How Beyoncé disrupts the Music
Industry Insights in how Beyoncé disrupts the Music Industry by introducing a traditional business model in a new fashion. Amsterdam, January 2014

TH 13 ON DECEMBER 2013
BEYONCÉ LAUNCHES HER NEW ALBUM ON ITUNES

AN ALBUM ON ITUNES?

AN ALBUM ON
ITUNES!

HER FULL ALBUM

WHY WOULD SHE DO
THAT?

WHAT CAN WE LEARN FROM
BEYONCÉ?

FIRST TAKE A LOOK AT
THE MUSIC INDUSTRY

A DETAILED ANALYSIS

SEVERAL
QUESTIONS…

WHAT DOES THE MARKET LOOK
LIKE?

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
PEOPLE’S LIVES “Music is something most people love, that no one dislikes and that touches everyone throughout their lives” BrandAmp)study,)Millward)Brown,)2007)

A GLOBAL INDUSTRY

SOMETHING FOR
EVERYONE…

REMEMBER THEM?

THE CREATIVE
GENIUS

LOT’S OF GOOD
ADVISORS

ENOUGH PLAYERS

TECHNOLOGY
ADVANCEMENTS

MORE MUSIC THAN A SINGLE
STORE

UNDERSTAND THE
CONTEXT…

DECLINING SALES IN
2009

GLOBAL MUSIC SALES Global&music&sales&& (physical)and)digital))
excluding)VAT) 1997:)38)billion)USD) 2009:)17)billion)USD)

WHO
ARE THE
PLAYERS?

WHO CREATES VALUE IN THE
MUSIC INDUSTRY?

WE NEED TO UNDERSTAND THE
VALUE CHAIN

RECORD COMPANIES? WHO RECORD, PRODUCE,
PUBLISH, DISTRIBUTE AND MARKET MUSIC?

SHOPS? WHO AGGREGATE AND SELL
MUSIC?

DESIGNING BETTER BUSINESSES

PLAYERS? WHO AGGREGATE AND STREAM
MUSIC?

ARTISTS?
WHO WRITE AND SING?

OR FANS? WHO LISTEN AND
EXPERIENCE MUSIC?

SO LET’S SEE…

HOW
THEY EACH
ADD VALUE?

WHAT DIFFERENT BUSINESS MODELS EXIST
IN THE INDUSTRY?

LET’S LOOK AT 5 PLAYERS
AND THEIR MODELS…

A RECORD COMPANY

THE BIG FOUR

1 MAIN ACTIVITY

THE RECORD
COMPANY BUSINESS
MODEL

THE RECORD COMPANY DISTRIBUTION CHANNELS
MARKETING AND PROMOTION MANUFACTURERS DETECTING AND BUILDING TALENT HITS AND WANNABE HITS PORTFOLIO OF STAR ARTISTS MASS MARKET RETAILERS TV COPYRIGHT CONTENT RADIO DIGITAL MARKETING AND PROMOTION SUBSIDIZING UNSUCCESFUL ARTISTS ROYALTIES HUGE SALE FROM FEW ARTISTS TOURS AND CONCERTS MERCHAND ISING

IN COSTS YOU MISSED: ‘OVERPAID
EXECUTIVES’…’ MICHAEL SMELLIE, FORMER COO SONY MUSIC

MICHAEL SMELLIE

RECORD COMPANIES DID NOT KNOW
THEIR CUSTOMERS

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PIRACY

THE DOMINATING PHENOMENON

SORRY, NOT THESE GUYS

THIS IS WHAT WE BELIEVED…

THE BIG DISCUSSION

THE PIRACY
BUSINESS MODEL

THE PIRACY MODEL ILLEGAL DEVELOPERS
UPLOAD NETWORK OF COMMITTED USERS DOWNLOAD PEER TO PEER MASS MARKET ALL THE WORLDS MUSIC USERSKILLS DIGITAL COMMITMENT HOSTING ADVERTISING TRAFFIC

IS PIRACY A
SUSTAINABLE
MODEL?

ITUNES

ONE BIG BELIEVER

“Rock)and)Roll)will)
never)die.)It)is,)
however,)being)
reborn.”)

A NEW SUCCESFUL
BUSINESS MODEL

Very)successful)

STEVE JOBS ANNOUNCED IN HIS
"IT'S SHOWTIME" KEYNOTE THAT APPLE HAD 88% OF THE LEGAL U.S. MUSIC DOWNLOAD MARKET ON SEPTEMBER 12, 2006

THE ITUNES
BUSINESS MODEL

THE ITUNES MODEL RECORD LABELS
HARDWARE/ SOFTWARE DESIGN OEM MARKETING & SALES SUPPLY CHAIN MANAGEMENT ITUNES SOFTWARE SEAMLESS MUSIC EXPERIENCE AND COOL DESIGN (MUSIC AND SOFTWARE) IPOD HARDWARE APPLE STORE APPLE BRAND APPLE.COM DESIGNERS SUBSIDIZING UNSUCCESFUL ARTISTS ITUNES STORE RETAIL STORE CONTENT & AGREEMENTS MARKETING AND PROMOTION MASS MARKET ROYALTIES HUGE SALE FROM FEW ARTISTS TOURS AND CONCERTS MERCHAND ISING

