THE DEVELOPMENT OF THE MUSIC

terrificbeepedMobile - Wireless

Dec 10, 2013 (3 years and 8 months ago)

82 views





THE DEVELOPMENT OF THE MUSIC
INDUSTRY






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 K
ey Pla
y
ers









7
-
9

5.1

Windows Media Player







7

5.2
WinAMP









7

5.3 Napste
r









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
Stream
ing









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
-
26

9.0 References










27
-
28









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
M
uch
C
ustomers are
W
illing t
o
P
ay

Figure 3.

Cost: Media Players
R
anking.

Figure
4
.

Diagram showing
E
xamples of a
P2P
N
etwork and
C
lient
S
erver
N
etwork

Figure
5
.

Napster P2P Network

Figure
6
.

Peer to Peer Network

Capabilities
:
M
edia Player
R
anking.

Table

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

Figure
7
.

Compatibility with Peripherals: Media

Player
R
anking.


Figure
8
.

Streaming
: Media Player
R
anking.

Figure
9
.

Overall Media Player
R
anking.














4



3.0

List of Abbreviations


BPI
-


CD


Compact Disc

FM
-


IFPI


International Federation of Phonographic Industry

LAN


Local A
rea Network

P2P


Peer to Peer

RIAA


Recording Industry Association of America

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, broadcast and sell
the
record
ings
. The focus of this e
ssay 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 dramatically, along with the manner in which it is
purc
hased. 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 digital 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 rpm
-

12 inch
re
cording 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 today in our modern day charts. In 1955
,

the BBC began
broadc
asting in 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 compact
casette tape by Philips in 1964.
Th
is
was offered to the market wi
th free licenses worldwide, an
important factor in its growth
.

These cassettes made up of magnetic tape became the new way
to listen to music
.

H
owever, by 2004
,

they
only accounted for 4% of all music sold globally.

In 1979
,

Sony in
troduced the Walkman
, a product tha
t 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

desir
ed 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 original 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 sale
s numbers
, people were
still buying vinyl records

and even

tod
ay, it
still

survives in
niche areas of music

Following the
CD, t
he MiniDisc format
was introduce
d

prov
ing

popular with some

but never really became
the
next music
tr
end
.

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
distrib
uting 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 years 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 Phonograp
hic 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 re
corded music

in the 21
st

century

compared to
previous years
, as

can
be seen in Table 1
.

This also supported by
Mintel
(
2009
)
, who

reported that digital album sal
es
increased by

475
%, and digital singles by
182
%

since 2006.

Des
pite 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
-
recor
ded 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 (20
09
)


Pre
-
recorded music sales, including downloads, hav
e fallen by around a third over the past five
years.
According to BPI
,

t
he average cost of an album dropped by 27% between 2000 and 2008
and
so far
digital sales have
not managed to compensate for this loss of revenue. Howev
er, 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 onli
ne music services
operating with a subscription or ‘freemium’ model, there is 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 sourc
e,
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
.

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

This
report

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

through increased distribution
.


















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 gro
wn 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 identified as key players within this industry
, as shown below in Figure 1.






WMP

WinAMP


Napster



LimeWire



iTunes


Spotify


Figure 1.

Ke
y Med
ia Player
L
ogos



5.1

Windows Media Player

Windows Media Player

(WMP)

was the first computer software that was
developed to handle these digitised music files in 1991.
WMP

is the defau
lt
software on every Windows Personal Computer

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

launched 22
nd

June, 2009. 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

abilit
y to

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

a
nd
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 be
fore WMP
.
WinAMP

has
now reached version 5.6.01
,

launched 7
th

December, 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
softw
are 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 injunct
ion
. 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 is
constantly
ahead of t
he game and

with
new ground
-
breaking techonolgy
,

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 ne
twork
,

launch
ing

on the 29
th

May, 2000. It reached version 5.5.16 (launched 30
th

September, 2010)
but
was soon after shut down

due to a

legal copyright
dispute
,

on 27
th

October 2010.

