Digital Distribution Models Reviewed: The Content Provider’s Perspective

Chapter

Abstract

Digital distribution has surpassed physical distribution in key markets and will soon be the dominant music distribution model in Australia. Four different business models (free, ad-funded, pay-per-use and subscription-based) and two different music delivery methods (downloading and streaming) currently compete in the market place. The author analyses each distribution model available in Australia and evaluates advantages and disadvantages from the content provider’s perspective. The most striking development is the blurring line between promotion and distribution. Content providers can either lower the barriers to access music in order to facilitate rapid music circulation and create a strong promotional effect to support various revenue streams; or heighten the barriers to access music in order to install an artificial scarcity through excludability, which is essential to implement a business model based on selling musical recordings. In this regard, the variety of different digital distribution models provides a flexible toolbox for content providers to coordinate their overall marketing strategy.

References

  1. Anderson, C. (2004). Change this – The long tail. http://changethis.com/manifesto/show/10.LongTail. Accessed 10 July 2012.
  2. Anderson, N. (2006). Disney-ABC: We understand piracy now as a business model. http://arstechnica.com/business/2006/10/7946/. Accessed 11 Mar 2012.
  3. Anderson, C. (2008). Free! Why $0.00 is the future of business. Wired Magazine, 16, 25.Google Scholar
  4. ARIA. (2012). 2011 ARIA yearly statistic. Sydney.Google Scholar
  5. Arrington, M. (2009). This is quite possibly the Spotify cap table. http://techcrunch.com/2009/08/07/this-is-quite-possibly-the-spotify-cap-table/. Accessed 27 May 2012.
  6. Atkinson, C. (2011a). Apple pays music bigs $100M+. http://www.nypost.com/p/news/business/apple_pays_music_bigs_OcxlGqT1E0P5P9vzosxtyK. Accessed 12 Feb 2012.
  7. Atkinson, C. (2011b). Spotify leaps to US. http://www.nypost.com/p/news/business/spotify_leaps_to_us_oCGRiUlgBbgU8076NBkyuN. Accessed 20 June 2012.
  8. Beatport. (2011). Introducing: Skrillex. http://www.beatportal.com/feed/item/introducing-skrillex/. Accessed 12 June 2012.
  9. BPI. (2012). Digital revenues overtake physical in UK recorded music market. http://www.bpi.co.uk/press-area/news-amp3b-press-release/article/digital-revenues-overtake-physical-in-uk-recorded-music-market.aspx. Accessed 10 July 2012.
  10. Bradshaw, T., & Menn, J. (2010). Spotify-MOG battle heats up. http://www.ft.com/cms/s/2/7a289b4e-249b-11df-8be0-00144feab49a.html#axzz1U5W8Lyq9. Accessed 12 April 2012.
  11. Buskirk, E. V. (2011). David Lowery is wrong about streaming, money and artists. http://www.gizmodo.com.au/2012/06/david-lowery-is-wrong-about-streaming-money-and-artists/. Accessed 20 July 2012.
  12. Buxmann, P., Pohl, G., Johnscher, P., Strube, J., & Groffmann, H. D. (2005). Strategies for digital music markets: Pricing and the effectiveness of measures against pirate copies – Results of an empirical study (Working paper). Technical University, Darmstadt.Google Scholar
  13. Cashmere, P. (2012). Former Virgin Boss Phil Quartararo Joins Guvera. http://www.undercover.fm/news/15615-former-virgin-boss-phil-quartararo-joins-guvera. Accessed 23 July 2012.
  14. Doerr, J., Benlian, A., Vetter, J., & Hess, T. (2010). Pricing of content services – An empirical investigation of music as a service. Sustainable E-Business Management, 58, 13–24.CrossRefGoogle Scholar
  15. Fiebach, M. (2012). An in-depth case study on the pretty lights + BitTorrent partnership. http://www.hypebot.com/hypebot/2012/01/case-study-pretty-lights-bittorrent-partnership.html. Accessed 5 May 2012.
  16. Fitzsimmons, C. (2012). Spotify to launch with a different beat. http://afr.com/p/business/marketing_media/spotify_to_launch_with_different_6OyD5hKW8gfdNbyqqzlI6J#. Accessed 20 July 2012.Google Scholar
  17. Frey, B. (2000). Not just for the money: An economic theory of motivation. Cheltenham: Edward Elgar.Google Scholar
  18. Gartler, G. (2012). “The universal thump” – The new album by Greta Gertler. http://www.kickstarter.com/projects/GretaGertler/the-universal-thump-the-new-album-by-greta-ger?ref=live. Accessed 12 June 2012.
  19. Greenburg, Z. O. M. (2012). Skrillex: The $15 Million DJ. http://www.forbes.com/sites/zackomalleygreenburg/2012/08/02/skrillex-the-15-million-dj/. Accessed 12 July 2012.
  20. IFPI. (2012). Digital music report 2011. London.Google Scholar
  21. IMDB. (2012). Tom waits. http://www.imdb.com/name/nm0001823/bio. Accessed 11 Mar 2012.
  22. Karubian, S. (2008). 360 deals: An industry reaction to the devaluation of recorded music. Southern California Interdisciplinary Law Journal, 18, 395–462.Google Scholar
  23. Kelly, K. (2008). Better than free. http://www.edge.org/3rd_culture/kelly08/kelly08_index.html. Accessed 11 June 2012.
