DIGITALDISTRIBUTIONOFRECORDEDMUSIC INFINLAND Ananalysisofservicesfromaconsumerandindustry perspective AnttiMoilanen Bachelor'sThesis January2011 DegreeProgrammeinMusicManagement SchoolofBusinessandServiceManagement
DESCRIPTION Author(s) MOILANEN,Antti Typeofpublication Bachelor sthesis Pages 98 Confidential ()Until Title DIGITALDISTRIBUTIONOFRECORDEDMUSICINFINLAND: Ananalysisofservicesfromaconsumerandindustryperspective DegreeProgramme DegreeProgrammeinMusicManagement Tutor(s) CRAWFORD,Steven,KREUS,Pia Assignedby Date 05.01.2011 Language English Permissionforweb publication (X) Abstract TherecordindustrygloballyandinFinlandhasbeenundergoingamajortransformationoverthe lastdecade.duringthisperiodoftimerevenuesintherecordingbusinesshavesteadilydeclined, resultinginsignificantfinanciallossesandforcingcompaniestodownsizeandinsomecasesshut downcompletely.theprimaryforcesbehindtheglobalrecordindustry'sproblemsarelinkedto rapiddevelopmentsintechnology,thegloballyubiquitousnatureandeffectsofonlinedigital piracy,andfundamentalchangesinconsumerbehaviour. ThemainpurposeoftheresearchistoshedmorelightonhowconsumersinFinlandperceiveDigital MusicDistribution(DMD)andonhowcompaniesuseitasameansofcontrol.Therefore,aprimary focusisplacedonexploringanddescribingdmd,andsoresearchquestionswereformedbasedon secondarydatathatfocusontheobjectivesofvarioustypesofdmdemployedtoday,andconsumer perspectivesaboutthem.inaddition,theauthorizeddigitalmusicsectoronlycountsforaminor shareofthetotalmusicmarketrevenueinfinland,andthereasonsbehindthiswereresearched throughconsumerperspectives.theliteraturereviewproducedtheconceptualframeworkthat guidedthedatacollectionprocess.amixedmethodsapproachwasemployedinwhich primarydatawascollectedthroughquestionnaireandinterviewmethodsfromconsumersanda representativeoftherecordindustry,respectively. TheresultsofthestudyshowthatconsumersinFinlandaregenerallysatisfiedwiththeauthorized musicservicesavailable.however,illegalfilesharingisverycommoninfinlandandauthorized servicesarenotatsuchacostlevelwheretheycanbeconsideredasviablealternativesto unauthorized,illegalmusicacquisitionmethodsformanyconsumersinfinland.thisledtothe conclusionthattherecordindustryisnotusingitsbusinesscompetencesandcreativitywellenough togainbackcustomersbyprovidingcompellingauthorizedalternativesforhabitual usersofillegalfilesharingnetworks. Keywords Music,Distribution,Digital,Customer,Behaviour,Record Miscellaneous Appendices:questionnaireforsurvey,surveydata,commentsforsurvey,52pagesintotal
OPINNÄYTETYÖN KUVAILULEHTI Tekijä(t) MOILANEN,Antti Julkaisunlaji Opinnäytetyö Sivumäärä 98 Luottamuksellisuus () saakka Työnnimi MUSIIKINDIGITAALINENJAKELUSUOMESSA: Musiikkipalveluidentarkastelukuluttajanjamusiikkiteollisuudennäkökulmasta. Koulutusohjelma DegreeProgrammeinMusicManagement Työnohjaaja(t) CRAWFORD,Steven,KREUS,Pia Toimeksiantaja(t) Päivämäärä 05.01.2011 Julkaisunkieli englanti Verkkojulkaisulupa myönnetty (X) Tiivistelmä LevyteollisuusonollutvahvanmuutoksenalaisenakansainvälisestijaSuomessaviimeiset kymmenenvuotta.tänäaikanalevy yhtiöidentulotovattasaisestilaskeneetjasuuriosaniiden markkina arvostaonhävinnyt.monetovatjoutuneetturvautumaanirtisanomisiinjatoiminnan lopettamiseen.pääasiallisetsyytlevyteollisuudenongelmiinovatteknologiankehittyminen,laajalle