Transcript Online Music Industry

Online Music Industry
311: Fall 2003
(c) Jakob Iversen, 2003
Background/History
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2000: MP3 format released
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Napster
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No central file list – cannot be held liable for illegal use when there’s
also legal uses – plus they’re located offshore
PressPlay
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Files on people’s own computers
Central file list – got sued and shut down
Kazaa
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Lots of web sites made files available
Easy to shut down for record industry
Legal downloads - $10/month no burning ($1 per song for burning)
iTunes
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Legal downloads - $1 per song
(c) Jakob Iversen, 2003
P2P vs. Network
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Web site
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Web owner makes files
available
User types in web address,
downloads file from web
server
Centralized
P2P
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Users make part of their
hard disk available to other
users
Some systems have central
list of all files
Other systems propagate
searches among clients
Files downloaded directly
from other client
Decentralized
(c) Jakob Iversen, 2003
Porter’s Value Chain
From Fundamentals of Information Systems, Ralph Stair and George Reynolds, 2003, p. 20.
(c) Jakob Iversen, 2003
Porter’s Value Chain for online
music
From Fundamentals of Information Systems, Ralph Stair and George Reynolds, 2003, p. 20.
(c) Jakob Iversen, 2003
Problems for the Music Industry
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Most investments made upstream, but revenue
comes downstream
Kazaa: 240 million users, 890 million files traded
between 4.3 million users.
31% drop in CD sales since mid 2000
An estimated 40 million Americans have traded
songs online
Ownership of CD burners has risen threefold
since 1999
40% of music consumers own CD burners
(c) Jakob Iversen, 2003
Recent Events
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RIAA sued 261 users of KaZaa
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Including a 12-year old honors student living
in subsidized housing in NY
UMG slashed prices to $13
Many new legal download sites announced
(Sony, RealNetworks, Microsoft)
(c) Jakob Iversen, 2003
Opportunities
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New media, new markets
Closer ties between artists and users
Better way to discover other music you
may like
The movie industry fares a lot better!
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Movies are cheap to buy, lots of extras on
DVDs, decent download alternative on the
way
(c) Jakob Iversen, 2003
Questions
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Is filesharing legal? Ethical? A Problem?
Have you used filesharing?
Would you use filesharing in the future?
What should the music industry do now?
(c) Jakob Iversen, 2003