  24. Kidman, A. (2012). Australian subscription music services compared. http://www.gizmodo.com.au/2012/06/australian-subscription-music-services-compared/. Accessed 19 July 2012.
  25. Kim, J. Y., Natter, M., & Spann, M. (2009). Pay what you want: A new participative pricing mechanism. Journal of Marketing, 73, 44–58.CrossRefGoogle Scholar
  26. Liebowitz, S. J. (2006). File sharing: Creative destruction or just plain destruction? The Journal of Law and Economics, 49, 1–28.CrossRefGoogle Scholar
  27. Lindvall, H. (2009). Behind the music: The real reason why the major labels love Spotify. http://www.guardian.co.uk/music/musicblog/2009/aug/17/major-labels-spotify. Accessed 23 May 2012.
  28. Lindvall, H. (2011). Why artists and indies shouldn’t write Spotify off – At least not yet. http://www.guardian.co.uk/technology/pda/2011/dec/08/artists-indies-spotify. Accessed 15 June 2012.
  29. Mahadevan, B. (2000). Business models for Internet-based e-commerce. California Management Review, 42, 55–69.CrossRefGoogle Scholar
  30. Michaels, S. (2011). Coldplay’s Mylo Xyloto won’t be streaming on Spotify. http://www.guardian.co.uk/music/2011/oct/27/coldplay-mylo-xyloto-spotify-streaming. Accessed 21 April 2012.
  31. Morrow, G. (2009). Radiohead’s managerial creativity. Convergence, 15(2), 161–176.CrossRefGoogle Scholar
  32. News.co.uk. (2007). 60 % bought in rainbows for free. http://www.inthenews.co.uk/entertainment/music/60-bought-in-rainbows-free-$1162792.htm. Accessed 12 June 2012.
  33. Nme.com. (2007). Radiohead’s ‘In Rainbows’ to be released on CD this year. http://www.nme.com/news/radiohead/32393. Accessed 12 June 2012.
  34. Oberholzer-Gee, F., & Strumpf, K. (2007). The effect of file sharing on record sales: An empirical analysis. Journal of Political Economy, 115, 1–42.CrossRefGoogle Scholar
  35. Oppenheimer, P. (2012). Drowning? The iTunes store now has 28 million songs …. http://www.digitalmusicnews.com/permalink/2012/120425itunes. Accessed 12 May 2012.
  36. Parker, S. (2011). LeWeb 2011: Sean Parker, Shervin Pishevar & Alexia Tsotsis [Video file]. www.youtube.com/watch?v=jxNhc64b_po. Accessed 00 June 2012.
  37. Peoples, G. (2011). Business matters: U.K. dance labels pull out of Spotify, Other Subscription Services. http://www.billboard.biz/bbbiz/industry/digital-and-mobile/business-matters-u-k-dance-labels-pull-out-1005542482.story#UKK6CO2pDtiDKEmy.99. Accessed 17 May 2012.
  38. Reuters. (2012). GEMA seeks YouTube deal after German copyright case. http://www.reuters.com/article/2012/04/22/youtube-germany-idUSL5E8FM2LP20120422. Accessed 1 May 2012.
  39. Roche, T. (2012). Music takes a back seat to fund-raising. http://mobile.nytimes.com/2012/06/24/opinion/sunday/music-takes-a-back-seat-to-fund-raising.xml. Accessed 27 June 2012.
  40. Sherwin, A. (2007). How much is radiohead’s online album worth? Nothing at all, say a third of fans. http://entertainment.timesonline.co.uk/tol/arts_and_entertainment/music/article2633798.ece. Accessed 20 May 2010.
  41. Smith, E., & Kane, Y. I. (2009). Apple changes tune on music pricing. http://online.wsj.com/article/SB123126062001057765.html. Accessed 12 Mar 2012.
  42. Stamp, C. (2011). Kids these days: Spotify, radiohead, and the devaluation of music. http://nsfreepress.com/story/music-devalued. Accessed 12 June 2012.
  43. SXSW. (2011). Digital music pricing strategies: What works? http://schedule.sxsw.com/2011/events/event_MP6550. Accessed 19 June 2012.
  44. Thomson, K., & Cook, J. (2012). Artist revenue streams. http://money.futureofmusic.org/40-revenue-streams/. Accessed 18 June 2012.
  45. Throsby, D. (1994). A work-preference model of artist behaviour. In A. Peacock & I. Rizzo (Eds.), Cultural economics and cultural policies (pp. 69–80). Boston: Kluwer.CrossRefGoogle Scholar
  46. Tschmuck, P. (2003). How creative are the creative industries? A case of the music industry. The Journal of Arts Management, Law, and Society, 33, 127–141.CrossRefGoogle Scholar
  47. Vision, M. (2011). Musiksverige Svenskarnas Internet Van Or Q2 2011. http://www.scribd.com/doc/66658516/Musiksverige-Svenskarnas-Internet-Van-Or-Q2-20111. Accessed 9 May 2012.
  48. Watt, R. (2009). An empirical analysis of the economics of copyright: How valid are the results of studies in developed countries for developing countries? The Economics of Intellectual Property. http://www.wipo.int/ip-development/en/economics/pdf/wo_1012_e_ch_3.pdf. Accessed 10 July 2012.
  49. Zeithaml, V. A. (1988). Consumer perceptions of price, quality, and value: A means-end model and synthesis of evidence. The Journal of Marketing, 52(3), 2–22.CrossRefGoogle Scholar
  50. Zentner, A. (2006). Measuring the effect of file sharing on music purchases. The Journal of Law and Economics, 49(1), 63–90.CrossRefGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  1. 1.Macquarie UniversitySydneyAustralia

Personalised recommendations