levinnytlaitontiedostojenlataaminensekämuutoksetkuluttajakäyttäytymisessä. Tämäntutkimuksenlähtökohtanaoliselvittääjakuvailladigitaalistamusiikinjakelua kokonaisuutena.lisäksitarkoituksenaolitutkiasitä,kuinkakuluttajatnäkevätjakuinkayritykset hyödyntävätdigitaalisenmusiikinjakelun.saavuttaakseentutkimukselleasetetuttavoitteet tutkimuskysymyksetmuotoiltiinniin,ettänekäsittelivätdigitaalisialiiketoimintamallejajapalveluita kuluttajiennäkökulmasta.digitaalinenmusiikkisektorisuomessakäsittäävainpienenosuudenkoko musiikinmarkkina arvostajasyitätähänpyrittiintutkimaankäyttäenkuluttajalähtöistänäkökulmaa. Tutkimuskysymystenpohjaltatoteutettiinlaajakirjallisuuskatsaus,jokatuottikonseptuaalisen viitekehyksenaiheenjatkotutkimustavarten.tutkimuksenedetessätämäviitekehysohjasin kirjallisuuskatsaustajatietojenkeräämistä.tutkimuksendatasaatiinkerättyälaaja alaisesta kuluttajakyselystäjahaastattelusta.menetelmäsaatujentulostenanalysoimiseksiolilaadullinen. Tutkimuksessasaatujentulostenperusteellanäyttääsiltä,ettälähtökohtaisestisuomalaiset kuluttajatovattyytyväisiätämänhetkisiinlisensoituihinmusiikkipalveluihin.laitontiedostojen lataaminenonkuitenkinhyvinyleistä,sillälisensoidutpalveluteivättällähetkelläpystyvastaamaan laittomienpalveluidentarjontaan.tutkimuksenperusteellanäyttääsiltäetteivätlevyteollisuuden toimijatkäytäparhaallamahdollisellatavallahyväkseenliiketoimintaosaamistaantuodakseen markkinoillepalveluita,jotkahoukuttelisivatlaittomienpalveluidenkäyttäjiämuuttamaantapojaan. Avainsanat(asiasanat) Musiikki,Jakelu,Digitaalinen,Kuluttaja,Äänite Muuttiedot Liitteet:kuluttajakysely,kuluttajakyselyntulokset,kommentitkuluttajakyselyyn,yhteensä52sivua
1 TABLEOFCONTENTS 1INTRODUCTION... 4 2LITERATUREREVIEW... 7 2.1Recordedmusicdistribution... 7 2.2Digitalmusicdistribution... 8 2.3Globalmusicmarket...14 2.4Finnishmusicmarket...16 2.5Broadbandandmobile...17 2.6DigitalRightsManagement...18 2.7Informationeconomy...19 3RESEARCHPROBLEM&QUESTIONS...20 4METHOD&METHODOLOGY...21 5RESULTS...25 5.1Surveyresults...25 5.1.1Digitalmusicacquisitions...26 5.1.2Mobilemusic...27 5.1.3Satisfactionwithdigitalmusicservices...27 5.1.4Preferencestoacquiredigitalmusic...29 5.1.5Methodsforacquiringdigitalmusic...31 5.1.6Acquiringdigitalmusicinanidealworld...32 5.2Interviewresults...33 5.2.1Consumerhabitsinacquiringmusic...33 5.2.3Consumersandcommunication...34 5.2.4TherecordindustryinFinlandatpresent...34 5.2.5Recordcompanies abilitytochange...35 6DISCUSSION...36 7CONCLUSION...39 8LIMITATIONS...41 9RECOMMENDATIONS...42
2 REFERENCES...43 APPENDIXA:QUESTIONNAIREFORTHESURVEY...46 APPENDIXB:SURVEYDATA...49 APPENDIXC:COMMENTSFORSURVEYQUESTION11...53 APPENDIXD:COMMENTSFORSURVEYQUESTION12...63 APPENDIXE:COMMENTSFORSURVEYQUESTION13...76 APPENDIXF:COMMENTSFORSURVEYQUESTION14...88
3 ACKNOWLEDGEMENT IwouldliketothankmyinstructorsStevenCrawfordandPiaKreusfortheirhighly importantguidanceandpatienceduringtheprocessofconductingtheresearch andthesubsequentwritingofthisreport.furthermore,iwouldliketothankmr. LauriRechardtforhistimeandfortheopportunitytointerviewhimforthisthesis. Inaddition,Iwouldliketothanksomeofmyfriendsfortheirsupportand discussionsessionsduringtheprocessofcompletingthisthesis.mostimportantly, IwouldliketothankAnniforherpatienceandeverlastingsupportduringthedark autumnnightsandlatehours.
