Business model innovation in the Norwegian indie music industry

Abstract

In the nine years that have passed since Spotify launched its service in the fall of 2008, the industry for recorded music has experienced a streaming revolution where the industry’s model for consumption and monetization has been turned around. This disruptive change is likely to have caused substantial changes in the strategies and business models for the industry, and especially so for the indie sector of the industry who due to their limited amount of income generating catalogue, has been deemed to be affected negatively by the exogenous change. Building on a literature review of some of the most well-known and established literature on frameworks for business models and business model innovation, an overarching model for business model classification has been synthesized. Through a multiple-case study on four Norwegian indie record labels conducted with semi-structured interviews, the model is employed to facilitate a descriptive analysis of the four indie labels’ business models which take aim at highlighting the main variable components the labels can change or manipulate to innovate and thus achieve a competitive advantage in their markets. Despite having clear limitations, the model proved itself applicable for analysis of the indie sector of the recorded music industry, and was successful in highlighting some developmental trends that are likely to drive changes in strategy and business model innovation. The main challenge for the sector is deemed to be the pro-longed timeline for income generation and recoupment of costs. In a short-term perspective, the sector has mainly coped with this challenge through vertical integration and scope integration. In a long-term perspective, it is also met with what seems to be a shift in the industry standard for contract durations. Another developmental trend that was uncovered through the analysis is a shift in who the labels identify as their customers (from end consumer to the artist), which can open up for multisided business models. It can be argued that this has made way for a re-evaluation of the offerings of indie labels. This has led to business models with a strong focus on selected core activities, while most support activities are being outsourced to a small selection of suppliers being governed through relational or network based governance systems.