THE DEVELOPMENT OF THE MUSIC

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THE DEVELOPMENT OF THE MUSIC
INDUSTRY

-

HOW MEDIA PLAYERS
HAVE MET THESE DEMANDS






Report submitted by

Group P

in part fulfilment of the requirements for the

eBusiness Module

School of Management

University of Surrey


January 2011


2




1.0

Table of
Contents



1.0 Table of Contents









2

2.0 List of Tables and Figures








3


3.0 List of Abbreviations








4

4.0 Introduction









5
-
6

5.0 Key Players









7
-
9

5.1

Windows Media Player







7

5.2
WinAMP









7

5.3 Napster









7

5.4
LimeWire









7

5.5 iTunes









8

5.6 Spotify









8

5.7 Features Table








9

6.0 Key Drivers









10
-
22

6.1
Convenience








10
-
12

6.2
Cost









13
-
14

6.3
Peer
to

Peer

Network Capabilities






15
-
17

6.4
Compatibility with Peripherals






18
-
20

6.5
Streaming









21
-
22

7.0 PEST Analysis









23
-
24

7.1

POLITICAL Aspects







23

7.2
ECONOMIC Aspects







23

7.3
SOCIAL Aspects








24

7.4
TECHNOLOGICAL Aspect
s






24

8.0 Conclusion










25

9.0 References










26
-
27







3


2.0

List of Tables and Figures



Table

1.

Mintel 2009
Music
Sales Figures

Figure
1
.

Key Media Player
L
ogos

Table 2.

Feature Capabilities for each
K
ey
P
layer.

Table 3.

A
C
omparison of
P
hysical and
D
igital
A
lbums between 2000 and 2009.

Table 4.

A
C
omparison of
P
hysical and
D
igital
S
ingles between 2000 and 2009.

Figure
2
.

Convenience: Media Player R
anking.

Table 5.

Results of Q
uestionnaire
: How Much Customers are W
illing t
o P
ay

Figure
3
.

Diagram showing Examples of a P2P Network and Client Server N
etwork

Figure
4
.

Napster P2P Network

Figure
5
.

Peer to Peer Network Capabilities
: Media Player Ranking.

Table

6:
Media Players Supporting File Formats and Converting Abilities.

Figure
6
.

Compatibility with Peripherals: Media Player Ranking.


Figure
7
.

Streaming
: Media Player R
anking.

Figure
8
.

Overall Media Player R
anking.

















4


3.0

List of Abbreviations


BBC


British Broadcasting Corporation


BPI
-

British
Phonograph

Industry


CD


Compact Disc


Codec


Compression Decompression


DRM


Data
Rights Management


FM


Frequency Modulation


HD


High Definition


IFPI


International Federation of Phonographic Industry


LAN


Local Area Network


MPEG


Moving picture Experts Group



P2P


Peer
-
to

Peer


PC


Personal Computer


RIAA


Recording
Industry Association of America


RPM


Revolutions Per Minute


WMP


Windows Media Player























5


4.0

Introduction


The
m
usic industry is one of the
worlds
most fast paced and developing markets
,
surviv
ing
through the selling of compositio
ns,
recordings and performances, with

both
a
growth and
decline in profitability
seen
in recent years (IFPI
,

2010)
.

T
his industry is made up of many
individuals, from musicians who compose and perform music
,
to the companies and
professionals who create, broad
cast and sell
the
record
ings
. The focus of this essay will be
towards the distribution and playing of music.

Looking at the history and its progression since the years of vinyls, it is clear to see that the way
in which music is accessed has changed dramat
ically, along with the manner in which it is
purchased. In the 1940’s music was bought as vinyls but today, as well as record shops up and
down the country, any song can be physically purchased or instantly downloaded, therefore
moving
music
into the digit
al era.

Music storage began through the playing of gramophone records made of shellac compounds.
However with

a shortage of this material in

World War II , the alternative vinyl became the new
material on which all future gramophone records would be made;
the 33
-
1/3
revolutions
p
er
m
inute (rpm)

-

12 inch recording and the 45 rpm
-

7 inch recording were introduced in 1948.

In addition to this distribution of music, the Top 40 was introuced in 1949. This concept has
remained strong and can still be found tod
ay in our modern day charts. In 1955
,

the B
ritish
B
roadcasting
C
orporation (BBC)

began broadc
asting in
Freuquency Modulation or
FM for the
first time
.
Following this i
n 1958
,

the first pirate radio stations started broadcasting
,
claiming a
staggering 32
million visitors
. However,

by 1967
,

the BBC had launched Radio 1
,

using

the
same
forma
t
, and the pirate radio stations were forced to withdraw from the airwaves
.


The first major advancement of vinyl took hold for many years until the release of the compac
t
casette tape by Philips in 1964.
Th
is
was offered to the market with free licenses worldwide, an
important factor in its growth
.

These
cassettes made up of magnetic tape became the new way
to listen to music. However, by 2001, they only accounted for 4%
of all music sold globally

(BBC
News, 2005)
.

In 1979
,

Sony introduced the Walkman
, a product that enabled music to be played whilst on the
move.

This invention took personal music listening out of the home and onto the streets.
Portability was

both

desired and required
by

consumers,
resulting in its current

form of MP3
players.

The next
biggest

revolution in music technology was the compact disc
or CD
. Originally
introduced in 1982 by Philips and Sony, the new format offered crystal clear sound

qualit
y.
The
introduction of the new media was slow to take off at first
,

as many had huge collections of vinyl
recordings and were reluctant to change. In addition to this
,

the audiophiles claimed that the
crystal clear sound lost "
the soul"
of the origi
nal recordings. These factors
,

combined with an
inevitable price rise of the new discs
,

meant that it wasn't until 1988 that the CD became the
dominant media for recorded music.

While the CD remained the dominant force in 1990
,

according to sales numbers,

people were
still buying vinyl records

and even

today, it
still
survives in niche areas of music
Following the
CD, t
he MiniDisc format
was introduced
prov
ing

popular with some

but never really became the
next music
trend
.

Towards the end of the 1990’s
,
the I
nternet was becoming more

and more heavily adopted by
the public, and therefore the music industry began to focus on the more technical ways of
distributing and selling.

F
urther developments

were made

in
improving

the

speed
s of delivering
music
across

the
I
nternet,
which helped aid the
continu
ing
success

throughout the decade
.

A
long with each new development that was seen to change the music industry
,

came the
question of piracy, especially when music became readibly available online.

In the early year
s of
the decade, the record industry took aggressive action against illegal file sharing.
However, t
he
6


popularity of
I
nternet music distribution
still

increased and in 2009
,

according to

the

International
Federation of the Phonographic Industry

(
IFPI
)
,

more than a quarter of all recorded music
industry revenues worldwide
were

coming from

online c
hannels.

