowledge of supply pricing (Picot
& Bortenlanger, 2006)
• the ability of an ubiquitous communication
network to support direct exchanges
efficiently (Benjamin & Wigand, 1995)
IntermediarySupplier Consumer

6. 6
Vienna Music Business Research Days 2013 – Young scholar’s workshop
Reintermediation
• reintroduction of an intermediary between
supplier and consumer, whenever
disintermediation has occurred first (Chircu
and Kauffman, 1999).
• reformulation, realignment and pruning of
intermediaries but without total elimination
(Carr, 1999)
IntermediarySupplier Consumer
Intermediary

7. 7
Vienna Music Business Research Days 2013 – Young scholar’s workshop
IDR cycle
• Characterizes changes in the market
interactions in terms of an intermediation,
disintermediation and reintermediation
• strategies used in the IDR cycle for
intermediaries to achieve a sustainable
competitive advantage in the marketplace:
• partnering for access
• partnering for content
• partnering for application development
• technology licensing
(Chircu & Kauffman, 1999)

8. 8
Vienna Music Business Research Days 2013 – Young scholar’s workshop
The value chain of music business
Music
Artist
Retail
Record
Company
Distributor
Consumer
Fan
Music
Artist
Consumer
Fan

9. 9
Vienna Music Business Research Days 2013 – Young scholar’s workshop
The powerhouse of the industry
A&R
Sales
Legal
Product
Management
New
Media
Marketing
International
Promotion
Finance Production
LABEL
MAJOR
RECORD
(Adapted from Passman, 2009)

10. 10
Vienna Music Business Research Days 2013 – Young scholar’s workshop
The disintermediation possibilities
Music
Artist
Retail
Record
Company
Distributor
Consumer
Fan
Music
Artist
Retail
Record
Company
Distributor
Consumer
Fan

11. 11
Vienna Music Business Research Days 2013 – Young scholar’s workshop
The emergence of new intermediaries

12. 12
Vienna Music Business Research Days 2013 – Young scholar’s workshop
Instances of disintermediation: Radiohead
Extracted from http://www.wired.com/business/2007/10/radiohead-snubs/.
Consulted in 2013/06/17
Music
Artist
Retail
Record
Company
Distributor
Consumer
Fan

13. 13
Vienna Music Business Research Days 2013 – Young scholar’s workshop
Instances of disintermediation: NIИ
Music
Artist
Retail
Record
Company
Distributor
Consumer
Fan
Extracted http://royalflushmagazine.com/2008/09/12/lights-in-the-sky-over-red-
rocks-nin/
Consulteed in 2013/06/17

14. 14
Vienna Music Business Research Days 2013 – Young scholar’s workshop
The new paradigm (i)
Marketing
Promotion
Finance
Distribuition
Production
Direct-to-fan
Management
DIY
Independent
Contracting

15. 15
Vienna Music Business Research Days 2013 – Young scholar’s workshop
The new paradigm (ii)
(Adapted from Graham, 2006)
Virtual
Coordinator
Artist Consumer
Label Retailer
Distributor

16. 16
Vienna Music Business Research Days 2013 – Young scholar’s workshop
References
• Benjamin, R., & Wigand, R. (1995). Electronic
Markets and Virtual Value Chains on the
Information Superhighway | MIT Sloan
Management R. Sloan Management Review,
62–72. Retrieved from
http://sloanreview.mit.edu/article/electronic-
markets-and-virtual-value-chains-on-the-
information-superhighway/
• Bailey, J. P., & Bakos, Y. (1997). An
Exploratory Study of the Emerging Role of
Electronic Intermediaries. International Journal
of Electronic Commerce, 1(3), 7–20.
• Chircu, A. M., & Kauffman, R. J. (1999).
Strategies for Internet Middlemen in the
Intermediation/Disintermediation/Reintermediat
ion Cycle. Electronic Markets - The
International Journal of Electronic Commerce
and Business Media, 9(2), 109–117.
• Passman, D. (2009). All You Need to Know
About the Music Business (p. 512).
• Carr, N. G. (1999). Hypermediation:
Commerce as Clickstream. Harvard Business
Review, 77, 43–47. Retrieved from
http://www.nicholasgcarr.com/articlesmt/archiv
es/hypermediation_commerce.shtml
• Graham, Dr. Gary, “The Transformation of the
Music Industry Supply Chain: A Major Label
Perspective,” Manchester Business School
Executive Briefing (2006).
• Sarkar, M. B., Butler, B., & Steinfield, C.
(2006). Intermediaries and Cybermediaries: A
Continuing Role for Mediating Players in the
Electronic Marketplace. Journal of Computer-
Mediated Communication, 1(3).
doi:10.1111/j.1083-6101.1995.tb00167.x
• Picot, A., & Bortenlanger, C. (2006). An
Organization of Electronic Markets:
Contributions from the New Institutional
Economics. The Information Society, 13(1),
107–123.

17. Francisco Bernardo
fbernardo@musiclovers.co
http://www.musiclovers.co
Vienna Music Business Research Days 2013 – Young scholar’s workshop
Thank you!
Master in Management for the Creative
Industries
http://artes.ucp.pt/industriascriativas/