UNBUNDLING THE
ALBUM OR CD

COMBINING
SOFTWARE AND
HARDWARE

SPOTIFY

THEIR VISION WAS PUT ON
PAPER

DESIGNING BETTER BUSINESSES

“We)are)going)to))
provide)music)to)everyone))
(any)time,)any)place))
for)free)
in)a)legal)way”)

THE SPOTIFY
BUSINESS MODEL

THE SPOTIFY MODEL DISTRIBUTION CHANNELS
MARKETING AND PROMOTION MANUFACTURERS DETECTING AND BUILDING TALENT AUTOMATED ONLINE ADVERTISING 3RD PARTIES API ADVERTISERS COMMUNITIES PORTFOLIO OF STAR ARTISTS COPYRIGHT CONTENT MARKETING AND PROMOTION SUBSIDIZING UNSUCCESFUL ARTISTS ACCESS TO MUSIC VIA DOWNLOADING AND STREAMING ROYALTIES ADVERTISING INTERNET + MOBILE GLOBAL MUSIC FANS INTERNET + PC FREE SUBSCRIPTION

THE MODEL VISUALIZED

WILL THEY SURVIVE BY CHARGING
TOO FEW MONEY FOR MUSIC?

THE ARTIST

THIS IS THE DUTCH SINGER
HIND

“I just want to sing
and perform.”

Crowd-funding paves the way for
the independent artist

€ 40.000
11 days

THE ARTIST
BUSINESS MODEL
(INDEPENDENT)

THE ARTIST MODEL MUSICIANS SONGWRITING
SONGWRITERS SINGING & PERFORMING PRODUCERS PROMOTION CD PRODUCTION MUSIC, VIDEOS, CONCERTS MUSIC FANS ARTWORK & STUDIO MANAGEMENT TECH & TOUR TEAM RADIO & TV BRAND HIND ONLINE PLATFORMS MUSIC ARCHIVE BAND HIND.COM BRAND EXPERIENCE EVENTS INVESTMENTS SALARIES IT, WEBSITE, TRAVEL ETC. CONCERTS MUSIC SALES MERCHAND ISING

A TOUGH MODEL WHEN ‘EVERYBODY’
CAN BE A SINGER NOWADAYS…

A FEW MAJOR SHIFTS IN
THE MUSIC INDUSTRY

COPYRIGHT

A FRAGMENTED COPYRIGHT INDUSTRY MADE
IT IMPOSSIBLE TO SET UP LEGAL, SUSTAINABLE BUSINESS MODELS.

RISE OF
PIRACY

THE GAP OF LEGITIMATE BUSINESS
MODELS FOR CUSTOMERS PAVED THE WAY FOR THE RISE OF PIRACY.

UNBUNDLING
OF THE
ALBUM

THE UNBUNDLING OF THE ALBUM
KILLED SIGNIFICANT REVENUE STREAMS IMPACTING THE WHOLE MUSIC INDUSTRY.

MUSIC
DISTRIBUTION

FROM YOUR LOCAL SHOP

TO ‘FREE’ PLAYERS

RESULTING IN A BUSINESS MODEL
PATTERN…

FROM
OWNERSHIP
TO ACCESS

FROM OWNERSHIP

TO ACCESS

TECHNOLOGY
DEVELOP
MENT

FROM HERE

TO HERE

SO WHAT DID
BEYONCÉ LEARN?

VERY SIMPLE

UNDER
STAND

SHE UNDERSTANDS THE CURRENT FRAGMENTED
INDUSTRY

HOW ARTISTS STRUGGLE TO MAKE
MONEY

LEARNING

SHE LEARNED ALL ABOUT OTHER
BUSINESS MODELS

AND
RE-INTRODUCED
THE ALBUM!

SO…

WILLING
NESS
TO PAY

BEYONCÉ
KNOW(LE)S…

WHAT HER FANS ARE WILLING
TO PAY FOR…

15,99
USD

I AM A BIG FAN
OF BEYONCÉ NOW ALSO FOR HER BUSINESS MODEL SKILLS!

BEYONCÉ THANKS
HERE FANS…

WARNING! WE WORK ON GLOBAL
BUSINESS MODEL CASE STUDIES FOR OUR TRAINING COURSES AND STRATEGY WORK. IN THE COMING YEAR WE WILL CONTINUE TO PUBLISH ON THE MUSIC INDUSTRY ESPECIALLY IN THE ELECTRONIC DANCE MUSIC PROJECT ‘OPEN HOUSE’ IN COOPERATION WITH ID&T AND VARIOUS DJ’S.

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By patrick@businessmodelsinc.com CEO Business Models
Inc. DESIGNING BETTER BUSINESSES