4 1INTRODUCTION ThomasEdison sinventionofthephonographin1876isoftenseenasthe startingpointoftherecordindustry(morton,2006).atthattimeitwasamajor stepintechnologicaldevelopmentthathasalwaysbeenoneofthekeydriverson howmusicisbeingdistributedtoconsumers(ibid).overacenturyhaspassed andtherecordindustryhasdrasticallychangedfromtheearlyphasesofitsbirth (Ibid).Duringthisperiodoftimeubiquitouscomputercommunicationnetworks havebroughtdramaticchangesinthescope,scaleandefficiencyofcultural productionvaluesystems(benkler,2006). AccordingtotheInternationalFederationofthePhonographicIndustry(IFPI), newcompaniesfromotherindustriesarenowenteringthebusinessofmusic distribution.inaddition,changesinconsuminghabitswillalsoforcetherecord industrytoadapttonewmarketdemands(ifpi,2009b).thisprocessforcesthe recordindustryintobigtransformation(ibid).however,therecordindustrywill continueproducingmusic,peoplewillstillbelisteningtoitincars,homesandin public;theconsuminghabitswillnotchangeeventhoughwaystodistributethe contentwill(ibid).therefore,therecordindustryisnowmovingfromselling physicalmediatothesalesofsongsandlicensingrights(ibid).accordingto Benkler(2006),onceithasbeenproduced,musicisa"non rivalpublicgood" whosemarginalcostiszero.digitalfilescanbereplicatedwhereverneededand thosearenottakenfromoneplacetoanotherinordertobeplayed(ibid).the onlycoststhatareinvolvedatthetimeoftransmissionarethestorage, communicationandprocessingcapacity(ibid). AccordingtoTapscott&William(2006),agreatdealofdiscussionhastaken placewithintherecordindustryontopicsofdecreasingmarketshares, digitalisationandillegalfilesharing.currently,therecordindustryistryingto adapttothenewmarketdemandsbylaunchingseveralonlinemusicservices andopeningtheircataloguesformusiclicensingtodigitalretailers(ibid). Tapscott&William(2006)explainthatdigitalmusicprovidesgreat opportunitiestoplaceartistsandconsumersatthecentreofvaluecreation. Therefore,therecordcompaniesshoulddeveloponlinebusinessmodelsand
5 offeringswiththerightcombinationoffreedom,consumercontrolandservices (Ibid).Therecordindustrymustunderstandthattheycanachievemuchmore withanopenmindsetthantheycanwithaclosedapproach(ibid). ResearchbyAarkstoreEnterprise(2009)demonstratedthattheadoptionof broadbandandmobiletechnologies,thegrowingnumberofsmartphonesand portablemusicplayersaresomeofthekeydriversofadigitalmusicmarket.the IFPI(2009)alsostatedthatthedigitalmusicmarketisinfluencedbythestrength ofthephysicalsector,thelevelofpiracy,creditcardpenetrationandavailable paymentmethods.eventhoughthedigitalmarketsarestillwidelyunexplored, thoseseemtohavesignificantgrowthpotential(ibid).accordingtokusek& Leonhard(2005),theInternethasfinallyreachedthecriticalmassinmostofthe Westernnationstoencouragebusinessmodelsindigitalenvironments. Mansala(2010)explainedthatconsumershaveliquidityandarewillingtopay,if thecontentsareeasilyavailableindigitalformatsandinsuchawaythattheyare comparablewithillegalfilesharing.itseemsthatconsumersactuallymovedto theinternetmuchfasterthanthesuppliersdid(ibid).thisunbalancedsupply anddemandhasledtheentertainmentindustriesintoasituationthatiscausing themseveralproblems(ibid).accordingtotheifpi(2009b),changesinhow recordedmusicisdistributedarereflectedinallthepartsofthevaluechain.in thecurrentenvironmentrecordcompaniesareexperimentingwithanumberof newmethodsformusicdistributionfromwhichdigitaldownloads,bundled servicesandsubscriptionservicesaregainingthemainfocusfromtherecord industryandcustomerperspectives(ibid). AccordingtoMansala(2010),illegalfilesharingstillremainsthemost challengingsubjectfortherecordindustry.however,theavailabilityoflegal materialisarguablythebestalternativeforeliminatingpiracy,therefore,allthe availableresourcesshouldbeboundtothisaim(ibid).intheearly1990'sdigital technologiesallowedthebirthofnewproductionsystems,whichproduced illegalcopiesbyusingthesamemethodsaswereusedwiththeoriginalproduct (Ibid).Intheformittakestoday,onlinepiracyforcesentertainmentindustriesto adapttotheneedsofconsumers(ibid).ifthisisnothappening,wewillseean evenmoreextensivegrowthofillegalfile sharingservices(ibid).