Due to this change
,

consumers
spent far less money

on recorded music

in the 21
st

century

compared to previous years
, as can
be seen in Table 1
.
This al
so supported by
Mintel
(
2009
)
, who

reported that digital album sales
increased by

475
%, and digital singles by
182
%

since 2006.

Despite th
e

constant development within this industry
, the market as a whole is declining.

Table

1
.

Mintel 2009 Music Sales
Figures


Year (in £m)

%
change

(‘04
-
‘09)


2004

2005

2006

2007

2008

2009
(est)

Pre
-
recorded music
market**


1,949

1,847

1,634

1,392

1,309

1,300

-
33.3


Music
concerts/festivals

1,342

1,460

1,560

1,868

2,035

2,204

+64.2











Source:

Mintel (2009)


Pre
-
recorded music sales, including downloads, have fallen by around a third over the past five
years.
According to
the Britsih Phonograph Industry (
BPI
)
,

t
he average cost of an album
dropped by 27% between 2000 and 2008 and
so far
digital s
ales have not managed to
compensate for this loss of revenue. However, it is difficult to determine whether this decline is
caused by this reduction on price or volume.
Along with this
,
the thrill of live performance has
acquired new significance, boosted
by the growth of festivals
.
As the music industry enter
s

a
new phase, gigs are seen as a growing source of revenue, alongside other
additional

sources
such as merchandise. For online music services operating with a subscription or ‘freemium’
model, there i
s great scope for packaging concert tickets along with other products and
exclusive offers.


Looking at the music industry of today, there are now several mediums in which to source,
buy
and listen to music. The most common today is through the use of downloadable media players
from which users can access music and choose to
purchase

or stream depending on
it’s
required use
.

Business and consumer spending on music
-
related software and hard
ware has
increased dramatically over the last decade, providing a valuable new income
-
stream for
technology companies.

This
report

identifies
key players
within the industry and the ways in
which they compete
to gain market share

through increased distribu
tion
.



















7


5.0

Key Players

Like
most technology, media players are in great competition
,
with many to be found in the
market
. According to the IFPI 2010 report, the number of licensed music services available on
the
I
nternet has grown from
less than 50 in 2003 to around 400 in 2009 (Mintel, 2009). It is
difficult to identify the “best” media player
,

but based on

their influence
within
this software
market
; Windows Media Player

(WMP)
,
WinAMP,
Napster,
LimeWire, iTunes and
Spotify have
been id
entified as key players within this industry
, as shown below in Figure 1.





WMP WinAMP Napster LimeWire iTunes


Spotify


Figure 1.

Key Med
ia Player L
ogos



5.1

Windows Media Player

Windows Media
Player

was the first computer software that was developed
to handle these digitised music files in 1991. WMP is the default software on
every Windows Personal Computer

and has
advanced continuously since its
introduction
,
reach
ing
version Windows Media Pla
yer 12
,

launched 22
nd

June, 2009

(Microsoft, 2010)
. WMP has always been praised for its ability to to rip and
copy music from discs and burn recordable audio or data discs. Not only can it’s latest
version burn and rip CD’s, it also has the

ability to

c
reate
p
laylists from the users music
selection
which
can be transferred to peripherals
,

and stream music content to another
named computer using Windows Live ID.


5.2

WinAMP

Win
A
MP
,
released on 21
st

April, 1997
was next to follow
and interestingly
integrated its CD functionality into one software before WMP.
WinAMP

has
now reached version 5.6.01
,

launched 7
th

December, 2010

(AOL Music
2010)
. Its capabilities are vast including: compatabil
e

with
more

file types

than any other media

player
, personalisable skins, embedded radio stations and iPod
and Android peripheral functions. Its well developed brand name, and peripheral
competition against iTunes, gave
WinAMP

a place in the top 6.


5.3

Napster

Napster was originally launched in June
1999 as the first innovative
software that u
tilised a peer
-
to
-
peer

(P2P)

network function

(see section
6.3 for more details)
. Consumers could download files from other peers
through a search engine specif
ing

the minimum server ping (response)
times, as well as MP3 bitrates and frequency.

However, when an
unreleased version of
Metallica's "I Disappear" started circulating around the network

in 2001
, Napster was
investigated and shut down following an injunctio
n
. According to Mintel
,

Napster

was
the leading online digital download store at the time.
In
October 2003
it reopened
after
abolishing the peer
-
to
-
peer structure

(Napster, 2010)
. Napster is
constantly
ahead of
the game and

with new ground
-
breaking techono
lgy
,

they were

the first to
introduce
themselves as a
streaming
and downloading
provider
.


5.4

LimeWire

LimeWire

was another software utilising a peer
-
to
-
peer network
,

launch
ing
on the 29
th

May, 2000. It reached version 5.5.16 (30
th

September, 2010)
but
was
soon after shut down

due to a legal copyright dispute
,

on 27
th

October 2010

(Lime Company, 2010)
.

Whilst up and running
,

LimeWire

did

provide a store

from which songs could be downloaded
,

with the assurance of
100%
compatib
i
l
ity

with all peripherals and
could

be
purchased
in bulk at a reduced price.
Songs
could
be previewed during installation and then cancelled if quality
was
poor.

8


5.5

iTunes

iTunes is one of the most reknowned media players. It was f
irst released

on 9
th

January, 2001 and is the default me
dia players for all Apple
computers. It’s l
atest version is
iTunes 10.1, released 12
th

November,
2010

(Apple, 2010)
.
It is a
compulsory software for the use of iPods &
iPhones

and

has the largest downloadable

library choice of music.
iTunes allows
c
onsumers

the ability to

share music from

their

playlists across a
L
ocal
A
rea
N
etwork
(LAN).
It also has a feature called ‘
The Genius Mixes

,

which
searches your iTunes
library to find songs that go great together

and

then organises them into mixes.


5.6

Spotif
y

Spotify is the last media player to meet the chosen selection. It was only
released on 7
th

October 2008, being the youngest of the collection.
Spotify’s influence is one for the future, utilising the most up
-
to
-
date
technology in this market
,
streaming.

This software abolish
es

the
traditional concepts of owning CDs, and even owning mp3 files
, switching

to streaming
a compiled selection of media
, therefore

removing the need to ever own it. This is
possible by utilising a hybrid P2P network. Spotify

is co
nstantly updated and

can be
played anywhere with a valid internet connection, with consumers chosing from a
catalogue of over 10 million songs, with approximately 10 thousand added every day.

9


5.7

Features Table


It is easy to
note
software capabilities, but

it is

equally
important to
identify

its restrictions.

T
able

2 below

captur
es

a few
prominent
features: if a tick is present the software can provide that
function,
and alternatively

a cross demonstrates a
n unav
a
ilable feature.


Table

2
.

Feature
Capabilities for each Key Player.


