Digital transformation of music aggregation and distribution companies: The case of Russia

Abstract

Currently distributors ensure the operation of the whole value chain in the music industry, while most researchers focus on technological, streaming and copyright impact in light of digitalization. This paper tries to understand the influence of digitalization on business models and the role of music distributors in a value chain. Research identifies operational processes that were changed due to digitalization, barriers that arose, and actions taken to overcome them on the corporate level. Through retrospective case study based on an interview with the CEO, the experience of the Russian music distribution company Broma16 is analyzed. This paper describes the goals of business model transformation, drivers, performed activities and their results. The research derives four consequences of digitalization for the firm’s business model and role in a value chain: the firm can be considered as a technological company rather than a music company. Distribution relies on digital instruments for management and marketing. Local intermediaries get more opportunities to enter foreign markets, but they have to perform innovations in these markets. Music distributors operate at the complicated intersection of copyright and technological aspects. The research applies a general theoretical framework for the study of digital transformation of business models. A similar approach can be used to do research on companies in music and other creative industries, and to conduct workshops with industry representatives. The paper provides value for practitioners in emerging music markets, for example, Brazil, Argentina and Mexico, due to the presentation of management practices towards digitalization and the consequences of transformation for the distribution role.