6 Themusicindustryhasbeeninturbulenceforthepastdecadeandseveralnew serviceshavebeenlaunchedtothemarket.thedigitalmusicmarketonlytakesa minorshareofthetotalmusicmarketrevenuesinfinland.therefore,itis unclearifthecurrentmusicservicesareabletofulfilthemarketdemands.the objectivesofthisstudyweretoanalyzecurrentdigitalmusicservicesinfinland fromaconsumerperspectiveandtodrawanideaofwherethedemandis moving.theconsumeraspectisimportantforthedevelopmentoftherecord industry,newbusinessmodelsandfortheexistenceofaculturallyrichsociety.
7 2LITERATUREREVIEW 2.1Recordedmusicdistribution AccordingtoPassman(2008),distributionofrecordedmusicisdividedinto physicalanddigitaldistribution,whichthencanbedividedintosmallersectors. However,thenextgenerationofmusicdistributionwillbeelectronicinsteadof physicalsoundcarriers(ibid).mansala(2010)statedthatin2010themost commonwayofdistributingmusicisstillwithphysicalsoundcarriers,butthe transitionisgoingstronglytowardsdigitaldistribution.theseearlyphasesof progressionfromtheoldtypeofbusinessintodigitalmodelshavebeenoneof themosttroublingissuesfortherecordcompanies(ibid). Morton(2005)explainedthatwhenconsideringthebirthofdigitaldistributiona fewmilestonescanbeindentifiedonthewaytothecurrentposition.pulsecode Modulation(PCM)wasthefirstformofaudiocompressiontoconvertanalog audioandvideosignalsintoadigitalformatintheearly1980's(ibid).withpcm, theengineerswereaimingtocompressthedatamainlyfromvideoinsuchway thatitcouldbemoreeffectivelytransmittedoverthetelephonelines(ibid).the wholeprocessstartedalineofresearchthatin1992finallyresultedinthebirth ofmpeg 1layer3standards,laterreferredasMP3(Ibid).Ayearafterthe publicationofthemp3standardthefirstformsofdigitalmusicdistribution beganontheinternet(ibid).accordingtopassman(2008),thefirstpioneering onlinemusicsourcewasinternetundergroundmusicarchive.however,thefirst commercialmusic downloadingsitemp3.comcamefouryearsafterthefirst formsofdigitaldistribution(ibid).mp3.combasedtheirbusinessmodelon advertisementrevenues,sothatallthemusicwasfreetodownloadandthesite wasfilledwithadvertisements(ibid).evenbeforethattheadvertisement businessmodelhasbeencommonlyusedinradioandtvbutindigitalmusic distributionitwasthefirstofitskind(ibid). AccordingtoFisher(2004),theInternetisusedformultiplepurposesbutmost importantlyitenablespeopletotransmitdigitalaudioandvideorecordings easily,quicklyandinexpensively.mewton(2001)statesthateventhoughthe recordcompaniesmighthavedifficultiestounderstandthefundamentalsofthe
8 Internetandtheelectronicdeliveryofmusic,itisstillthebestthingthathasever happenedtothemusicindustry.hecontinuesbyexplainingthatdownloadingis oneofthemainactivitiesintheinternet,anditcanbeseenasamodern day equivalentoftapingafriend salbumontoacassette(ibid).fisher(2004) explainedthatdigitalsystemsandfileshavealeasttwocharacteristicsthathave proventobecrucialfortheentertainmentrevolution.copiesofdigitalrecordings areidenticaltotheoriginalsandthosecanbestoredandmanipulatedwith severalcomputersatthesametime(ibid).inaddition,animportantfactoristhe compressionlevelatwhichtheycanbepacked,whichallowsefficientusageof space(ibid). ResearchbyKlym(2005)statesthatthefirstfile sharingcommunitiesoperated aroundcentralizeddownloadingsitessuchasmp3.com.in1999shawnfannig launchedhislandmarkpeer to PeersoftwareNapster,whichallowedusersto exchangefilesdirectlybetweeneachother(ibid).therecordingindustry AssociationofAmerica(RIIA)quicklysuedNapsterafteritslaunch(Ibid).This waspossiblebecausenapsterwasbasedonacentralizedfile sharingtechnology anditwasseenasanillegalservice(ibid).theriia slegalactionagainstnapster andotherearlymp3siteslaunchedtwooppositedirectionsthatbetweenthem definedthefutureofdigitalmusicdistribution(ibid).thefirstdirectionisthat illegalfilesharingnetworkstriedtocircumventauthoritiesandtobuildtheir newservicesinsuchawaythattheywereoutofthereachofriias legalaction (Ibid).AnotherdirectionisthebirthofdigitaldistributionwithDigitalRights Management(DRM),astherecordcompanieslaunchedanumberofnewservices tothemarketthatweresellingmusicwithprotection(ibid). 