Disintermediation and re-intermediation in the music business : the effect of multimedia technologies and e-commerce
Advances in e-commerce and multimedia technologies are becoming inextricably more closer related to society and business. Theoretical insight into these new areas is scarce and that is the gap that this thesis aims to cover. The study uses the music industry as a test-bed for the propositions developed. The literature review summarises and criticises the theories on E-commerce which centre around the "transaction cost economics" branch of management literature. Other theories used to develop the frameworks include "network externalities" and "increasing returns" from economics, "value chain" from industrial organisation and theories on "search costs" and "quality uncertainty" from the economics of information. Special mention is given to the literature on the music industry dealing with the production and commercialisation of music, the resulting and changing structure of the industry, as well as various research approaches to understanding consumer involvement in the industry (cultural/subcultural analyses of user behaviour). The methodology followed is qualitative in nature and concentrates on the case study method. Besides the secondary data, primary data is collected via interviews with key informants in the music industry. Executives in other relevant to e-commerce/multimedia industry firms such as telcos and software firms are also interviewed to give a broader perspective to the study. The data are analysed using the pattern matching method. The data analysis process can be summarised as follows: A primer is offered on the recording and music industry which serves to develop the research questions and propositions. This stemmed from the pilot research and coupled with the theory allows the formation of patterns that are expected to match the data if the theory stands. Three patterns emerged from the literature review: Pattern 1: Labels sell music content directly to the consumer Pattern 2: Artists sell content directly to the consumer. Pattern 3: E-commerce between content owners and consumers will be facilitated by intermediaries. A case study is then built detailing the events in the music industry concerning Music on Demand during the period 1995-1998. The case study is "partitioned" in chapters detailing each of the technological players examined. Other significant events relevant to the study, are included in vignettes in the main body of the analysis. The analysis matches the data in the case studies with the relevant patterns and incorporates interview quotes. Concluding the thesis offers some explanations for the failure of matching theory with data. It also goes one step further by developing a new value system and patterns that can be used to guide further academic research on the subject. The chapter ends with the development and analysis of four scenarios, proposing their value for practitioners such as managers and investors seeking insight into the future of the music industry in a multimedia environment, as well as policy makers interested in the relationship between creativity and economic technological factors. The main conclusion is that concentration of copyright in the hands of the few is hindering rather than promoting new multimedia and e-commerce industries.