E-commerce Business Models for the Music Industry

Clearly, the music industry faces considerable pressure to adopt new business models in order to meet consumer needs successfully in the e-commerce milieu. In particular—as is discussed in the following section—music labels are incurring lower costs and reduced barriers to entry. In the third section of this paper, I examine the business models that are being developed to respond to these changes and discuss the flaws inherent in these evolving business models. Napster’s success indicates that consumers clearly value choice and convenience. To provide value to consumers, the major labels must cross-license their catalogs to third-party content aggregators (sites where consumers can gain access to a wide variety of music, from various labels).