Digital Music Intermediation Part 5
The article The Move to Artist-Led Online Music Distribution: Explaining Structural Changes in the Digital Music Market (2005) by Jesse Bockstedt, Robert J. Kauffman and Frederick J. Riggins of the Carlson School of Management is an expository analysis of the future structure of the music industry and the role of digital technology players in the business value chain. The authors argue that current intermediary companies will have to reestablish their core competencies so that they reflect new value-added service potential created by digital distribution.
The article is effective in explaining potential applications of digital technologies over the proposed market structure, however some important technologies are not explored. The cost benefits of the proliferation of digital technology are based on a particular view of the future marketplace that is dubious. The authors also make subjective and non-evidenced assumptions and generalizations regarding the consumer. These deficiencies suggest a value judgment of traditional actors in the value chain. Moreover, the articles conclusions lack practicality due to the addition of an effective IP Rights Enforcement Body in the value chain as a significant contingency on which the rest of the proposed market structure is based.
The target audience of this article is music industry strategists and they benefit from the use of practical examples that illustrate abstract business concepts within the context of emerging digital technologies. The absence of peer-to-peer networks in the proposed model however, is an allusion to the authors’ bias towards negating the controversial technology for the benefit of their intended readers. In their article “Application of P2P (Peer-to-Peer) Technology to Marketing” (2003), Kato and Yokoi argue that “peer-to-peer (P2P) networks are spreading, and their practical applications for the business scene are promising”.
Bockstedt et al, however state that “P2P file sharing has hurt artists and record labels”. This is, of course, not accompanied with a bibliographical reference and in fact, there is a wealth of evidence that suggests the contrary (Oberholzer & Strumpf, 2004). Peter S. Fader, Ph.D. reports “the available evidence provides overwhelming support for the contention that [file-sharing] is beneficial to the music industry.” As a result of this technological omission in this model, the marketing function in the value chain is underrepresented. The authors proclaim that “the Internet allows sampling of products using digital audio files…” but does not put forward the potential value of P2P. According to Sharman Networks (2005), KaZaA has been downloaded over 350,000,000 times and has a user base of up to four million at any given time, yet is not included even as a case-study example of the use of the Internet for marketing or a truly costless distribution model.
This approach suggests a bias towards major players in the traditional music market such as the major record labels and there trade groups who claim that illegal file sharing has adversely impacted the sales of CDs.
My next post will discuss Jesse, Bob and Fred’s take on the “Virtual Value Chain” and DRM.