Whilst up and running
,

LimeWire

did

provide a
store

from which
songs could be downloaded
,

with

the

assurance

of
100%
8


compatib
i
l
ity

with all peripherals and
could

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

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 media players for all Apple
computers. It’s l
atest version is
iTunes 10.1,
released 12
th

November,
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 local area

network (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

Spotify

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 owni
ng 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 constantly updated and

can be
played anywhere with a valid i
nternet 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 t
o
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
K
ey
P
layer.


The available features
help to identify
what strategy

the media player is undertaking

and

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



















10


6.0 K
ey Drivers

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

all products, is
heavily
driven by consumer preferences.
I
t is therefore

imperative
for

companies

to

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

network capabilities
, compatability with peripherals and
str
eaming
.


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 convie
nence of the music industry has transformed, as technology has advanced. The
onus of production companies to create the ‘music’ in
-
house
h
as disappeared as technology
allows consumers to create
their own
using
PCs. Moving from vinyl to cassette a
nd 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 milli
on in 2009. (Mintel
,

2009).

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

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

the last 5 years. Growth in digit
al 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 swi
ng

and

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


This led to the closing of
record shops,

with 800
music stores
going
out of busines
s b
etween 2003 and 2006

(Keen, 2007).


Table

3
.

A
C
omparison of
P
hysical and
D
igital
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


S
ource
:

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

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


Singles p
hysical (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


S
ource
:

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 o
ne of these. As greater number of media players
have been introduced into the market

with improved software,
more
choice

is available to
consumers
. It is diffi
cult 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
. This is also true for iTunes
on all
A
pple technologies. This availability is even more significant as they are the most popular
operating systems

and

t
his ‘convienence’ would lead to many co
nsumers 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
co
nsideration 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
allow
s a consumer
s
account

to

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

free experience.

However, when it comes to
download
ed music
from

Napster, and all media on iTunes,
LimeWire
,
WinAMP

and WMP, its
primary location is on the computers drive

and in turn

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

due to

Digi
tal Rights Management

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

As CD
s have also played an integral part 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 digitall
y. 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 similar
feature
.

Consumers may

also

want to create a compilation CD
via

the media player
.

T
his is
only

possible

w
ith WMP,
WinAMP

and iTunes.

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

and Napster. Out of
these, the i
Tunes 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

downloads,
help
ing to

eas
e

the consumers search
.

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

this did not
eliminat
e the problem of poor quality

of

music. Acknowledging this, Naptser
had search engine
12


capabilities to find files; ability to specify 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. It also makes recommendations of
songs it thinks the
consumer may like. 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. Spotify and Napster are
only functional as audio players, although there ar
e 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 c
ontrols which allow music to be changed easily, without interu
pting
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 device.
Additional with
Napster

there is

a ‘moo
d manager’
available
,

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

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 fe
atures 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, fe
atures 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 down
loading 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 al
lows “faster ripping and burning from
CDs


(
WinAMP
, 2010)
.

WinAMP

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

which 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
Spoti
fy Free gives 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 Free.

Recognising this was not enough,
Spotify
reverted

back to their original c
oncept
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 mu
sic abroad. Spotify Premium
,
£9.99
,

has an
additional feature whereby you can

transfer your music to your phone and therefore access
unlimited music anywhere. You are also able to access your pla
ylists offline

making

it similar to
the
iTunes
service
.

Napster is very similar to Spotify
a
s

it offer
s different versions of the product

but with this media
player

there is no free version. For £5 per month, users are able to stream 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.
T
hese
price plans are very similar 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 al
so
be purc
hased through their catalogue from 50p to £1.29 compared to iTunes 79p to £7.99 an
album.

One of the key costs affecting media players is the cost of downloading music files. Th
e 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)
. Albums are also available at
a lower unit price, making it cheaper to buy than
individual singles

or even as CDs in store
.
.

Napster was set up as free peer
-
to
-
peer file sharing sites, until legal issues led to the pay
service tha
t 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 per
-
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, 2009), demonstrating the effectiveness of Napster and
LimeWire
s pricing
structure.
LimeWire

Pro ca
n
now
be obtained at an additional cost.


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.




14


Table

5:
Results of
Q
uestionnaire: How
M
uch
C
ustomers were
W
illing 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 opp
ortunity 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. Sp
otify 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
, wher
e

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.
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 W
M
P
, 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.

With all of our chosen media players except Napster, they are all freely available and make their
profit from online music

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
obsolet
e 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.