The available features
help to identify
what strategy the media player is undertaking

and

therefore giv
es
a greater view on what t
ype of player they are trying to be.



















10


6.0 Key Drivers

The development of
the music industry and furthermore
media players,
alike

all products, is
heavily
driven by consumer preferences.
It is therefore
imperative
for

companies

to

acknowledge these drivers and em
brace them in their products.
These have been identified as
convien
ence, cost, peer
-
to
-
peer

network capabilities
, compatability with peripherals and
streaming.

6.1

Convenience


Convenience is a

tangible source of benefit to the consumer (Jelassi et al, 2005)

and therefore
a highly important factor to consider
.
It

concerns

the mental effort
,

energy and time that buyers
spend
on the

decision and
purchasing process
,

in order to choose the right media player for
them.

The convienence of the music industry has transformed, as technology has advanced. The
onus of production comp
anies to create the ‘music’ in
-
house
h
as disappeared as technology
allows consumers to create
their own
using P
ersonal
C
omputer
s

(PCs)
. Moving from vinyl to
cassette and then CD, introduced rewinding, and jumping between tracks.
Looking at Table 3,
t
he
latest revolutionary change lies within digital files. The available
, legal

catalogue of digital
music has grown from 1 million tracks in 2003 to around 11 million in 2009. (Mintel
,

2009).

During the first half of the decade, physical album sales in the U
K continued to rise year on year

(Mintel, 2009)
, but
digital music has had the biggest impact
over

the last 5 years. Growth in
digital album sales,increased by 56%
from 2008 to
2009 (Mintel, 2009). Although digital still
only
accounts for just one in eight

album sales, this has risen from
the recorded
one in 13 in 2008.By
the middle of the decade online retail was in full swing

and

this constituted the decline in
physical album sales as digital alternatives became more widely accessible.


This led to the
cl
osing of record shops,

with 800 music stores going out of business between 2003 and 2006
(Keen, 2007).


Table

3
.

A Comparison of Physical and Digital A
lbums between 2000 and 2009.


Albums physical (m)


Albums digital (m)


Total albums (m)






2000

134.3

-

134.3

2001

144.9

-

144.9

2002

149.2

-

149.2

2003

159.3

-

159.3

2004

163.4

-

163.4

2005

159.0

-

159.0

2006

151.9

2.8

154.7

2007

131.8

6.3

138.1

2008

123.3

10.3

133.6

2009

112.9

16.1

129.0


Source:

BPI/Official Charts Company



Further to
this, the volume of total UK album sales fell by more than a fifth

between 2004 and
2009
,

due to the acknowledgment that c
onsumers no longer need
ed

to purchase a whole
album
,

a
s songs can, and most often are, individual digital files. This created a cultur
al shift.
Consumers are now able to ‘cherry
-
pick’ the songs that they want, leading to a surge in single
sales in the last few years
, as shown in Table 4.







11


Table

4
.

A Comparison of Physical and Digital S
ingles between 2000 and 2009.


Singles physical
(m)


Singles digital (m)


Total singles (m)






2000

55.7

-

55.7

2001

51.2

-

51.2

2002

43.9

-

43.9

2003

30.9

-

30.9

2004

26.5

5.8

32.3

2005

21.4

26.4

47.9

2006

13.8

53.1

66.9

2007

8.6

78.0

86.6

2008

4.9

110.3

115.1

2009

3.1

149.7

152.7


Source:

BPI/Official Charts Company



Over recent years, convenience has become a factor of competition between media players,
with

the

ability to provide digital files being one of these. As greater number of media players
have been introduced into the ma
rket

with improved software,
more
choice

is available to
consumers
. It is difficult to measure convienence as it varys between every individual. However,
features are created in order to provide convienence to
the

customer. Please see
Table 2

for a
summary.

In
this
I
nformation
T
echnology age, all softwares mentioned can be easily downloaded off the
I
nternet. However
,

there is still a competitive advantage within them

with regards to
ease of
access. WMP comes pre
-
installed as
a
default on all
Windows
PCs

(Microsoft, 2010)
. This is
also true for iTunes on all
A
pple technologies

(Apple, 2010)
. This availability is even more
significant as they are the most popular operating systems

and t
his ‘convienence’ would lead to
many consumers keeping that
software. It is key to note that although
LimeWire

was easily
downloadable, due to the injunction

against them

it is currently unavailable.


In addition, access from different computers is another factor people may take into
consideration as consumers can
have more than one, and change computers contintuously.
Spotify and Napster have identified and overcome this predicament

with a business model that
allows a consumer
s

account

to

be accessed from any and multiple computers through
an online
streaming
library
, therefore
providing
a stress

free experience

(Napster, 2010; Spotify, 2010)
.

However, when it comes to downloaded music
from

Napster, and all media on iTunes,
LimeWire
,
WinAMP

and WMP, its primary location is on the computers drive

and in turn

req
uires a manual transfer between PCs. iTunes provide
A
pple accounts
,
but

due to

Digital
Rights Management

(
DRM
)
, this is restricted to the original source PC and therefore cannot be
re
-
downloaded onto another
computer
.

As CDs have also played an integral p
art in the
development

of the music industry,
the

media
players ability to support this must be considered.
WinAMP

and iTunes can
all
rip CD’s
therefore allowing consumers to access their music digitally. It is important to note that this
method (unless
manually transferring music onto the PC)

is

the only way that WMP and
WinAMP

can play music as they do not provide downloadable functions. Napster and Spotify do
not have this function as it
is

replaced
with

the streaming function.
LimeWire

provided no sim
ilar
feature
.

Consumers may

also

want to create a compilation CD
via

the media player
. T
his is
only

possible

with WMP,
WinAMP

and iTunes.

As mentioned, consumers can combine their selection of music with that downloaded through
media players. This functi
on is available through
Spotify
, iTunes,
LimeWire

and Napster. Out of
these, the iTunes store has the biggest library and variety of songs available to download.
A
lso
provide
d are

the top current chart singles and albums
which are set as

recommended
downl
oads,
helping to ease the consumers search
.

iTunes also offers the facility to have a 30
-
second preview of the song before purchase

(Apple, 2010)
.
In comparison to this
,

consumers
could spend ages picking a song from
LimeWire

as

most media is peer uploaded

with

questionable

quality
.
LimeWire

did offer a 10

second preview capability to assist the search
12


time,
but

this did not eliminate the problem of poor quality

of

music. Acknowledging this,
Naptser had search engine capabilities to find files; ability to s
pecify the minimum server ping
times, as well as MP3 bitrates and frequency.

Some of the media players examined have added features which allow them to be
multifunctional. Within iTunes there is iTunes Genius which makes playlists and mixes from
songs in
your library that go together

(Apple, 2010)
. It also makes recommendations of songs it
thinks the consumer may like.

