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.

The industry argues that “downloading music is illegal…and unethical, it is hurting the industry and artists… takes away the incentive for creativity… and is therefore harmful for national music cultures.” (Bakker, 2004) He then systematically “deconstructs” these “discourses” to show that although the industry “strengthens the argument that all kinds of illegal activities are harmful”, they “fail to reveal how much downloading contributes to the decline in music sales”.

The author then provides evidence that local artists are showing success in spite of piracy thus discounting the claim that national music cultures are “becoming less diverse”. Radio consolidation, on the other hand is mentioned, although briefly, as a possible negative influence on national music cultures. In fact, a Future of Music Coalition report “clearly demonstrates that the radical deregulation of the radio industry has not benefited the public or musicians. Instead, it has led to less competition, fewer viewpoints, and less diversity in programming.” (DiCola & Thomson, 2002) Although Bakker does reference himself several times in the article, this subjectivity can be dismissed by ample referencing to numerous sources and in one case, six sources for one point. (Bakker, 2004, p.5)

Much of Bakker’s argument depends upon consumer behaviour and the resulting decline in sales of a physical medium, in this case, CDs. He speaks for consumers in general when he suggests “experiencing music (MP3) is by no means inferior to buying music (CDs).” In this rare case, the author does not provide a reference to a qualitative study that examines the value- added features of a physical CD including artwork, photos and bonus materials.

He also asserts that the adoption of portable MP3 players and legal download services is contributing to the decline of CDs sales and that this trend “is most likely irreversible”. This is a recurrent theme in both “The end of the CD as we know it” and “The Move to Artist-Led Online Music Distribution: Explaining Structural Changes in the Digital Music Market” and will be examined later in this essay.

It’s safe to say that the trend of declining CD sales has continued through 2007, according to Soundscan. It’s also interesting to note that digital downloads (legal) continue to rise, even though file sharing is not illegal in Canada (yet). Digital album purchases were up 93%, to 1.98 million, in 2007 and now account for 4.7% of total album sales and track sales also increased 73% from 14.9 million in 2006 to 25.8 million in 2007.

A note on diversity:

A cheezy crooner, a plastic doll for kids, aging rockers, THREE country artists, R&B diva, Nu-metalers, Canadian crooner, and TWO Idol winners. I was happy to see that all the rap and hip-hop was gone!

This does not indicate, however that there is a lack of cultural diversity in the music-listening public. Anyone managing a band should also notice that three of these artists were launched on TV.