In the era of the Internet and digitalization, the music industry faces since the beginning of the 2000’s one of its biggest dilemma. Should it kept the current standard format or not? And furthermore, should it kept the physical format or not?
The music industry already faced this problem with the vinyl disc and succeeded in launching an innovative alternative, the Compact Disc in 1982. Majors tried to launch alternative to the CD (Super-Audio CD as example) to compensate the slow down of sales in the late nineties. However, the lack of innovation of those alternatives never allowed a real substitution. Nowadays the standard format of the music industry market is still the same as almost thirty years!
Thanks to the democratization of Information Technology at the end of the nineties, consumers found a substitute for CDs which offer innovation and convenience, the MP3 file.
Even if the CD format is still the major source of income for the music industry, it won’t be the case for next years.
The music industry has to be prepared toward the new consumer generation!
Indeed this generation who born with the Internet and new technology (Computers, MP3 Players…) does not have the same relation concerning the “physical object” due to the fact that they are used to immaterial products.
At the beginning, the digitalization of music was made by hackers who provide free music on the Internet without any answer of the music industry which still thought that the CD format will be perennial.
Now the music industry still works on the digitalization of its offer. Nevertheless, how provide a sustainable economic system when consumers are not used to pay for a product?
A French website called Beezik launched in mid 2009 a new alternative for music consumption. People who created this website provide free MP3 files!
How can they do that?
Beezik’s economic system is based on the indirect remuneration it means that it is not the consumer who paid for the final bid.
Indeed this system is based on advertising. People who want to get music from Beezik have to watch a video advertisement before downloading the file.
For now, the offer does not provide enough hindsight to know if it is sustainable for every actors of the industry.
Does the answer for is the free offer?
Others industry such as the newspaper industry and the movie industry face the same kind of issues currently and have to react quicker than the music industry did to not experience the same kind of crisis.