Moodagent with WinAMP fulfills a similar function. Consumers
s
imply play a track in Winamp and launch the Moodagent online service to get
r
ecommendations of tracks to match
their

taste in music

(
Nullsoft
, 2010).

In WMP there is also
the option to integrate web browsing support to access online music stores, shop for music and
tune into radio stations

(Microsoft, 2010)
. Spotify and Napster are only functional as audio
players, although there are many different audio features, whereas
LimeWire

and
WinAMP

can

only

be used as audio and video players. People may be more inclined to go towards iTunes or
WMP as they appear to

be more versatile. iTunes, Spotify and WMP also have toolbar controls
which allow music to be changed easily, without interupting work. All of the media players have
guides to help users so that they do not get stuck as they are installing or using the de
vice.
Additional with
Napster

there is
a ‘mood manager’ available
,

which suggests music based on
colour, such as yellow for happy

(Napster, 2010)
.

This is only a small summary on the unique and basic features of the media players, giving a
glimpse of what
they

are possible of achieving. Different features will create convienence for
different people. This subjective nature of convienence means it is extremely hard to judge.
There are high competitor forces for media players due to their low barrier
of

entry

into the
market
. Due to this, features are
frequently
likely to change . However,by
analysing

the number
of available features from the selection shown in
Table
2
, the media players rank as shown in
Figure
2
.



Figure
2
.

Convenience: Media Player
R
anking.

13


6.2

Cost


Cost is an integral factor in purchasing any consumer product, and will considerably
e
ffect the
desirability of downloading and using any of the six media players that we have examined.
iTunes, WMP and
WinAMP

are all free to download and use.
WinAMP

also has a premium
version available for a one
-
off payment
of £11.99

which allows “faster ripping and burning from
CDs


(
Nullsoft
, 2010)
.

WinAMP

still has a strong focus on physical media, as opposed to digital

whi
ch could be an important factor to the consumer
.

Spotify has various price plans available which offer different features. When Spotify was first
released it was in a beta format and was free to download and use. This free version called
Spotify Free give
s the user unlimited streaming on their computer, but
comes with the
annoyance of adverts
every
ten minute
s
. After the initial downloads, this version was only
available to consumers who were ‘invited’ to use it. Invitations were given to paying customers
and they had one free invitation a year. This
in turn

limit
s

the number of Spotify users who have
Spotify F
ree.
Recognising this was not enough,
Spotify
reverted

back to their original concept
and introduced Spotify Open which is free for anyone who wishes to download it
. There are still
other verisons available, for example
Spotify Unlimited
which
costs £4.99

per month, does not
include adverts and allows you to take your music abroad. Spotify Premium
,
£9.99
,

has an
additional feature whereby you can

transfer your music to your phone and therefore access
unlimited music anywhere

(Spotify, 2010)
. You are also
able to access your playlists offline

making

it similar to
the
iTunes
service
.

Napster is very similar to Spotify
as

it offers different versions of the product
but with this media
player

there is no free version. For £5 per month, users are able to strea
m unlimited tracks, as
well as download 5 mp3’s which are transferable to other devices. Similar options are available
for £10 and £15 per month, with an increase in the number of tracks available to download

(Napster, 2010)
.
T
hese price plans are very sim
ilar to phone contract tariffs, so
seemingly

familiar for consumers

and this

can increase
their

decision bias (Park and Lessig, 1981).
However, unlike Spotify, the subscription chosen also covers a limited number of free
downloads.
T
racks

on Spotify

can also be purc
hased through their catalogue from 50p to £1.29

(Spotify, 2010).


One of the key costs affecting media players is the cost of downloading music files. The UK
Official Charts Company organised
the official UK Download Chart on the 26
th

June 2004
. In
January 2005, legally downloaded singles overtook physical record sales for the first time

and
t
his has been the case ever since
.

iTunes has always
had

a download store as well as a
physical music player with single tracks ranging from £0.59

to £0.99

(library can be browsed
free of charge)

to £7.99 an album (Apple, 2010).


Napster was set up as free peer
-
to
-
peer file sharing sites, until legal issues led to the pay
service that is available today.
LimeWire

operate
d

as a peer
-
to
-
peer site

but a
, recent injunction
has meant operation has ceased. Like WMP, iTunes, Spotify and
WinAMP
,
LimeWire

was free
to download. It had its own store with songs available for $0.99 each. However, like Napster
there were subscription plans that discount the p
er
-
song cost to as low as $0.27
, but this

service was only available in the United States. Digital album sales
were

boosted in 2009 by
the introduction of variable pricing, with the price of back catalogues discounted relative to chart
albums (Mintel, 200
9), demonstrating the effectiveness of Napster and
LimeWire
s pricing
structure.
LimeWire

Pro can
now
be obtained at an additional cost.

With all of our chosen media
players except Napster, they are all freely available and make their profit from online mus
ic
stores and services, are part of a greater software like Windows or have an upgrade option in
WinAMP’s case.

From this observation we can deduce that value for money is important to the
digital music industry consumers. That does not make Napster obsole
te as for any paying
customers, it still offers value for money but does highlight the benefit of a free central library in
the case of Spotify run by advertising.




14


Although the price plans have been described, it needs to be viewed in the wider picture.

Mintel
(2009) completed a questionnaire to find out how much customers are willing to pay
, the results
of which can be found in Table 5.

Table

5:
Results of Questionnaire: How Much Customers were Willing to P
ay

Source:
Mintel (2009)


Results showed that
54% of the ‘market’ would pay up to £2 for a CD single,
and

50% would
pay up to £10 for a downloaded album. All of the software with download capabilities have
fulfilled this pricing need from customers. If anything, some are underpricing the music that they
sell. However
,

it is difficult to determine whether this

could be a profit opportunity by applying an
increase on these underpriced songs, as that alone could be the reason for
their
market share
when competing against iTunes.

The opposite behaviour is being displayed for the streaming services. Around a third
of music
listeners say they would be willing to pay a monthly subscription for both music streaming and
downloading

combined
, demonstrating a demand for this service. The average consumer say
s

they would pay

around

£3.50

for a monthly streaming service
but

with an unlimited download
service

they would be willing to pay approximately
£5.30
. Although the advert version is free for
Spotify, £9.99 for the premium version is almost 3 times the amount the average person is
willing to pay. Spotify is developing a
large customer base, but

at the same time

it
appears to
be
closing itself off from an even greater market. Napster similarly is overpriced
at

provid
ing

a
limited amount of downloads

for
£5 a month
, where
customers

would expect unlimited
downloading for £5.
30 a month.

