The Impact of a Radical Innovation on Business Models: Incremental Adjustments or Big Bang?

22 Pages Posted: 28 Apr 2012

See all articles by Marc Bourreau

Marc Bourreau

Telecom ParisTech

Michel Gensollen

Telecom Paris Tech

François Moreau

Université Paris 13

Date Written: April 27, 2012

Abstract

In this paper we study the impact of a radical technological innovation on business models. Do firms react by adjusting their business models incrementally, through iterative steps? Or do such innovations lead, instead, to a big bang of new innovative business models that are all adopted and experimented by the industry? To answer these questions, we analyze the impact of digitization — a radical innovation — on business models in the recorded music industry. Using an economic analysis of the effects of digitization, we begin by building five potential digital business models for the music industry. Then, using data from a survey on a sample of French record companies, we map these record labels on our digital business models. Our analysis suggests that digitization has led to a big bang of business models in the music industry, rather than to incremental adjustments of the existing business model.

Keywords: business models, innovation, digitization, recorded music industry

JEL Classification: L2, L86, Z1

Suggested Citation

Bourreau, Marc and Gensollen, Michel and Moreau, François, The Impact of a Radical Innovation on Business Models: Incremental Adjustments or Big Bang? (April 27, 2012). Available at SSRN: https://ssrn.com/abstract=2046991 or http://dx.doi.org/10.2139/ssrn.2046991

Marc Bourreau (Contact Author)

Telecom ParisTech ( email )

46, rue Barrault
Paris Cedex 13, F-75634
France

Michel Gensollen

Telecom Paris Tech ( email )

46, rue Barrault
Paris Cedex 13, F-75634
France

François Moreau

Université Paris 13 ( email )

France

Register to save articles to
your library

Register

Paper statistics

Downloads
765
Abstract Views
3,150
rank
31,873
PlumX Metrics