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.
Highlights
Recorded music was the first content business to be severely impacted by digital distribution (Lee et al, 2011; Moreau, 2013; Peitz and Waelbroeck, 2006), started by unauthorized peer-to-peer (P2P) networks (Beekhuyzen et al, 2015; Liebowitz, 2005), which distribute phonograms for free
Incumbents have faced three waves of disruptive innovations (Urbinati et al, 2019), and after facing a somber scenario and years of downturn, global music revenues started to show recovery since 2015, and digital music, which has steadily grown its share in global revenues since 2004, accounted for 54% of worldwide sales in 2016 (IFPI, 2017, 2018b)
On the digital distribution side, it is composed by content aggregators and digital outlets (Nakano and Fleury, 2017), with Apple Music and Spotify as the leading firms (Ipsos Connect, 2016)
Summary
Recorded music was the first content business to be severely impacted by digital distribution (Lee et al, 2011; Moreau, 2013; Peitz and Waelbroeck, 2006), started by unauthorized peer-to-peer (P2P) networks (Beekhuyzen et al, 2015; Liebowitz, 2005), which distribute phonograms for free. Industry representatives asserted that the dominance of streaming over download is not just a matter of technology choice but a shift in the perceived value by users: file download is related to ownership, while streaming is related to access (IFPI, 2016). It is not just a matter of technology, but an association to the digital music outlets' business models (BM) (Chesbrough and Rosenbloom, 2002; Chi Chang, 2006) about how they use technology to deliver value to users
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