Current Online Business Models Related with the Music Industry (Essay Sample)

CURRENT ONLINE BUSINESS MODELS RELATED WITH THE MUSIC INDUSTRY
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Current Online Business Models Related with the Music Industry
Revenues in the international music sector have shrunk from the beginning of 21st Century. Companies in this industry are shifting from retailing music in digital setups which allows the introduction to various business models. A clear link exists between revenue decline and digitalization in the music industry, with the most mutual clarification being the responsibility sharing of the file, usually called piracy. The piracy occurrences may be a kind of purchase replacement, where music customers replace illegal downloads for authorized purchase. Extensive accessibility of broadband online facilitates the rise of sharing of files. Since physical distance is basically irrelevant for online based file sharing, people from all over the globe can take part. To counteract unlawful file sharing, certain republics have launched stronger law. Analysis indicates an association between stronger law safeguarding Intellectual Property Rights and increasing proceeds.
Bearing in mind the emergence of the P2P networks and the emergence free music digital files, it appears sensible to suppose that these new technological tools satisfy customer demands that were unattained before. At its stature, Napster had about 75 million listed users downloading over 10, 000 songs for every second. The prizes of becoming an international distributor comprise the costs of a computer, electricity, and internet access (Fisher, 2014). Putting separately the cost, or no cost, difficulty, these ideas brought to the marketplace a new form of freedom. Customers can escape from physical CDs and from an absolute and extraordinary standard of playing system. Digital files are playable on different devices like wireless phone, PC, an MP3 player, or a PDA. In contrast, all the trials to safeguard copyright result to limiting access, and current rights, for example, making copies of individual use (Bourreau, 2011).
Unlicensed music download was projected to increase in 201, with 8.45 billion audio files and later, reduce because of the entrance in the marketplace of genuine music services online. Consistent with Europe media, to be prosperous, the models ought to meet the standard of portability on different devices, accessibility from the 5-majors and from the autonomous labels, burn it and copy it, ownership for the client who is able to mix it, selectiveness with exceptional services and content that distinguish from unlicensed downloads, and digital controlling enabling music share. The following are renowned new music models that might represent novel methods of earning capital along with digital distribution of digital music (Johnson, 2014).
The Ransom Model
The model is derived from what Stephen Kind performed with his final story. Individuals who were downloading his story compensated him $1, generating a profit of greater than $400,000. He publicized that if he failed to get payment for a minimum of 75%, he would not finish the story. As stated by Ku (2014), by a similar way, musicians could entertain the people with free of charge samples but refuse to release a complete album, or withhold any innovative works, or reject to embark on trips until enough payment has been obtained (Bourreau, 2011).
The tipping model
With online sites like Snarfizilla and Espra, when consumers download music, they are offered the chance to tip the artist. As said by Ku (2014), if only 1% of clients tipped per download, it would result to $500,000 in income for every song (Fox, 2013).
The Promotion Model
During 2012, Smashing Pumpkins, the rock band, utilized Napster for distributing songs on the internet with no traditional promotion. T-shirt sales, ticket sales, and commercial promotions are responsibilities of an artist's fame. Online could be viewed as valued instrument for improving popularity by giving its music free of charge and thus increasing the earnings due to popularity. For instance, the artist Janis Jan provided free songs download at her personal site leading to a 300% increase in merchandise sales (Fisher, 2014).


