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Industry Conditions that Led to the Revolution in Audio Distribution which Described in the Case


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Industry Conditions that Led to the Revolution in Audio Distribution which Described in the Case

  1. 1. INNOVATION PRESENTATION- CHAPTER 9 <ul><li>Group – D </li></ul><ul><li>By: </li></ul><ul><li>Keshani </li></ul><ul><li>Malindi </li></ul><ul><li>Chanaka </li></ul><ul><li>Reeza Fazily </li></ul>
  2. 2. Overview of the Case <ul><li>In 1991, Fraunhofer IIS of Germany developed the MP3 format, which revolutionized the how music was distributed, stored and consumed. </li></ul><ul><li>In 1999, Shawn Fanning developed Napster, a peer to peer application that allows users to share MP3 files over the internet. </li></ul><ul><li>RIAA was concerned bout about the illegal trade of copyrighted music over the internet. In 2001 it obtained a court ruling against Napster, taking its service offline. </li></ul><ul><li>However new peer-to-peer services similar to Napster began to sprout online, facilitating music users to continue downloading pirated music. </li></ul>
  3. 3. Cont’d….. <ul><li>In 2003, Apple opened its iTunes Music Store, an application to download music files from the five major record labels. Now the record industry is earning high revenues from MP3s </li></ul><ul><li>However, new forms of digital distribution appeared namely Creative Commons that allows music to be downloaded and distributed without the risks of infringement suits and Podcasting which allows audio broadcast to be downloaded free over the internet. </li></ul>
  4. 4. Main Reasons for Rapid Music Distribution Revolution <ul><li>Music plays an important role in our lives </li></ul><ul><li>But, it required lot of time and effort to find the suitable music for our taste </li></ul><ul><li>Radio stations and record labels acted as the filters of music </li></ul><ul><li>But still, radio station only decided what to listen and when to listen </li></ul>
  5. 5. Cont’d…. <ul><li>Also, even for the most recent equipment, recording tapes make lot of time and intolerant process </li></ul><ul><li>Revolution was driven by improving the technology in order to pressure digital audio that made it practical to distribute music </li></ul>
  6. 6. Industry Conditions that Led to the Revolution in Audio Distribution which Described in the Case <ul><li>MP3 </li></ul><ul><li>Ability to transfer songs and albums to the new digital recorded format “MP3” </li></ul><ul><li>MP3 format allowed for the songs to be downloaded and played digitally in the personnel computers </li></ul><ul><li>Software programs allowed to transfer CD tracks to the new format </li></ul>
  7. 7. Cont’d….. <ul><li>Broad base MP3 licensees provided easy access to encoders and decoders for the consumers </li></ul><ul><li>- Provided decoders free of charge </li></ul><ul><li>- Nominal charge for the encode MP3s </li></ul>
  8. 8. Cont’d….. <ul><li>Napster </li></ul><ul><li>This allowed users with internet access to share MP3 files easily and freely </li></ul><ul><li>Provided a user – friendly solution to share and music online </li></ul>
  9. 9. Cont’d….. <ul><li>iTunes </li></ul><ul><li>Many features in iTunes helped to protect from users who do mass distributing to others </li></ul><ul><li>Some of features, </li></ul><ul><li>- Songs files allowed to load up to five computers </li></ul><ul><li>- Couldn’t be played in non - iPod MP3 players </li></ul><ul><li>- Couldn’t be e-mailed or distributed over the web </li></ul>
  10. 10. Cont’d…… <ul><li>Used familiar MP3 format </li></ul><ul><li>Offered reasonable price for online music </li></ul><ul><li>User friendly, well marketed and well designed Apple’s iPod made the success of iTunes </li></ul>
  11. 11. Cont’d……. <ul><li>Podcasting </li></ul><ul><li>Similar to radio </li></ul><ul><li>Can be created by anyone with a computer and a microphone </li></ul><ul><li>Individual artists can incorporate into their podcasts </li></ul><ul><li>And make available for download without having any harm for the artist’s copyrights </li></ul>
  12. 12. Most and least benefit stakeholders from the revolution <ul><li>Stakeholders are the parties who interest for the company activities </li></ul>
  13. 13. Most Benefit Stakeholders from the Revolution Employees Vendors Music Artists Competitors Communities Customer Partner Investor Company
  14. 14. Cont’d……… <ul><li>Customers </li></ul><ul><li>No longer rely on radio stations to listen to music </li></ul><ul><li>Can access much more wider selection of music </li></ul><ul><li>Can listen to the radio stations which have been programmed according to customer taste </li></ul>
  15. 15. Cont’d……. <ul><li>Musicians </li></ul><ul><li>Have more control over their music </li></ul><ul><li>No need to have contracts between local record companies </li></ul><ul><li>Broader worldwide distribution channel bring high profit margins for them </li></ul><ul><li>Lack of overhead cost with the internet access </li></ul><ul><li>Internet labels offer 50% royalties while major labels offer 12% - 15% </li></ul>
  16. 16. Least Benefit Stakeholders from the Revolution Major record labels and Retail record stores Employees Vendors Music Artists Competitors Major record labels and Retail Record Stores Customer Partner Investor Company
  17. 17. Cont’d……… <ul><li>Major record labels and Retail record stores </li></ul><ul><li>High demand for the internet record labels and downloadable music sites </li></ul><ul><li>If they don’t quickly switch on to the web business then they will have a huge loss and loss the market share </li></ul>
  18. 18. References <ul><li>Team com, “The digital music revolution”, Accessed on 12 th April 2010, Available at: </li></ul>
  19. 19. Thank You!!!!!!