The cost
encountered by

the customer is not the only
one that can be measured
.
From

a
business
point of view
, it is important to note how they make

their

money too. With paid
services, such as downloaded songs and subscription fees

this

demonstrate
s

an obvious
revenue stream. iTunes and Spotify also offer vouchers that can be bought as gifts for
redeeming within their online stores

(Spotify, 2010; Apple, 2010)
.
A less obvious form of profit
maximisation is through the use of a
dvertising
:

Spotify Open features thirty seconds of
interactive adverts every ten minutes. However, none of the other media players

mentioned
within this report

include external advertising. This suggests that
LimeWire
,
excluding

its stor
e,

and WMP, have no relevant
income stream.

As the media players offer different services, it is extremely difficult to compare them

in terms of
cost and therefor
e

impossible to rank them against each.




Price Categories (No. Of people %)


1p
-
50p


50p
-
£1


£1
-
2


£2
-
5


£5
-
10


£10
-
20


Wouldn’t
pay⁦or⁩琠
慴⁡汬


Not
interested
in buying/
listening

CD singles

18

17

19

10

2

-

17

18

CD albums

5

5

6

20

39

8

12

7

Downloaded singles

30

20

5

1

-

-

24

21

Downloaded albums

7

10

12

21

9

-

22

18

Podcasts

12

8

4

2

-

-

36

37

Online monthly
streaming service
(unlimited listening)

5

4

5

9

6

2

33

37

Online monthly
download service
(unlimited
downloads)

5

3

3

9

10

5

29

36

15


6.3

Peer to Peer Network Capabilities

The initial
idea

of

downloading music
through

a media playe
r

would comprise of a traditional
client
-
server network

as shown in Figure
4
.
Communication on this software is normally to and
from a central server.
A
P
eer
-
to
-
P
eer

(
P2P
) network is a different structure that also permits the
downloading of media.
It

is a distributed application architecture that divides tasks or workloads
between peers

who act

as equal participants in the application (Feng et al, 2009). Peers make a
part

of their resources, in this case music media, directly available to other network participants.
As the network develops,
the
need for a central server or one point of failure

decreases
.
The

capacity of a P2P system also increases as more users connect. In

a P2P network, peers are
both suppliers and consumers of resources, in contrast to the client

server model where only
servers supply, and clients consume.

Figure
3
.

Diagram showing Examples of a P2P Network and Client Server N
etwork









Source:

Glynx (2010)

Computers within a P2P network run the same networking protocols and software. They are
commonly found on LANs, usually located physically near to each other, such as in homes,
small businesses or schools. However, some P2P networks make use of the Interne
t and are
spread worldwide.

The internet based P2P networks removed the barrier of physical connections

and now
new
communities can form all over the world. Napster created a new
communit
y

in order to share
files, predominantly music.

With t
he original MP
3 file sharing system, Napster grew to be the
most popular Internet software application. A user interface supporting both file serving and
downloads, Napster also provided chat rooms to connect its users
, as shown in Figure
4
.



Figure

4
.

Napster P2P
Network


Source:

How Stuff Works (2010
b
)

P2P Network

C
lient Server
Network


16


However,
P2P networks have come under large amounts of criticism, especially
with
regard
s

to
their legality. It is thought that these networks are used to share illegal content

and

Napster was
a large scale, automated way to copy copyrighted material.
However, its is often forgotten that
digital music is an
intellectual rights products, . A purchaser of digital music does not purchase
ownership of the software or digital music, but
rather purchases the right to use the product

(Woolley, 2010)
.
Thousands of people were


able to make
copies of copyrighted songs, and
neither the music industry nor the artists received any money in return for
these
. Although
software can have legitimate
users
,
The RIAA (Recording Industry Association of America)

pursued legal action against Napster, resulting in them being shut down.



Due to the digital nature of sharing, more and more consumers find illegal downloading
acceptable
.

Music piracy is a soci
ally accepted illegal practice. (Woolley, 2010). This is
especially apparant within the younger generations as most young adults do not see a problem
with free downloading via file
-
sharing software such as (Rosencrance, 2003). This attitude does
however, f
all sharply amongst the over
-
25s
(Mintel, 2009).

E
lectronic copies are further
regulated by a variety of laws including the Digital Performance Right in Sound Recordings Act
of 1995, the No Electronic Theft Act of 1997, and the Digital Millennium Copyright Act of 1998
(Imfeld & Ekstrand, 2005). Recording
companies have successfully sued to close a variety of
I
nternet sites used to distribute music electronically (Green

et al
, 2008)


Mintel (2009) found that
41% of under
-
35s listen to mostly free music, at a level consistent
throughout the 16
-
34 age group.
The total cost of pirating music is estimated at $12.5 billion
annually, of which $5 billion is a direct cost to the recording industry. (Woolley, 2010). The
recording industry has experienced dropping profits and has lowered employment because of
the effe
cts of music piracy (Blyth, 2008).

In greater detail, Mintel (2009) found the
‘mostly free’
music consumers are likely to be on a household income of less than £50,000 with a bias
towards the DE socio
-
econmic group, more likely to be Orange/T
-
Mobile users

than other
mobile providers and likely to be the heaviest internet users.

It should not be assumed that
because of this behaviour it is in fact the preferred method of obtaining music. ‘Tangibility’ of
CDs is preferred to downloads by 30% of under
-
35s and

by over half of over
-
45s (Mintel, 2009).

“Unless the industry moves to providing easy access to attractively priced, easy to use music
products, what suggests that individuals will not continue to seek out DRM free content from
piracy sites or “grey area”

P2P sharing sites”(
Bhattacharjee et al, 2009).
The most common
users of these networks are students and those from younger generations
. According to
Podoshen (2008), this is because students give higher importance to avoiding payment and
getting more choi
ce, rather than ethical concerns. To them, it’s about convenience.


LimeWire

uses
a free Gnutella P2P file sharing network with over 100 million users. They
attempted to counteract the issue of sharing copyrighted music by opening a
LimeWire

Store.
This permitted legitimate purchases of copyrighted media, and
the
sharing of unlicensed media
through the network. Although they have their own download store, most media on
LimeWire

was exchanged through peers. In October 2010
,

after a court battl
e with the RIAA over
copyright infringement,
LimeWire

was issued an injunction forcing them to prevent “the
searching, downloading, uploading, file trading and/or file distribution functionality, and/or all
functionality of its software” (
Halliday
, 2010).
As a result, newer versions of the software have
been disabled

h
owever, older versions of
LimeWire

still function. In response to the ruling, a
LimeWire

spokesperson said that the company is not shutting down, but will try to cease
distributing and support
ing P2P software (Bangeman, 2010).

iTunes has suceeded in providing music that is easy to access and attractively priced. Although
not in the same capacity, it does utilise some peer
-
to
-
peer

by allowing users to share their
playlists over a LAN.

