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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
COMMERCIAL BREAK
We help companies innovate like start-ups
Consulting and Training

DESIGNING BETTER BUSINESSES
<advertising>

WE HELP COMPANIES INNOVATE LIKE
START-ups
through consulting and training
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.
<advertising>

WE HELP COMPANIES INNOVATE LIKE
START-ups
through consulting and training
By patrick@businessmodelsinc.com
CEO Business Models Inc.

DESIGNING BETTER BUSINESSES

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