Business Model Design Laboratory: The Music Industry

While moving homes has dark sides it also has bright sides: In a huge pile of unread and half-read magazines (who doesn't know that phenomena ;-) I stumbled across the September issue of Wired. The cover story was about the "rebirth of music" and triggered a lot of ideas in my mind.

First of all, I realized at what point the music industry is currently a huge business model design laboratory. It's not new that old and new business models are clashing in this domain, but the richness of all these new business models is astonishing. I believe it might be the industry with the most different types of business models competing against each other these days.

Sedondly, while reading I understood that other industries MUST follow the evolution of business models in the music industry if they want to be prepared for business model innovation in their own industry. I'm not only talking about intellectual property rights (IPRs), peer-to-peer (P2P) music sharing platforms and lessons for the film industry. I'm talking about genuine insights into business model innovation.

Finally, The music industry transformation is giving us lessons about business model innovation in many different building blocks, such as distribution channels (mobile phones, P2P, USB-sticks, TV series, MySpace, game consoles, ...), service & product innovation (free remixing platforms, ringtones, communities of interest, recommendation engines & music DNA...), revenue streams (various forms of advertising, live-streamed concerts, ...) and so on.

One of my favorite business model innovations picked from the several Wired stories is the one where movie theaters offer live streaming of sold-out concerts on their big screens (Big-Screen Bands).

With help from National CineMedia, your local cineplex can show live footage from a sold-out concert in New York City. Sure, you may not get away with smoking a joint and sipping a flask, but for $15, you’ll get comfy stadium seating and a view of every wrinkle on the aging rocker’s face.

WOW - this simple innovation involves new value added services, new distribution channels, reducing fixed costs, partnerships and new revenue streams. My advice: go out and learn about the business model innovations taking place in the laboratory of the music industry today - then apply the lessons to your own field.

Merry Christmas, Alex

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