2.2Digitalmusicdistribution AccordingtoLappalainen(2010),previouslytherecordbusinesswasmainly basedonsellingmusiconphysicalsoundcarriers.themostcommonmethodof distributionwastosellmusiconacd,whichatthesametimewasthemain revenuestreamfortherecordindustryitself(ibid).thesedaysthemainrevenue streamisdecliningandtherecordbusinessisfragmentedintoseveralsmaller revenuesstreams(ibid).atthispointdigitaldistributioncanbedividedintofive
9 maincategoriesbasedontheirbusinessmodels(ibid).thesecategoriesare: digitaldownloads,subscription,bundled,advertisementfunded,andringtones (Ibid).DavidMorton(2006)statedthattechnologicaldevelopmentwillcontinueto drivechangesinhowmusicisbeingdeliveredtoconsumers.mostofthecommon digitalbusinessmodelsarepresentedherebasedontheirkeyfunctions.in additiontothose,threeothertypesofbusinessmodelsarealsopresented. AccordingtotheIFPI(2009b),recordcompaniestogetherwithdigitalretailersare tryingtobringmorealternativestothemarketandbydoingsotheyaimtocreate morechoicesforconsumers.thetransitionfromphysicalretailingtoadigitalform isreshapingthewholeindustryandinfluencingallaspectsofthevaluechain (Ibid).Asconsumerbehaviorchangesinanongoingprocessrecordcompaniesare forcedtodevelopnewbusinessmodelsandalsotochangetheirwaysofoperating (Ibid).Thesechangesindistributionarereflectedinthedifferentwaysconsumers wanttohavetheirmusic(ibid).morton(2006)statesthatfromtheearlyphase whendigitaldistributionwasonlythroughdownloadsthereisnowashifttowards streamingandsubscriptionservices.fromacustomerperspectivethismeansa transitionfromownershipofthecontenttoanopportunitytoaccessthecontent wheneverneeded(ibid). AccordingtoLappalainen(2010),oneofthemainformsofthedigitalbusiness modelisadownloadingstorefromwhichtheconsumermaydownloadan individualtrackorthewholealbum.passman(2008)describesdigitaldownload asatransmissiontotheconsumerwithavarietyofmethods.themostcommon platformsusedtodeliverandtopurchasedigitalcontentaretheinternetand mobilephone(ibid).atthecoreleveldigitaldownloadmeansrecordsbeingsold electronicallyinallthepossibledigitalwaysthatallowtheconsumertostore musicforlateruse(ibid).gordon(2005)explainsdownloadingastransferringof onefilefromonecomputertoanother.hecontinuesbyexplainingthatwhen talkingaboutmusicdownloading,itreferstomakingapermanentcopyof prerecordedmusicandthentransferringittoacomputerbydigitalmeans(ibid). Theindividualdownloadmodelthatisalsoknownas alacarte givesthe consumerafreedomtochoosewhichpartofthecontentheorshemightbe willingtopayfor(dubosson Torbay,Pigner&Usunies,2004).Accordingtothe IFPI(2009),themostwell knownretailerandcurrentmarketleaderofdigital
