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Alexander Osterwalder AlexOsterwalder.com Twitter: business_design Experimenting with Business Models in the Music Industry (part II)

Business model music industry

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Les business model dans l'industrie musicale : comment gérer les droits d'auteur et permettre à chacun de toucher sa juste rétribution. Le succès des smartphones et de l'iphone avec le média internet et les possibilités d'écoutes musicales.

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Page 1: Business model music industry

Alexander OsterwalderAlexOsterwalder.com

Twitter: business_design

Experimenting with Business Models in the Music Industry (part II)

Page 2: Business model music industry

the following slides are a very brief excerpt of a 60 minute keynote I gave at Eurosonic Noorderslag, Europeʼs most

important live music industry conference

Page 3: Business model music industry

todayʼs music industry is ...

Page 4: Business model music industry

a business model playground ..

Page 5: Business model music industry

a business model playground ..

Page 6: Business model music industry

limitations of the old record company ...

Page 7: Business model music industry

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

The Old Record Label Model

hits & wannabe

hitsmass

market

Retailers TV

Radio

tours &

concertsmerchandising

huge sales from few

artists’ albums

portfolio of

star artists

detecting & building talent

distribution

channels

marketing &

promotion

marketing &

promotion

royalty paymentssubsidizing

unsuccessful artists

copyrighted content

manufacturers

“new” digital channels

Page 8: Business model music industry

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

The Old Record Label Model

hits & wannabe

hitsmass

market

Retailers TV

Radio

tours &

concertsmerchandising

huge sales from few

artists’ albums

portfolio of

star artists

detecting & building talent

distribution

channels

marketing &

promotion

marketing &

promotion

royalty paymentssubsidizing

unsuccessful artists

copyrighted content

manufacturers

“new” digital channels

distribution is a commodity, attention is

the new scarcity

social networks are what drive music sales

unbundling of albums into single

songs (iTunes)price of songs

tending towards ZERO

customer needs are not being satisfied

itʼs all about hits AND the Long

Tail of music

piracy

shift of the balance of power

towards artists

bloated cost structure (talent

discovery/marketing)

talent will be discovered by

other mechanisms

Page 9: Business model music industry

twonewmodels

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example

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OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

Business Model

free streaming

music

Spotify.com

free

young connected music fans

software application

Page 24: Business model music industry

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

Business Model

free streaming

music

Spotify.com

free

young connected music fans

software application

Page 25: Business model music industry

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

Business Model

free streaming

music

Spotify.com

recordlabels

licensing

agreements

free

young connected music fans

software application

licensing fees (for each song

played)$$$$$$

Page 26: Business model music industry

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

Business Model

free streaming

music

Spotify.com

platform development & maintenance

recordlabels

licensing

agreements

free

young connected music fans

software & network engineers

platform,

software &

brand

software application

licensing fees (for each song

played)

plus even more work

Page 27: Business model music industry

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

Business Model

free streaming

music

Spotify.com

platform development & maintenance

recordlabels

licensing

agreements

free

young connected music fans

software & network engineers

platform,

software &

brand

software application

licensing fees (for each song

played)

bandwidth

costs salaries engineers

plus even more costs

Page 28: Business model music industry

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

Business Model

free streaming

music

Spotify.com

platform development & maintenance

recordlabels

licensing

agreements

free

young connected music fans

software & network engineers

automated online

relationship

platform,

software &

brand

software application

advertisers

licensing fees (for each song

played)

bandwidth

costs salaries engineers

mood-based advertising

ad fees

revenues for free services

Page 29: Business model music industry

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

Business Model

Spotify.com

platform development & maintenance

recordlabels

licensing

agreements

young connected music fans

software & network engineers

automated online

relationship

platform,

software &

brand

software application

mobile

application

licensing fees (for each song

played)

bandwidth

costs salaries engineers

premium subscription

subscription fee

revenues from premium

subscriptions

Page 30: Business model music industry

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

Business Model

Spotify.com

platform development & maintenance

recordlabels

licensing

agreements

young connected music fans

software & network engineers

automated online

relationship

platform,

software &

brand

software application

mobile

application

licensing fees (for each song

played)

bandwidth

costs salaries engineers

premium subscription

subscription fee

pay-per-usefee

day pass

revenues from occasional

uses

Page 31: Business model music industry

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

Business Model

free streaming

music

Spotify.com

platform development & maintenance

recordlabels

licensing

agreements

free

young connected music fans

software & network engineers

automated online

relationship

platform,

software &

brand

software application

mobile

application

advertisers

licensing fees (for each song

played)

bandwidth

costs salaries engineers

mood-based advertising

premium subscription

subscription fee

pay-per-usefee

day pass

ad fees

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we need to constantly rethink ourmodels - systematically ...

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BusinessModelGeneration.com

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THANK YOU!www.businessmodelgeneration.com

www.alexosterwalder.com www.businessmodelalchemist.com

Twitter: business_design