The transformation of the music industry supply chain

Abstract

This article explores the impact of the Internet on the supply chain for music. Music is a massive global industry worth $38 billion annually. The global music industry is dominated by the "big five" major record companies. However, as this article will show, the advent of the Internet is having a significant impact on both the supply chain for music and the dominance of the big record labels. The article begins by describing the background to our research and the methods employed. It then goes on to examine how the Internet is transforming the supply chain for music. This is followed by a discussion of the impact of piracy on the music industry. The article concludes by arguing that while the future may look bleak for the major record labels, it looks much more positive for artists and consumers.

Rethinking the music industry

“…For example, Leyshon's (2001) model of 'the musical economy as a networked economy' and his subsequent work (Leyshon et al 2005) attributes the domination of the record companies to 'per-unit pricing and the enforcement of copyright law' (ibid., p. 186). As well as cultural/ economic geography, there is a growing body of work on the music industries in the field of business and management studies (Gander and Rieple 2002;Graham and Burnes 2004) which, along with the existing approaches, can contribute to a more complex and accurate description of the music industries.…”

Untitled

“…This paper also contributes to the understanding that product and services need to be managed in different ways [Bustinza et al, 2013a]. Services are more amenable to global upstream delivery, whereas product format relies upon national or regional assets [Graham et al, 2004]. Findings revealed some regional level of preference that may be influenced by national or regional specific factors [Dunning et al, 2007].…”

“…broadband, file sharing services) and revenue decline in the music industry, principally due to a decrease in physical sales [IFPI, 2011]. Many intermediary operations and associated firms have been removed from the music supply chain as digital music formats are traded online, replacing traditional physical sales with online service products [Graham et al, 2004]. Music firms who previously made their money from physical format sales, such as CD and vinyl, are now seeking additional value and revenue through online digital music services in a process that has been described as the 'servitization of the music industry' [Parry et al, 2012;Vandemerwe, Rada, 1988].…”

Is the music industry stuck between rock and a hard place? The role of the Internet and three possible scenarios

“…Graham et al (2004) conducted research in which the interviewees argued that alternative channels of distribution to consumers, along with the lowering of entry costs to the music market, would pertain to weaken the bargaining position of the major record companies; but on the other hand many artists would continue to seek the benefits of being associated with a major label, such as the marketing expertise. Also Lam and Tan (2001) felt that new artists are more likely to face greatly increased competition in attempting to gain real recognition through the Internet.…”