March 26, 2016 by admin
Analysis and strategy recommendation for digital music distribution
Introduction and case background
This case sheds an interesting light on the evolution of the digital music distribution. It talks about creation of the MP3 music format and how different market players used it to distribute music to the users. Some of these players succeeded in their attempts and became hugely popular while others could not maintain the lead. Finally the case discusses the success of iTunes and the future trends in the digital music industry.
Creation of digital music formats such as MP3, revolutionized the music distribution, however, it also lead to many problems such as piracy issues or music copyright issues. The main business problem is to provide value to the users while retaining the copyrights of the music. It also involves discouraging illegal or pirated downloads while increase revenue for music creators and record labels. Here we will look at different aspects of the problem and will try to find recommendations that could work for such an issue.
Important factors and analysis
The first main factor in the digital music distribution was the use of flexible and portable music formats. These formats made it easy to distribute music files to the users. Various tools such as Napster, made it easy to share illegal music files which lead to revenue loss for the record labels. Record labels tried to prevent this phenomenon by fighting a legal battle against Napster. Record labels also realized that such a distribution channel is going to be the future of the online music distribution, but the methods they adopted were not so popular among the users due to their restrictive nature.
Steve Jobs from Apple Inc. tried to find the right balance between intellectual property (IP) protection and user friendly methods of content distribution and thus Apple’s own music service iTunes became hugely popular. Apple made it easy to share the content while still protecting the distribution rights of the record label. It also partnered with multiple record labels to provide cheaper and a wide range of music content to the users.
Alternative strategies and recommendations
Based on the above analysis it is clear that in order to be successful in the music distribution industry companies will have to learn to strike the balance between value creation and IP protection. Using less restrictive DRMs for their content distribution will attract more users to their services. Collaborating together to provide large catalogue of music will also be beneficial for the longevity of the music distribution. In addition to that, using subscription model and pay per use model to encourage users to invest in the service will also go a long way to keep them tied to service and thus increase the profits.