Business Model evolution in the music industry

2007 is a cornerstone year in the music industry. Various business model have been tested and I guess that 2008 will see some trends emerging. Let's take the Radiohead example, no figure have been officially released but simply the fact that a well established band can produce, market and distribute his own music is already a revolution. The perception of the workload (and cost) is not always reflected in the price the people wanted to give away for the In Rainbow Record (average of 2.5£). Now that this action is closed and that the album is regularly distributed through I-tunes and XL recording, I'm wondering if it was just not a marketing action....

Madonna is another example, she signed an all in contract with the concert promoter Live Nation (Clear Channel), valued at 120m$ for 3 albums, concert organization, selling merchandising and Licensing her name. That contract is also unique because behind live Nation, clear channel owns a full supply chain for the music industry from Radio to ticketing and venue. The value add of such deal for Clear Channel is huge !

The open source model is also applicable for another segment of artists. Smaller artists (in term of audience ,not in term of quality !) can benefit from free distribution and social platform like Jamendo with their 2530.000+ users to create a buzz and get noticed by professionals.

To conclude, many other alternative where elaborated but in essence to go back to the primary objective of this blog (publishing industry), the value chain is not changing in the music industry. The content (the music itself) is more and more accessible for free on the web and the value added of the actors need to be refine to establish new business models. Orgnaization like the Rolling Stone (not sure if I can still call them band :-) needs a new record to promote a worldwide tour, the money is defenitely not generated by that new album. I can see similar trend in the publishing industry, the information is more and more available for free and adaptation are needed to monetize new value added.