Figure 3: Cost Ranking


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

1
9

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 ser
vice
(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 peer
-
to
-
peer

(
P2P
) network is a different structur
e 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 thei
r 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 increas
es 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
4
.

Diagram showing
E
xamples of a P2P
N
etwork and
C
lient
S
erver
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 th
e Internet 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 MP3 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 5.



Figure
5
.

Napster P2P Network


Source:

How Stuff Works

(2010)

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 t
hat 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 industr
y 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 socially 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, fall 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 Electro
nic 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, 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 effects 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 pr
eferred 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
P
odoshen (2008), this is because students give higher importance to avoiding payment and
getting more choice, rather than ethical concerns. To them, it’s about convenience.


LimeWire

uses
a free Gnutella P2P file sharing network with over 100 mil
lion 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 hav
e their own download store, most media on
LimeWire

was exchanged through peers. In October 2010
,

after a court battle with the RIAA over
copyright infringement,
LimeWire

was issued an injunction forcing them to prevent “the
searching, downl
oading, uploading, file trading

and/or file distribution functionality, and/or all
functionality of its software” (Guardian, 2010). As a result, newer versions of the software have
been disabled

h
owever, older versions of
LimeWire

still functio
n. In response to the ruling, a
LimeWire

spokesperson said that the company is not shutting down, but will try to cease
distributing and supporting 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 Spotify, there are sites dedicated to creat
ing playlists which people
can 'share'

whilst also opting to

connect with friends who also

have Spotify via Facebook.
Finally,
WinAMP

utilises the peer
-
to
-
peer function through its shoutcast capabilities. As
previously mentioned, consumers share and listen to other consumers broadcasted radio
stations
rather than traditional ‘professional’ ones.

17


The
biggest issue raised with P2P nework
s 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 limited by

the content
provider.
However, t
he

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
-
compet
itive 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 subscription
-
based
approach to DRM, where by users can download an unlimited amount of music while
subscribed to the service.

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

the online client
-
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 leg
itmiate 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, such 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 socia
l networks and new trading platforms 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 del
ivery and the
needs of consumers.


Due to the peer
-
to
-
peer network forming the main structure of
LimeWire
, it will be ranked top
can be regarded as the best being the only key player that relies solely on a P2P network. The
others rank in terms o
f how many elements of P2P networks are used in the service they
provide,
as shown in Figure 6,
with WMP ranking last.












Figure
6
.

Peer to Peer

Networks
: Media Player
R
anking.



18



6.4

Compatibility with Peripherals


The digital music file wa
s 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, a
ud
io and v
ideo
f
ile formats
have developed greatly

with HD video files
as an example, different files have varying capabilities. The media players’ compatibility with file
formats can now be classed as a competitive form of comparis
on. Both the file types supported
and

the format which these can be converted into, are factors in the 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,
v
oc, 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
c
onversion 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.


Along with the increase in digitalisition came the high demands for portability. Therefore to meet
consumer needs
,

port
able 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 ava
ilable portable medis devices, the
iPod is undoubtedly the
most popular
device globally. It could be argued that
because of this, iTunes is also one of the
worlds most popular media players. Unlike traditional mp3 players, iPo
ds require iTunes
software capabilities in order to transfer music and other media
files from PC to device and visa
versa
.

As can be seen in the table above, there are some common files that most media players are
able to support, however
the differ
ence 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 revamped 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 p
eripherals. On the other hand, Spotify, the

market leader in streaming music, allows a compilation of current owned music and streamed
music. Although based on the table the selection is limited, it could also be argued that

this is a
major part in the con
sumer decision making process.

Not only do
m
edia
p
layers need to consider the file formats they are able to play but also how
these can be transferred onto portable peripheral
devices
.

iTunes is a default software with the
iPhon
es and iPod Touch, as well as the iPod. It also a compulsory software and cannot be
deleted even if it was desired by a customer. This makes iTunes a compulsory subsidiary over

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

Interestingly, the only media player mobile app that ca
n be purchased off the Apple store is
Spotify. Allowing the purchase of Spotify media player on its products could have 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
20


competitors and has embraced the trend of the smart phone. iPhone, Android, Windows Phone,
Symbian and Pa
lm are amongst

some of

the phones that can run Spotify.

