The Digitization of the Recorded Music Industry: Impact on Business Models and Scenarios of Evolution

Abstract

In this paper, we provide scenarios of evolution for the recorded music industry. These scenarios are based on two dimensions. First, we identify two strategies of revenue extraction in a digital world: either through the sale of content, which requires a direct or indirect protection of music files; or through the (almost) free distribution of content and the sale of complementary goods or services. Second, we argue that the informational structure of the industry is evolving from a situation in which works are selected before the production phase and promotion is centralised to a situation in which there will be no selection and/or promotion will be decentralised. We discuss each scenario in terms of market structure and diversity and provide examples of emerging business that fit with the scenarios.

Keywords: L2, L86, Z1

JEL Classification: music industry, digitization, business models