Digital music, online outlets and their business models

Abstract

Goal: to describe the current configuration of digital music distribution, and to give an overview of the business practices adopted by digital music outlets. Design/Methodology/Approach: Longitudinal study using descriptive statistics and cluster analysis on two datasets collected in 2011 and 2018. Results: Three clusters were identified in 2011: paid download, music streaming, and video streaming. Data shows that, in 2018, although streaming was the predominant technical mode, many outlets still applied the paid download business model (BM), and that cluster presented the highest survival rate. Large outlets used streaming, but the specialized ones still adhered to download, and catalog specialization and consumer behavior are the explaining factors. Limitations of the investigation: Data was gathered from 70 digital outlets operating in two major digital markets, USA and UK, but some large ones, such as Korea and Japan, were not analyzed. Practical implications: While a dominant technology prevails on mass markets, old technologies can still be adopted in niche markets, due to market limitations and consumer behavior. Thus, even in concentrated markets, small competitors can benefit from exploring segments with special needs that are not addressed by large players. Originality/Value: There are few quantitative studies and longitudinal analyses on digital music business models.