With Spot
ify, there are sites dedicated to creating playlists which people
can 'share'

whilst also opting to

connect with friends who also

have Spotify via Facebook

(Spotify, 2010)
. Finally,
WinAMP

utilises the peer
-
to
-
peer function through its shoutcast
capabilities. As
will be more greatly discussed in Streaming Section 6.5,
consumers

are able to

share and listen to other consumers broadcasted radio stations rather than traditional
‘professional’ o
nes.

17


The
biggest issue raised with P2P neworks is

how to make sharing legal. Digital Rights
Management

(DRM)

is an example of how copyrighted music can be protected. This access
control technology allows the usage of digital content and devices to be lim
ited by the content
provider.
However, the

use of DRM has caused debate amongst professionals. Supporters
maintain that it prevents unauthorised copying to retain artistic integrity and continual revenue
,
whilst o
pponents argue that
it

is an anti
-
competiti
ve practice by copyright holders, ignor
ing
e the
rights of users.

Regardless

of this
, online music stores use DRM to limit the purchase and downloading of
music online. One of our key players, iTunes used
a
FairPlay DRM system for purchased
songs
online until they launched iTunes Plus, which provided users with DRM free tracks for a higher
price. Now all of iTunes music is DRM free, although videos and mobile software
still get sold
through

FairPlay

DRM system
. On the other hand, Napster offers a s
ubscription
-
based
approach to DRM, where by users can download an unlimited amount of music while
subscribed to the service

(Napster, 2010)
.

Motivated by the success of P2P networks, businesses have been trying to find ways to move
away from

the online cli
ent
-
server network, the
number one

selling channel for digital music.
The introduction of new modern digital technology provides a solution, making it possible for
legal distribution of digital content over P2P networks through personal computing devices,

such
as PCs, mobile phones, and portable media players. In contrast to tra
d
itional methods such as
law enforcement or technology protection, the new digital technology allows consumers to have
more involvement in the legitmiate business distribution chain
. Consumers who share the
digital content with others are rewarded, and with the unlimited copies of songs that can be
created and distributed, the reward could be substantial enough to cover the original purchase
price. This new technological tool meets
both business and consumer needs that were
impossible before; it provides an monetary incentive for consumers to purchase and distribute
digital files legally, and businesses legal rig
h
ts are kept intact (Feng et al, 2009).


The underlying technology that makes this paid
-
content, P2P distribution architecture is
the
DRM
. Two other factors which also contribute to the development of this distribution are
:
the
increasing use of social networks and the introduction of new IT, suc
h as micropayments. This
IT provides a trading platform to support distributed information processing and transactions
among consumers, and methods to track sales and monitor user accounts for copyright owners.
Both social networks and new trading platform
s help create the most cost
-
effective model for
legitimate P2P distribution. This new incentive
-
based P2P distribution provides an innovative
strategy for businesses, which addresses the latest form of digital content delivery and the
needs of consumers.


Due to the peer
-
to
-
peer network

capabilities

forming the main
infrastructure
structure of
LimeWire
, it will be ranked top
. This can be seen in Figure 5. Similarly, with Spotify embracing a
hybrid peer
-
to
-
peer network, it can be found in second. WinAMP
utilises peer
-
to
-
peer in a
different way with its ShoutCAST radio. Allowing peers to listen to other peers music through
this method, whilst using a traditional client
-
server network for its other functions, has ensured it
has met customer demands whilst a
voiding legality issues at this moment of time.

With no found
peer
-
to
-
peer functions in Windows Media Player, it was ranked last.









Figure
5
.

Peer to Peer

Networks
: Media Player
R
anking
.

18



6.4

Compatibility with Peripherals


The digital music file was not refined until 1992 with mpeg1, a predecessor of the mp3 format.
The developments of these compressed files were useless unless there was software available
that could support and play the files.

Since their introduction, aud
io and video
f
ile formats have developed greatly

with
High Definition
or
HD video files as an example, different files

types use different Compression Decompression
algorithms or “codecs” and

have varying capabilities

in terms of media, compression ratio and
quality
. The media players’ compatibility with file formats can now be classed as a competitive
form of comparison. Both the file types supported and the format which these can be converted
into, are factors in th
e comparison
,

shown below in Table 6.



Supporting File Types

Convert To

WMP

aif, aifc, aiff, asf, asx, au, avi,
cda,dvr
-
ms, ivf, m1v, m3u,
mid, midi, mov, mpg, mpeg,
mp2, mp3, mp4, mpa, mpe,
mpv2, qt, ra, ram, rm, rmi snd,
wav, wax, wpl, wms, wma,
wmd,
wmv, wmx, wmz, wvx
.

mp3, wma
.

WinAMP

669, aac, aif, aiff, amf, asf,
asx, au, avi, b4s, cda, far,
flac, flv, it, itz, kar, m2v, m3u,
m3u8, m4a, m4v, mdz, mid,
midi, miz, mkv, mod, mp1,
mp2, mp3, mp4, mpeg, mpg,
mtm, nsa, nst, nsv, ogg, okt,
pls, ptm,
rmi, s3m, s3z, snd,
stm, stz, swf, ult, w64, wav,
webm, wma, wmv, wpl, vlb,
voc, xm.

aac, aacPlus, flac, mp3, wav,
wma
.

Napster


wma

mp3

LimeWire


Downloads all files including
zip and other non
-
music files.
Plays mp3, aac but also
opens files in users

preferred
player.

Unable to convert file types.
To convert, will need a
conversion website or
program
.

19


iTunes

aa, aac, aiff, Apple Lossless,
bmp, cda, gif, jpeg m4a, m4p,
m4v, mov, mp2, mp3, mp4,
mpeg
-
4, psd, tiff, wav
.


aac, aiff, Apple Loseless, cda,
mp2, mp3mpeg
-
4, wa
v.


Spotify




3g2, 3gp, mp3, mp4, m4a,
m4r, m4v, mov
.


Convert to mp3 using Spotifer
to mp3 converter
.

Table

6:
Media Players
S
upporting
F
ile
F
ormats and
C
onverting
A
bilities

(compiled by
information from Microsoft, 2010; Nullsoft, 2010; Spotify, 2010;
Apple
, 2010 and Napster, 2010)
.

As can be seen in the table above, there are some common files that most media players are
able to support, however
the difference occurs in the
additional, ‘bonus file’ formats. It is
interesting to note that Napster is unable to support any file formats from your PC or CD.
Although Napster used to predominantly be a downloading service, which stored the file, after
the injunction t
hey have revamp
ed as a streaming only software player. Any downloading,
dependent on the price plan opted for will be imported into iTunes or WMP

allowing customers
to still export their purchased music onto external peripherals. On the other hand, Spotify, the

market le
ader in streaming music, allows a compilation of current owned music and streamed
music.
White (2008) however argues that WinAMP has the best file compatability compared to
iTunes and WMP.