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
are played

in

real time. If the owned music

or

playlists
is

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

Th
e “new” Napster, although

a streaming media player similarly to Spotify, takes another route
for portable music. Napster To Go allows the customer to Fill and refill their compatible MP3
player from a choice of over 10 millions tracks. Napster To Go giv
es 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. However, rather than porta
ble streaming, Napster follows a traditional
drag and drop method, without the
additional cost per song.

WMP

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

WinAMP

is available as both a desktop ap
plication 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 mana
gement solution to storing and playing your music.

When it comes to compatiability with peripherals, Napster is the best of the key players.
Although it

doesn’t convert file formats and only supports mp3 files, Napster To Go is available
on all periphera
ls.
The rest of
the media players rank as shown in

Figure 7.













Figure
7
.

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 streamedfrom a broadcasted address. Other users are
then able to search for these radio stations in a SHOUTcast directory inside
WinAMP

and play
whichever they choose for free. It can also be used to bro
adcast video, although this is more
complex as it requires access to a web server. WMP took a different direction by providing
online radio stations and centralising the distribution to WMP. Based on individual consumer
preferences, users are able to chose

one of these broadcasts. 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 d
ue to bandwidth constraints 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 W
M
P
. In contrast, iTunes does not offer streaming but
instead initiated “podcasts”; pre
-
recorded shows which could be downloaded and played later based on the same user defined
principles of choice.

Streaming has now evolved further to allow on demand services where multiple streams can be
accessed from one s
ource. The stream of music 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 offeri
ng a service which includes 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 a
nd Pandora, online personalised 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 finance 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 th
eir 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 s
treaming music player.
However, 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 Naps
ter 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. Wh
at’s more is that these services provide an uninterrupted, legal and stable library,
meaning that whatever content is available, it will always be available unlike P2P services like
22


LimeWire
. Quality is assured because of the legal nature of these streamin
g services.


There is a strong 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 conte
nt 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 servic
e 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 bac
k locally stored music as well as other media, streaming services will be more
inclined towards content provision and the user value associated with this.

With the advancement in technology, such as the increase in accessibility of wireless
broadband se
rvices, 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, with
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 8.



Figure
8
.

Streaming
: Media Player
R
anking.









23


7

PEST
Framework
Analys
is


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

P
olitical/ Legal

Aspects


One of
the major issues
within the music industry
is
that
legislation

is
constantly
changing
, 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.
O
n the 8
th

of June
2010
,
the Digital Economy Act came into force
,

regulat
ing
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 locations.
It is a combination of bo
th 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 download mus
ic on a large scale between users

but both were closed down
due to
illegal sharing
.
.
Since December 2000, it has been 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 revolu
tion, 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
choice to pick and c
hoose the individual songs
they want and are not forced to buy
whole albums if
only want
ing

a selected few. There is also more freedom for the record
companies as they can
now
offer a wider variety of product
s

in terms of artistes

and

types of music etc.

R
ecord compan
ies

are also saving costs if more people decide to
p
u
rchase
online as
the costs of physical
ly

produc
ing

the

CDs
are
reduced

(
removing the costs of making
the disks, transportation,
shipment and
in
-
store advertisements
)
.

Napster 2.0 came back in 2003 and set up a deal with a European independent music
label
and

are no
w respecting copyrights.
One issue that is still unresolved is what the
payment rate to publishers by record companies who wish to distribute the songwriter’s
music online.

Elaborate




24


7.3

Social Aspects


C
urrent 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
increas
ing

over recent years,
the current recession

has

made many

people

consider the idea

of not

pay
ing

for
music
but streaming
it for free
.

Social networks are a
lso 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


One of the key te
chnological issues is the music industry’s goal to distribute digital
music online
whilst
respect
ing

the music publishers and record labels. It is the
technological changes that have contributed to the
disturbance

with
in the industry.
There a
re numerous ways in which technology is trying to move towards a more
secure format such as by using streaming music.

There is an increase in downloading speeds now a days to ensure that consumers can
get the music they wish quicker than before.

New so
ftwares, technologies, etc.
















25


8

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
,
most of us will use a computer
to contain their library,
especially in the younger generations (Mintel, 2009).