Another type of promotional model is the one of PromOH3, which distributes tracks to a mailing listing of followers. Every e-mail is sent two times. This service is free to tastemakers and DJs, but it appears that it could change into membership-having-password mode (Fox, 2013).
The Customer Data Model
Files may be programmed to “phone home” each period they are used (Bourreau, 2011). The data can be used to the labels straightforward investments by artists to evaluate customer favorites. This is even more important if you reflect that 30% of US downloaders have seen their musical preferences widened by downloading and showed that their favorite genre of songs has evolved. DJintheMix.com likewise charges for providing a response to labels. It is a feedback and promotion tool for DJ community and labels. Labels are charged range from $250-$600 for each track for getting a response in 48 hours rather than two months (Johnson, 2014).
The Preferred Placement Model
The lower than 1$ per track in total, Altnet provides a safe content together with a sponsorship-bound search engine device. Firms pay for favorite placement in P2P, like search results. They are betting on the reality that consumers will pay for very high-quality content even in case all music will still be obtainable for downloads like free MP3s. This model can be applied to a pre-radio advertising so as to create awareness. Music City managed by StreamCast Networks provides similarly encrypted files through the Gnutella network (Fox, 2013). It required concentration on self-determining artists enabling musicians to establish the content and get 70% of the proceeds. Taking into account this music business model, recording firms as traditional physical retailer and marketing machines, either internet retailer or brick-and-mortar, can be sidestepped (Delaney, 2012). It is illustrated in figure 4 below.


The Statutory Levy Model
An option to keep a financial inducement for building could be the obligation of a statutory levy, for example, “a tax on trades of a variety of services and goodies associated with the copying and distribution of digital creations that would be applied to finance production (Bourreau, 2011).” Software and computer stores in America made over $24 billion in sales and TV, radio and electronic stores got $ 41.5 billion. If a 2% tax had been charged, it would have generated roughly $1.3 billion to be allocated to the artistes or $48,000 for each new release. This sum refers to the estimated earnings for the whole downloading market in marketing during 2012. Research on the bulk of the downloaded audio files varies. Dependable approximates demonstrates that P2P services include over 50 million customers. Imposing them at the charge of $2 monthly would lead to increased income of almost $2 billion in agreement with Music Week (Fisher, 2014).
The Space/Time-Shifting Model
MP3.com operates the My.MP3 prompt-listening service, wherein copyright material is provided as wanted stream. MP3.com duplicated numerous CDs to its website demanding every user first to confirm that he/she had already bought the wanted CD. Once proved, the client is permitted to obtain the version kept on MP3.com website from whichever online access point, by avoiding repeating the verification procedure (Johnson, 2014).
In August 2011, a group of 50 music producers and Copyright.net filed a $25 million copyright violation case against MP3.com. On the other hand, MP3.com similarly maintained that it was a "justified use" assisting consumers listen to CDs they previously purchased at a diverse region. MP3.com claimed that it’s “space shifting” was titled to identical “fair use” defense since the “time shifting” within the Sony case, for example, recording a TV program on a VCR for watching at a future date (Fox, 2013). The court disallowed this and this defense and commanded MP3 to compensate $25,000 per copied CD. MP3.com then settled with 4 of labels by assenting to payments amounting $110 million (Deyoung, 2013).
Integrated Business Models
Users were most focused on a payment service that likewise rolls discounts headed for performance tickets, merchandise, and events. Users are on the lookout for the most co-efficient experience on the internet. Increasingly companies are exploring the potential applications of a multimedia procuring environment, particularly the introduction of digital kiosks enabling clients to hear samples and downloaded digital songs for a payment. Liquidaudio.com tried to persuade retail stores establish downloaded shops. However, the uncertainty was that the kiosk and retailers cost more than $ 100, 000 each (Delaney, 2012).
The Partnership Model
In accordance with Bazalgette, Music Choice CEO, "music will probably must be bundled along with other subscription founded content, for instance, via the corporation with OD2, Times readers managed to download 8 of Peter Gabriel's songs prior to the formal release of the novel album." The reader was forced to use a PIN number incorporated within the newspaper and register through a website. Corporations can be created between Internet players. For instance, SpinArt staffers forwarded unexpected users who copied the tracks and offered them gift licenses to the e-tailer Insound.com (Deyoung, 2013).
So as to create its brand on the internet, Music.com has introduced an offline magazine with producer Milor Entertainments. The magazine would retail at $5 for a locked content CD. This Disc space secured back to the...