Along with the increase in digitalisition came the high demands for

portability. Therefore to meet
consumer needs,

portable digital media
devices were created, similar to the portable
Sony
Walkman
, namely called MP3 Players.

The software that supported these
portable players
w
as

therefore
another factor
in

the

competition
to be the best.

When looking across the current
available portable media devices, the
iPod is undoubtedly the most popular device globally

(Hesseldahl, 2008)
. It could be argued that because of this, iTunes is also one of the worlds
most popul
ar media players. Unlike
other

mp3 players, iPods

and iPhones

require iTunes
software capabilities in order to transfer music and other media
files from PC to device and visa
versa
.

It
is

a compulsory software and cannot be deleted even if it was desired b
y a customer.
This makes iTunes a compulsory subsidiary over

its competitors. However in doing this, iTunes
is unable to transfer music to other mp3 players, and is therefore closing itself off from the
market. This limitation can cause frustration for cus
tomers as it requires additional work on their
behalf in order to extract the files.

Interestingly, the only media player mobile app that can be purchased off the Apple store is
Spotify. Allowing the purchase of Spotify media player on its products could h
ave been a result
of the belief that Spotify is positioned in a different market and is therefore not a direct
competitor. This has allowed Spotify access into a wide market, which had

previously

been
restricted to competitors. Spotify is a relatively new

media player in comparison to its
competitors and has embraced the trend of the smart phone. iPhone, Android, Windows Phone,
Symbian and Palm are amongst

some of

the phones that can run Spotify

(Spotify, 2010)
.

Spotify has a very
simple

principle
:

m
usic
found on Spotify can only be played on Spotify. How
this differs to make it acceptable is the principle that no music has been purchased
, it

is
streamed rather than owned. One great advantage from this is the fact that playlists on phones
20


are played

in

re
al time. If the owned music

or

playlists
is

updated on the PC, the music will then
be updated automatically on the phone.

The “new” Napster, although a streaming media player similarly to Spotify, takes another route
for portable music. Napster To Go allow
s the customer to Fill and refill their compatible MP3
player from a choice of over 10 millions tracks. Napster To Go gives you unlimited access to a
large music catalogue without paying per track. The customer can transfer unlimited music to
players from
Sony, Creative, SanDisk, and more, as well as music phones from Samsung,
Motorola, and Nokia

(Napster, 2010)
. However, rather than portable streaming, Napster follows
a traditional drag and drop method, without the
additional cost per song.

WMP can be use
d to rip and burn cds, and can sync with any
W
indows operating phone.


Since the introduction on Windows Media Player 10, music can be transferred to over 70
peripherals (Hill, 2004).
WinAMP is available as both a desktop application and as a mobile
application for Android devices. By having both WinAMP installed on your desktop and on your
Android device, you gain a complete media management solution to storing and playing your
music

(
Nullsoft
, 2010)
.

When judged on compatiability with peripherals,

we have found Napster is the best of the key
players. Music is standardised in a single mp3 format to allow downloads full playback on the
majority of devices.

Unlike using a users media library, Napsters files are guaranteed to work.
Although Napster doe
sn’t convert file formats and only supports mp3 files, Napster To Go is the
ony music supplier which can be available on all peripherals

(Napster, 2010)
. iTunes interfaces
very well with iPod’s and ranks highly in our list due to it’s accessibility. WMP an
d WinAMP are
not specifically tailored to peripheral use and do not use a single standardised library making it
difficult to manage on peripherals but because of their in built drag and drop abilities with
peripherals rank higher than Limewire. Although Sp
otify is enablied on smartphones it is still
behind in compatibility because of the select few peripherals with streaming capabilities it
supports. The media players ranks are shown below in Figure 6.













Figure
6
.

Compatibility with Peripherals: Media Player
R
anking.






21


6.5

Streaming


Streaming is a form of content delivery where media is distributed by a service and received by
an end user. This distribution originally started with services similar to radio,
providing one
stream from one source.

WinAMP was one of the first to allow users to stream music to other users using a compatible
SHOUTcast server, allowing music to be streamed

from a
users
broadcasted address. Other
users are then able to search for the
se radio stations in a SHOUTcast directory inside WinAMP
and play whichever they choose for free. It can also be used to broadcast video, although this is
more complex as it requires access to a web server.
Differing from a professional radio station,
the
user streams their playlist of music.
WMP took a different direction by providing online radio
stations and centralising the distribution to WMP

Professionals
. Based on individual consumer
preferences, users are able to chose one of these

pre
-
made

broadcas
ts. Due to copyright
issues, the music broadcast was mainly unsigned music and because of the small audiences,
the returns to the broadcaster were small. In the early implementation of these services, the
music quality was very poor due to bandwidth constr
aints of the average user. These stations
would be limited to using WMP, as the file format they used (wma) could only be accessed
through a web browser utilising WMP. In contrast, iTunes does not offer streaming but instead
initiated “podcasts”; pre
-
recor
ded shows which could be downloaded and played later based on
the same user defined principles of choice

(Apple, 2010)
.

Streaming has now evolved further to allow on demand services where multiple streams can be
accessed from one source. The stream of musi
c is distributed from a single location and
received simultaneously as it is being broadcast, rather than being downloaded in packets and
assembled for playback (How Stuff Works, 2010a).


Spotify enhanced music streaming by offering a service which includ
es mainstream music from
labels such as Sony Music, EMI, Warner and Universal, as well as providing music on demand
on a track by track basis via a hybrid P2P and centralised infrastructure. They followed services
such as last.fm and Pandora, online person
alised radio stations, but offer a more substantial
and defined approach using a desktop player and offering mobile applications. They also
provide music downloads through a third party but their main principle is music streaming. To
allow Spotify to finan
ce this, they intermittently include adverts or offer a paid subscription,
depending on the package that the user has subscribed to. The streaming service that Spotify
provides allows users to select individual tracks and create their own playlists from a
huge
library. The tracks are then played instantly as if they were downloaded like any other music
library. In addition, this music is completely legal and both the record labels and artists are paid
by Spotify.


With the increase in user broadband access
and the ability to use services both at home
andwhilst on the move, streaming is becoming ever more popular. Napster has introduced it’s
own streaming service and it is long rumoured that iTunes will follow (IDG Tech Panel, 2010).
Napster’s service offers
5 free music downloads as well as the streaming service for a fixed £5
a month. This direct competition to Spotify may take over the market through value for money
but will have to compete with the Spotify brand as the number one streaming music player.
H
owever, it is important to note that Spotify is not available in the US, a location where Napster
is the most popular and widely used, and therefore cannot be directly compared (Spotify, 2010)

The main defining difference with Napster and Spotify, is that
these are content providers rather
than simple content players like WMP and WinAMP. The amount of music available to these
providers makes them very attractive as an alternative to a user library stored on a consumers’
computer. What’s more is that these s
ervices provide an uninterrupted, legal and stable library,
22


meaning that whatever content is available, it will always be available unlike P2P services like
LimeWire. Quality is assured because of the legal nature of these streaming services.