Consumers
have built their own
music collection but are constantly wanting the

ability

to access
more and be up to
date. However, they are then faced with the choice of
whether to

buy and rip a CD,
purchase a digital album, or illegally download or subscribe to a service. This decision
will based on weighing
up the strengths and weakeness of each media player and the
use for which they are intended. Once this decision has been, the competition has to
overcome consumer loyalty and show new advantages to entice the consumer away
from their original decison.

Desktop media players now need to be easily accessable, easy to use both alone and
with peripherals, able to play a wide range of media and be increasingly portable. With
the integration of stores and music services, media playe
rs require large libraries of
music to be competitive in choice.

Without question, the growth of online music consumption has shown 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.

Through analysis of the

development of
music players it is shown that through
popularity media players have explanded and 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.

There are five key drivers that we identified at the beginning of our report as the key
players for co
mpaines to acknolwdge;
convienence, cost, peer
-
to
-
peer sharing,
compatability with peripherals and streaming capabilites. We have anaysled all of
these key drivers in turn with our six key players;
iTunes, W
M
P
, Napster, Spotify and
LimeWir
e
. We ranked all of the key media players in turn with the different key players
to see which media player would be ranked the highest.

Looking at our key drivers and evaluating the strengths and weaknesses of each music
player we have ranked them in orde
r of effectiveness to utilise these drivers and future
opportunity in the market at the current context
, as shown in Figure 9.

26



Figure
9
.

Overall Media Player
R
anking.


Although Spotify was not ranked the highest in all of the categories, it was the

highest
in convenience and streaming, and streaming is the driver that has the biggest imapct
upon consumer decisions. Using all of the above drivers, Spotify has captured the best
of each and leveraged them to their advantage.

With the change in how con
sumers act and the services music players provide, it
becomes clear that streaming services have an advantage. We feel that Spotify has
the best utilisation of the technology and the most potential for the future. Due to

the
rapid change within the music

industry,
competitors are constantly changing and
evolving.
Although streaming is seen as the new trend of playing music other media
players may develop another idea and
therefore the market will change again.As
streaming is still quite new in the market, it is
not clear whether it will overtake
downloading

to become the most popular form of music, (Youngs, 2010).

The way in which music players adapt and push new

technology can change the entire
shape of the market.
With iTunes and W
M
P

being preinstalle
d defaults maintaining
their share regardless of competition
, Spotify’s driver advantage may not be long lived.












27


Ref
erences

AOL Music (2010) WinAMP. Available at: http://www.WinAMP.com/. (Accessed 8th December 2010)


Apple (2010) iTunes. Available at: http://www.ap
ple.com/itunes/ (Accessed 8th December 2010)


Bangeman, E. (2010) “Sour Ruling for LimeWire as court says to turn off P2P functionality” Ars
Technica, November, Conde Nast Digital [Online]. Available at: http://arstechnica.com/tech
-
policy/news/2010/10/so
ur
-
ruling
-
for
-
LimeWire
-
as
-
court
-
says
-
to
-
turn
-
off
-
p2p
-
functionality.ars (Accessed
8th December 2010)


Bhattacharjee, S., Gopal, R.D., Marsden, J.R., & Sankaranarayanan, R. (2009) “Re
-
tuning the music
industry


can they re
-
attain business resonance?” Comm
unications of the ACM, 52(6), pp.136
-
140

Blyth, Alex (2008). Music in the digital age.
Accountancy,
28
-
31.


Feng, Y., Guo, Z., & Chiang, W.K. (2009) “Optimal Digital Content Distribution Strategy in the Presence
of the Consumer
-
to
-
Consumer Channel”,
Jou
rnal of Management Informations Systems
, 25(4), pp.241
-
270


Glynx (2010) What is Glynx. Available at: http://www.glynx.com/site/what
-
is
-
glynx (Accessed: 2nd
December 2010)


Gopal, R. D., Sanders, G. L., Bhattacharjee, S., Agrawal, M., & Wagner, S. C. (
2004). A behavioral
model of digital music piracy. Journal of Organizational C
o
mputing and Electronic Commerce, 14, 89
-
105.


Green, Heather (2008, May 5). Does she look like a music pirate?
Businessweek,
42
-
47.


