The purpose of this thesis is to develop a qualitative understanding of the impact of peer-based free exchanges on the social and economic value of information goods, and use that to develop a sustainable online business model for information goods industries. There are a number of studies that have been conducted on MP3 usage, peer-based systems, Internet usage and other related topics, and the most relevant statistics are presented here to provide a context for the specific issues examined. In addition, primary data has been collected through 23 interviews with executives, technologists and end users, 206 questionnaires from end users, and 1141 Internet questionnaires.
The paper consists of 5 main chapters and two appendices. The first chapter introduces a definition for the concept of information goods, and briefly surveys the relevant legislation and case law which is relevant to their protection under copyright. Understanding the requirements and limits of the law is crucial to the development of a viable business strategy in any area – but it’s one of the principle considerations for information goods industries. The second chapter examines consumer behavior, and describes the modalities related to the sharing of information goods that myself and others have observed in the last 15 years in various segments of the population. The third chapter describes the recording industry, which is studied in depth. Its history, value chain, key players and statistics are presented and analyzed. The fourth chapter presents the primary data collected through the administered survey, and analyzes its meaning and implications with the benefit of the opinions collected through direct interviews. The questionnaire itself, as well as a group of representative anecdotal feedback, is presented in Appendix A. The fifth chapter proposes a new online business model for information goods industries, using the music industry as the primary example. It consists of a sequence of prescribed measures, and analysis is presented to argue why such a model, and only such a model, will be successful in the short run and sustainable in the long run.
It should be noted that this paper is not trying to produce a comprehensive solution for the problems facing the recording industry. It is possible (and in my opinion quite probable) that the vociferous protection of copyrighted material, at least as a primary goal, may not be the best way for recording labels to maximize their revenues. The dynamics of the recording industry are studied in order to illustrate certain economic and managerial arguments pertaining to information goods industries online. However, issues that are not directly related to the creation and usage of information goods cannot necessarily be related to other industries, and are therefore not dealt with. Instead, this paper tries to focus on how any industry can maximize revenues from commercial information goods in the face of free information exchanges which give those goods to consumers without cost.
Introduction
Chapter 1. Information Goods
- 1.1 Definitions
1.2 Copyright Law
Chapter 2. Technology and Consumer Behavior
- 2.1 Third Party Sharing
2.2 Attitudes By Product Category
2.3 Peer-Based Systems
Chapter 3. The Recording Industry
- 3.1 History
3.2 Structure
Chapter 4. Study: Audio File Sharing Users
- 4.1 Key Findings
4.2 Analysis
Chapter 5. Proposal For a New Online Model
- 5.1 Pricing Model
5.2 Commercial Exchange Standard
5.3 Strategy for Free Exchanges
5.4 Analysis
Conclusion
Appendices
- A: Digital Music Survey
- B: Recording Industry Data
References
