1. Alexander Osterwalder
AlexOsterwalder.com
Twitter: business_design
Experimenting with
Business Models in the
Music Industry (part II)

2. the following slides are a very brief
excerpt of a 60 minute keynote I gave at
Eurosonic Noorderslag, Europeʼs most
important live music industry conference

3. todayʼs music industry is ...

4. a business model playground ..

5. a business model playground ..

6. limitations of the old record company ...

7. OFFER
CHANNELS
CUSTOMER
RELATIONSHIPS
CUSTOMER
SEGMENTS
REVENUE STREAMSCOST STRUCTURE
KEY
ACTIVITIES
KEY
PARTNERS
KEY
RESOURCES
The Old Record Label Model
hits & wannabe
hits
mass
market
Retailers
TV
Radio
tours &
concerts
merchandising
huge sales
from few
artists’ albums
portfolio of
star artists
detecting &
building talent
distribution
channels
marketing &
promotion
marketing &
promotion
royalty
paymentssubsidizing
unsuccessful
artists
copyrighted
content
manufacturers
“new” digital
channels

8. OFFER
CHANNELS
CUSTOMER
RELATIONSHIPS
CUSTOMER
SEGMENTS
REVENUE STREAMSCOST STRUCTURE
KEY
ACTIVITIES
KEY
PARTNERS
KEY
RESOURCES
The Old Record Label Model
hits & wannabe
hits
mass
market
Retailers
TV
Radio
tours &
concerts
merchandising
huge sales
from few
artists’ albums
portfolio of
star artists
detecting &
building talent
distribution
channels
marketing &
promotion
marketing &
promotion
royalty
paymentssubsidizing
unsuccessful
artists
copyrighted
content
manufacturers
“new” digital
channels
distribution is a
commodity, attention is
the new scarcity
social
networks are what
drive music sales
unbundling of
albums into single
songs (iTunes)
price of songs
tending towards
ZERO
customer
needs are not
being satisfied
itʼs all about
hits AND the Long
Tail of music
piracy
shift of the
balance of power
towards artists
bloated cost
structure (talent
discovery/marketing)
talent will be
discovered by
other mechanisms

9. two new
models

21. example

23. OFFER
CHANNELS
CUSTOMER
RELATIONSHIPS
CUSTOMER
SEGMENTS
REVENUE STREAMSCOST STRUCTURE
KEY
ACTIVITIES
KEY
PARTNERS
KEY
RESOURCES
Business Model
free streaming
music
Spotify.com
free
young
connected
music fans
software
application

24. OFFER
CHANNELS
CUSTOMER
RELATIONSHIPS
CUSTOMER
SEGMENTS
REVENUE STREAMSCOST STRUCTURE
KEY
ACTIVITIES
KEY
PARTNERS
KEY
RESOURCES
Business Model
free streaming
music
Spotify.com
free
young
connected
music fans
software
application

25. OFFER
CHANNELS
CUSTOMER
RELATIONSHIPS
CUSTOMER
SEGMENTS
REVENUE STREAMSCOST STRUCTURE
KEY
ACTIVITIES
KEY
PARTNERS
KEY
RESOURCES
Business Model
free streaming
music
Spotify.com
record
labels
licensing
agreements
free
young
connected
music fans
software
application
licensing fees
(for each song
played)
$$$$$$

26. OFFER
CHANNELS
CUSTOMER
RELATIONSHIPS
CUSTOMER
SEGMENTS
REVENUE STREAMSCOST STRUCTURE
KEY
ACTIVITIES
KEY
PARTNERS
KEY
RESOURCES
Business Model
free streaming
music
Spotify.com
platform
development &
maintenance
record
labels
licensing
agreements
free
young
connected
music fans
software &
network
engineers
platform,
software &
brand
software
application
licensing fees
(for each song
played)
plus even
more work

27. OFFER
CHANNELS
CUSTOMER
RELATIONSHIPS
CUSTOMER
SEGMENTS
REVENUE STREAMSCOST STRUCTURE
KEY
ACTIVITIES
KEY
PARTNERS
KEY
RESOURCES
Business Model
free streaming
music
Spotify.com
platform
development &
maintenance
record
labels
licensing
agreements
free
young
connected
music fans
software &
network
engineers
platform,
software &
brand
software
application
licensing fees
(for each song
played)
bandwidth
costs salaries
engineers
plus even
more
costs

28. OFFER
CHANNELS
CUSTOMER
RELATIONSHIPS
CUSTOMER
SEGMENTS
REVENUE STREAMSCOST STRUCTURE
KEY
ACTIVITIES
KEY
PARTNERS
KEY
RESOURCES
Business Model
free streaming
music
Spotify.com
platform
development &
maintenance
record
labels
licensing
agreements
free
young
connected
music fans
software &
network
engineers
automated
online
relationship
platform,
software &
brand
software
application
advertisers
licensing fees
(for each song
played)
bandwidth
costs salaries
engineers
mood-based
advertising
ad fees
revenues
for free
services

29. OFFER
CHANNELS
CUSTOMER
RELATIONSHIPS
CUSTOMER
SEGMENTS
REVENUE STREAMSCOST STRUCTURE
KEY
ACTIVITIES
KEY
PARTNERS
KEY
RESOURCES
Business Model
Spotify.com
platform
development &
maintenance
record
labels
licensing
agreements
young
connected
music fans
software &
network
engineers
automated
online
relationship
platform,
software &
brand
software
application
mobile
application
licensing fees
(for each song
played)
bandwidth
costs salaries
engineers
premium
subscription
subscription
fee
revenues from
premium
subscriptions

30. OFFER
CHANNELS
CUSTOMER
RELATIONSHIPS
CUSTOMER
SEGMENTS
REVENUE STREAMSCOST STRUCTURE
KEY
ACTIVITIES
KEY
PARTNERS
KEY
RESOURCES
Business Model
Spotify.com
platform
development &
maintenance
record
labels
licensing
agreements
young
connected
music fans
software &
network
engineers
automated
online
relationship
platform,
software &
brand
software
application
mobile
application
licensing fees
(for each song
played)
bandwidth
costs salaries
engineers
premium
subscription
subscription
fee
pay-per-use
fee
day pass
revenues from
occasional
uses

31. OFFER
CHANNELS
CUSTOMER
RELATIONSHIPS
CUSTOMER
SEGMENTS
REVENUE STREAMSCOST STRUCTURE
KEY
ACTIVITIES
KEY
PARTNERS
KEY
RESOURCES
Business Model
free streaming
music
Spotify.com
platform
development &
maintenance
record
labels
licensing
agreements
free
young
connected
music fans
software &
network
engineers
automated
online
relationship
platform,
software &
brand
software
application
mobile
application
advertisers
licensing fees
(for each song
played)
bandwidth
costs salaries
engineers
mood-based
advertising
premium
subscription
subscription
fee
pay-per-use
fee
day pass
ad fees

32. we need to constantly rethink our
models - systematically ...

34. BusinessModelGeneration.com

35. THANK YOU!
www.businessmodelgeneration.com
www.alexosterwalder.com
www.businessmodelalchemist.com
Twitter: business_design