Halliday, J. (2010) “LimeWire shut down by

federal court” The Guardian, 27th October, Guardian News
& Media Limited [Online]. Available at: http://www.guardian.co.uk/technology/2010/oct/27/LimeWire
-
shut
-
down. (Accessed 8th December 2010)


Hill, S. (2004). Microsoft targets iTunes' lead with Medi
a Player 10.
New Media Age
. 9
th

September, pg.
7.


How Stuff Works (2010a) How Streaming Video and Audio Works. Available at:

http://computer.howstuffworks.com/internet/basics/streaming
-
video
-
and
-
audio3.htm (Accessed: 5th
December 2010)


How Stuff Works

(2010b) How The Old Napster Worked. Available at:
http://computer.howstuffworks.com/napster.htm (Accessed: 1st December 2010)


IDG Tech Panel (2010) Apple to Introduce Streaming of iTunes media, Available at: http://www.gaj
-
it.com/20420/apple
-
to
-
introdu
ce
-
streaming
-
of
-
itunes
-
media/ (Accessed 2
nd

January 2011)


Imfeld, C. & Ekstrand, V. S. (2005). The music industry and the legislative development of the Digital
Millennium Copyright Acts's online service provider provision. Communication Law and Policy,
10, 291
-
312.


iTunes. (2010).
What's on iTunes.

Available: http://www.apple.com/uk/itunes/whats
-
on/. Last accessed
2nd December 2010


Jelassi, T. and Enders, A (2005).
Strategies for E
-

business
. 1st edn. Essex: Pearson Education
Limited. pp99


Keen, A.

(2007).
The cult of the amateur
. New York: Doubleday.


Lime Company (2010) LimeWire, Available at: http://www.LimeWire.com/. (Accessed: 8th December
2010)


28



Meisel, J and Sullivan T. (2002). The impact of the Internet on the law and economics of the mu
sic
industry. 4, 1
-
7


Microsoft (2010) Window Media Player. Available at: http://windows.microsoft.com/en
-
US/windows/products/windows
-
media
-
player (Accessed 8th December 2010)


Napster (2010) How it Works


Overview. Available at:
http://www.napster.co.u
k/more_about_napster.html. (Accessed: 8th December 2010)


Napster. (2010).
Music Features.

Available: http://www.napster.co.uk/search_music.html. Last
accessed 5th January 2010


Nullsoft. (1999
-
2010).
WinAMP Media player
-

MP3, Video and Music player.

Ava
ilable:
http://www.WinAMP.com/. Last accessed 21st December 2010


Park, C.W. and Lessig, V.P. (1981). Familiarity and Its Impact on Consumer Decision Biases and
Heuristics.
The Journal of Consumer Research
.
8
, pp.223
-
231.


Podoshen, J.S. (2008) “Why take
Tunes? An exploratory multinational look at student downloading.”
Journal of Internet Commerce, 7(2), pp.180
-
202


Rosencrance, L. (2003). BSA survey: Campus attitudes invite software piracy. Working Paper [On
-
line].
Available:
http://www.computerworld.com
/governmenttopics/government/legalissues/story/0,10801,85017,00.html


Spotify (2010) How Spotify works. Available at: http://www.spotify.com/uk/about/features/. (Accessed:
8th December 2010)


White, D. (2008).
WMP vs WinAMP vs iTunes vs MediaMonkey.

Avai
lable:
http://www.skytopia.com/project/articles/music/players.html. Last accessed 20th December 2010


WinAMP. (2010).
Features.

Available: http://www.winamp.com/help/Player_Features. Last accessed
23rd December 2010.


Windows Media Player. (2010).
Window
s Media Player Home.

Available:
http://windows.microsoft.com/en
-
US/windows/products/windows
-
media
-
player. Last accessed 14th
December 2010.


Woolley, D. (2010). THE CYNICAL PIRATE: HOW CYNICISM EFFECTS MUSIC PIRACY.
Academy of
Information and Management S
ciences Journal
. 13 (1), 31


43


Youngs, I. (2010).
Is streaming the future of music?.

Available:
http://news.bbc.co.uk/1/hi/entertainment/8481658.stm. Last accessed 03 Jan 2010.