It was fun to give a keynote on business model innovation at Eurosonic Noorderslag, Europe’s most important live music industry conference. The music industry is more or less a playground (and battlefield) of new business models
In this second blogpost (read part I) on the music industry I present two of the examples of innovative business models in this area, which I presented during my keynote talk: Sellaband and Spotify. Both companies were actually present during my presentation.
While in the past the music industry was characterized by one dominant business model design (the one of the major recording companies), the future will be characterized by multiple competing business models.
There was also an interesting discussion in the panel after my talk, which hosted Nokia, Spotify and rights holding company Buma/Stemra. One of the elements pointed out was a the competition between business models based on ownership of music (e.g. download) versus access to music (e.g. streaming).
Check out my slides for an illustration of Sellaband’s and Spotify’s business model:
What we see in the music industry is typical for any industry that has to reinvent itself. The incumbents always want to know the NEXT NEW business model that will dominate the industry. But there is no such thing as the NEXT BIG business model. There are several possible business models that compete for dominance.
And Market research will not tell you which business model will be the dominate design in the future. Today, everybody is love with Spotify. Yesterday, it was last.fm and tomorrow?
But this uncertainty is normal in any emergent industry. Utterback describes in its seminal book on The Dynamics of Innovation very well how dominant designs occure: http://bit.ly/71GhKk
And often only with hindsight we can explain why one business model became dominant while the others faltered.
Let’s see who will survive.
Patrick, I absolutely agree with your comment. It is unlikely that there will be a NEXT NEW dominant business model design in this and many other transforming industries. We will increasingly see multiple competing business models.
I also very much like your assessment of the limitations of market research. It won’t tell you how to succeed. The only way that incumbents, but also start-ups can win is by experimentation.
I think that one of the biggest hold backs of the current transition is that the companies see 100€ of revenue go, are searching for something new that can replace that 100€.
Instead the reality seems to be that for every 100€ you need to replace that with 1×30€ 3×10€ and 5×5€ (which indeed never comes back to a 100!), which will affect the workload, margins and general thinking of business dramatically. Business events/launches are turning into services/processes which will change business forever going forward.
[...] La représentation du business model de Spotify tiré des deux excellentes présentations d’Alexander Osterwalder sur l’industrie musicale visibles sur son site ici et ici. [...]