There is a s
trong consumer divide between the use of content providers and content players.
While buying CD’s is still popular, the accessibility and convenience of ripping those CD’s and
storing them is outweighed by the ease of use and content selection of streaming

services. As
the use of purely digital products increases and the advances in content providing becomes
more mainstream and reliable to provide services, it becomes ever more apparent that those
who can provide a complete service of music content from end

to end will eventually overtake
and become more valuable than those who serve only to play back existing media on a users’
computer. Whilst these services do not go unused as WinAMP, WMP and iTunes are still used
for playing back locally stored music as w
ell as other media, streaming services will be more
inclined towards content provision and the user value associated with this.

As streaming is still
quite new in the market, it is not clear whethe
r it will overtake downloading
to become the most
popular
form of music, (Youngs, 2010).


With the advancement in technology, such as the increase in accessibility of wireless
broadband services, and the use of media players on mobile phones via these services, in
addition to the decentralised and paid for
conveninece of streaming services than means each
party gains, streaming appears to be the future direction of the music industry,


In regards to streaming, Spotify is the best media player as it has the largest library of music
available for streaming, wi
th major record labels included in this. LimeWire does not allow users
to stream music, and therefore purely based on streaming, is the worst media player.

T
he
media players rank as shown in

Figure
7
.



Figure
7
.

Streaming: Media Player
R
anking.








23


7.0

PEST Framework Analysis


In an ever changing market, it is also vital to bear in mind the changes going on outside of the
industry. The future of this industry in particular is changing as there is a lot of new technology
available for consumers to be able

to search, play and purchase their music (Meisel et al,
2002). Below is an analysis of the macro
-

environmental factors including Political, Economical,
Social and Technological changes.


7.1

Political/ Legal Aspects


One of the key issues, is the music in
dustry’s goal to distribute digital music online whilst
respecting the music publishers and record labels. The introduction of digital files has led to an
ongoing battle of introducing and continually changing legislation, bringing several legal issues
to
the surface. Recent changes to the law has meant that there is now stricter guidelines
regarding what people can or cannot download. On the 8
th

of June 2010, the Digital Economy
Act came into force, regulating all types of digital music. The act works to prevent copyright
infringement (including the lending, copying and selling on of music) and also has the ability to
block certain Internet loca
tions. It is a combination of both digital technology and the Internet
that has enabled consumers to distribute copies of music to one another legally. A lot of peer
-

to
-

peer media players such as Napster 1.0 and LimeWire used to allow free access to
down
load music on a large scale between users but both were closed

down due to illegal
sharing. Even since December 2000, it was ruled that any song played over the Internet must
pay the both the music publisher as well as the record label.


7.2

Economic Aspects


Since the beginning of the online distribution revolution, the economic environment has
undergone a lot of change. There is now more freedom for consumers to access music and pay
using alternative payment plans. It also means that consumers have the choic
e to pick and
choose the individual songs they want and are not forced to buy whole albums if only wanting a
selected few. There is also more freedom for the record companies as they can now offer a
wider variety of products in terms of artistes and types
of music etc. However, an issue that is
still unresolved is what the payment rate to publishers by record companies who wish to
distribute the songwriter’s music online. With the physical purchase of songs, the payments can
be preagreed. With digital files
, and especially streaming of files, the payment terms become
ever more so complex.

The record companies are not losing out completely. They are also saving costs if more people
decide to purchase online as the costs of physically producing the CDs are red
uced. The
change in the industry has and will continue to remove the costs of making the disks,
transportation, shipment and in
-
store advertisements.






24


7.3

Social Aspects


Current trends within the industry claim consumers are moving more towards streaming
as they
pay little or no money to listen to music of their choice. Despite household disposable income
increasing over recent years, the current recession has made many people consider the idea of
not paying for music but streamingit for free.

Social netwo
rks are also used more to advertise music. On Spotify you can link your account
with your Facebook so that you can see your friend’s playlists, and MySpace is also used by a
lot of unsigned artists to promote their songs.


7.4

Technological Aspects



It is th
e technological changes that have contributed to the disturbance of legality of digital files
within the industry. Legislation is contiually reacting to the changes in technology and will
continue to do so, as technology is developing ever so fast. Media P
layers will need to ensure
they are able to support new file types that develop, for example high
-
defintion files, and try to
encompass new technological features also. Technology introduces several methods of
convienence and the media players must be prep
ared to provide these.


Developments in technology have increased downloading speeds, so that consumers can
access the music they wish quicker than before. With streaming services, these downloading
speeds have brought music to the customer almost instanta
neously.













25


8.0

Conclusion


Music plays a huge part in the world we live in today. How we listen to music is dictated by how
we lead our live
. M
ost
individuals

will use a computer to contain their li
brary
;

especially the
younger generations (Mintel, 2009).
From the growth in

online music consumption

shown in the
research, it has demonstrated

that music is heading to a digital and internet based distribution
method. It is becoming an old habit to buy CD’s
and there is no advantage over downloaded
content. Online music distribution offers more choice and more conveniece.

Consumers are faced with the choice of whether to buy and rip a CD,
purchase a digital album,

illegally download or subscribe to a service.
Desktop media players are easily accessible and
can fulfill

any of

these demands. However the
five key drivers that we
re

identified need to be
acknowledged as also play a large part in this decision
;
convienen
ce, cost, peer
-
to
-
peer
sharing, compatability with peripherals and streaming capabilites.
The individual consumer will
need to base their decision after

weighing up the strengths and weakeness of each media
player and the use for which they are intended
,
in relation to

their particular needs.


Figure
8
.

Overall Media Player
R
anking.

However, from scrutinising each of the key drivers, we
have ranked them in order of
effectiveness to utilise these drivers and

their

future opportunity in the market at the current
context, as shown in Figure 8.

By adding the key drivers together, we were able to achieve this
final ranking.

Although Spotify was not ranked the highest in all of the categories, it was the highest in
con
venience and streaming,

two factors that
should be considered with great

importance.

With
the change in how consumers act and the services music players provide, it becomes clear that
streaming services have an advantage.


The development of popular media
players, alike
Spotify,
are no longer just players but instead providers. Through the aid of large online libraries
and stores
,

media players offer wide levels of choice via easy navigation
,

pushing consumers to
buy or subscribe.

Due to the rapid change wi
thin the music industry, competitors are constantly changing and
evolving. Although streaming is seen as the new trend
and
best utilisation of the technology
of
music
,

as of today,
media players
are likely to

develop another idea and therefore the market
will change again.

The way in which music players adapt and push new technology can change
the entire shape of the market. Spotify’s driver advantage may not be long lived.






26


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