Are service-based business models of the video game industry blueprints for the music industry?

The internet, peer-to-peer technology and mobile devices are radically changing markets for digital media such as recorded music. Incumbent companies in these industries have severe difficulties in reacting to these changes and finding effective business models. The fundamental challenge is how to capture value from delivering digital music files which users expect to download for free. It is the consumer's capability to handle digital content that opens up possibilities for new business models where consumers are active partners helping to co-create value along with companies. Compared to the music industry, the video game industry was more successful in adapting its business models. By conducting an exploratory study among recently founded video game startups and two case studies of music-technology startups, whether and how the video game industry is a vital source from which to draw analogies for the music industry will be analysed in this paper.

[1]  J. MichelNorbert.  The Impact of Digital File Sharing on the Music Industry: An Empirical Analysis , 2006 .

[2]  S. Liebowitz.  File Sharing: Creative Destruction or Just Plain Destruction?* , 2006, The Journal of Law and Economics.

[3]  John Williamson,et al.  Rethinking the music industry , 2007, Popular Music.

[4]  Oliver Gassmann,et al.  Opening Up the Solution Space: The Role of Analogical Thinking for Breakthrough Product Innovation , 2008 .

[5]  Mark B. Sandler,et al.  Interactive Music Applications and Standards , 2010, CMMR.

[6]  Stephen L. Vargo,et al.  Evolving to a New Dominant Logic for Marketing , 2004 .

[7]  Edward De Bono,et al.  Lateral Thinking for Management , 1971 .

[8]  Yves Pigneur,et al.  Business Model Generation: A handbook for visionaries, game changers and challengers , 2010 .

[9]  Scott E. Caplan,et al.  Who plays, how much, and why? Debunking the stereotypical gamer profile , 2008, J. Comput. Mediat. Commun..

[10]  H. Chesbrough.  Business Model Innovation: Opportunities and Barriers , 2010 .

[11]  J. Schumpeter.  The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle , 1934 .

[12]  Daniel Kindström.  Towards a service-based business model – Key aspects for future competitive advantage , 2010 .

[13]  D. Teece.  Business Models, Business Strategy and Innovation , 2010 .

[14]  Perry R. Cook,et al.  ChucK: A Concurrent, On-the-fly, Audio Programming Language , 2003, ICMC.

[15]  Sudip Bhattacharjee,et al.  Digital music and online sharing: software piracy 2.0? , 2003, CACM.

[16]  Saul J. Berman,et al.  New business models for emerging media and entertainment revenue opportunities , 2011 .

[17]  D. Dahl,et al.  The Influence and Value of Analogical Thinking during New Product Ideation , 2002 .

[18]  Jesper B. Sørensen,et al.  Aging, Obsolescence, and Organizational Innovation , 2000 .

[19]  Stephen L. Vargo,et al.  On value and value co-creation: A service systems and service logic perspective , 2008 .

[20]  C. Grönroos.  Value co-creation in service logic: A critical analysis , 2011 .

[21]  Felix Oberholzer-Gee,et al.  The Effect of File Sharing on Record Sales: An Empirical Analysis , 2007, Journal of Political Economy.

[22]  Alejandro Zentner,et al.  Online Sales, Internet Use, File Sharing, and the Decline of Retail Music Specialty Stores , 2008, Inf. Econ. Policy.

[23]  P. Reay,et al.  An empirical evaluation of management and operational capabilities for innovation via co‐creation , 2012 .

[24]  Alexia Gaudeul,et al.  Software marketing on the Internet: the use of samples and repositories , 2008 .

[25]  Rachel S. Cobcroft,et al.  Consumer Co‐creation and Situated Creativity , 2008 .

[26]  Patrick Waelbroeck,et al.  Piracy of digital products: A critical review of the theoretical literature , 2006, Inf. Econ. Policy.

[27]  Dmitri Williams,et al.  Structure and Competition in the U.S. Home Video Game Industry , 2002 .

[28]  Jonathan Berger,et al.  Smule = Sonic Media: An Intersection of the Mobile, Musical, and Social , 2009, ICMC.

[29]  J. Schumpeter,et al.  Business Cycles: A Theoretical, Historical, and Statistical Analysis of the Capitalist Process , 1940 .

[30]  Kiho Yoon,et al.  On the Impact of Digital Music Distribution , 2009 .

[31]  Olli Sotamaa,et al.  Digital distribution of games: the players' perspective , 2010, Future Play.

[32]  E. Fleisch,et al.  Overcoming the Service Paradox in Manufacturing Companies , 2005 .

[33]  O. Gassmann,et al.  Creative Imitation: Exploring the Case of Cross-Industry Innovation , 2010 .

[34]  Sven Jöckel,et al.  Participatory Media Culture and Digital Online Distribution—Reconfiguring the Value Chain in the Computer Game Industry , 2008 .

[35]  Jens Leth Hougaard,et al.  Selling digital music: business models for public goods , 2009 .

[36]  Karl Reiner Lang,et al.  Designing Markets for Co-Production of Digital Culture Goods , 2009, Decis. Support Syst..

[37]  Jeffery Funk,et al.  Components, systems and discontinuities: The case of magnetic recording and playback equipment , 2009 .

[38]  A. Molina,et al.  Collaborative networked organisations and customer communities: value co-creation and co-innovation in the networking era , 2011 .

[39]  K. Pauwels,et al.  Effects of Word-of-Mouth versus Traditional Marketing: Findings from an Internet Social Networking Site , 2009 .

[40]  K. Eisenhardt.  Building theories from case study research , 1989, STUDI ORGANIZZATIVI.

[41]  Dorothy Leonard-Barton,et al.  A Dual Methodology for Case Studies: Synergistic Use of a Longitudinal Single Site with Replicated Multiple Sites , 1990 .

[42]  Robert J. Kauffman,et al.  The Move to Artist-Led On-Line Music Distribution: A Theory-Based Assessment and Prospects for Structural Changes in the Digital Music Market , 2006, Int. J. Electron. Commer..

[43]  Sabine Brunswicker,et al.  CROSSING HORIZONS: LEVERAGING CROSS-INDUSTRY INNOVATION SEARCH IN THE FRONT-END OF THE INNOVATION PROCESS , 2010 .

[44]  Antonio Dávila,et al.  Venture capital financing and the growth of startup firms , 2003 .

[45]  Y. Pigneur,et al.  Business Model Generation , 2010 .