10 downloadsgloballyisapples itunes.previouslyalldownloadshadthesame pricebutthesedaysflexiblepricingisalsobeingused(ibid).eventhoughdigital downloadhasseveralpositivefeaturesasabusinessmodelitislosingmarket sharetoothertypesofdigitalmusicbusinessmodels(ibid). Lappalainen(2010)explainsthatthesubscriptionbusinessmodelusually revolvesaroundmonthlypayment.withasubscriptionservicethecustomeris abletoconsumethecontentasmuchaswantedwithaflat ratepayment(ibid). Themostcommondeliverymethodsforsubscriptionservicesarestreaming ondemandanddownload(ibid).passman(2008)explainsthatstreaming ondemandisatransmissiontotheconsumerbydigitalmeans.thismeansthatthe consumerwillnothavetheownershipovertheproductbutinexchangeisableto accessthecontentwheneverwanted(ibid).streamingissimilartotraditional broadcastingtechniques;theonlydifferenceisthatthecontentisdelivered basedondemand(ibid).mewton(2001)explainsthatsubscriptionservicesare alternativesforuserswhoarenotwillingtopayforeachindividualdownload. Forthesetypesofusersthereshouldbealternativestosatisfytheiracquisition needs(ibid).accordingtotheifpi(2009b),streaming on demandasa distributionmethodisgaininganincreasinglevelofpopularityamong consumers.subscriptionbusinessmodelshaveseveralpositivefeaturesfor consumers,whichmightattractthemawayfromusingunauthorizedservices (Ibid).AccordingtoDubosson Torbay,Pigneur&Usunier(2004),therecord industryseesagreatdealofpotentialinsubscriptionbusinessmodels,anditis verylikelythatanincreasingnumberoftheseserviceswillemergeinthefuture. Furthermoremanycompaniesfromotherindustrysectorsareentering,the digitaldistributionofmusicwithnewservicestiedtoasubscriptionbusiness model(ibid).mostofthesubscriptionservicesoperateonaflat ratebased pricing,sothatconsumersarepayingthesameamounteverytimedependingon thelevelofservicerequired(ibid). SteveO'Hear(2007)explainsthatintheupcomingyearsmusicwouldbeclosely bundledtogetherwithinternetserviceproviders(isp)andhardware manufacturers offerings.musicserviceswillbesoldtogetherwithother productssothatmusiccreatesaddedvaluefortheconsumerusingtheproduct
11 (Ibid).Quiteoftenthesemodelsareoperatingonaflat ratebasedpricingmodel, andinexchangetheuserhasaccesstoauthorizedcontentandservice(ibid). AccordingtotheIFPI(2009a),therearehighexpectationsamongrecord companiestousetheirassetsincooperationwithcompaniesandmanufacturers fromotherindustries(ibid).incomesareexpectedtoincreaseinthenextfew yearsfromrevenue sharingdealswithisp s,hardwareandmobilephone manufacturers,andtechnologycompanies(ibid).nokia scomeswithmusic service,whichwaslaunchedin2008,isoneofthemostrecognizedbundled servicesonthemusicmarket(ibid).nokiahassaidthattheirservicewill transformthewaypeoplewillconsumeandenjoymusic(ascitedinifpi,2009 p.8).withthisservicecustomerswhobuycertainnokiaphonemodelswill receiveunlimitedaccesstocontentforayearwithouthavingtoworryabout individualtrackoralbumpurchases(ibid). Lappalainen(2010)explainsthatadvertisementfundedmusicserviceisoneof themainformsofdigitaldistribution.theseservicesareusuallytotallyfreefor consumerstouseandtherevenuescomefromadvertisements,whichareplaced intheservice(ibid).accordingtoifpi(2009b),therecordindustryisseeing subscriptionservicesasoneofthemostimportantandprominenttypesofnew services.companiesandartistsarebeingrewardedthroughlicensingfees,a shareofadvertisingrevenuesoracombinationofboth(ibid).therecord industrybelievesthattheadvertisementfundedbusinessmodelmighthavethe potentialtobringhabitualnon payersofmusicbacktoauthorizedmusicservices (Ibid).NewsCorporation smyspaceisoneofthehighestprofilemovesto monetizeadvertisementfundedsocialnetworkingthatistiedwithmusic(ibid). MySpacehaspartneredwithallthemajorlabelsinajointventuretolaunch MySpaceMusic,whichwillofferamusicsamplingfeaturewhereconsumersmay listentounlimitedaudioandmusicvideostreamsfromthecatalogue(ibid).a SwedishadvertisementfundedservicenamedSpotifyisalsooneofthestrongest attemptstomonetizemusicusagewithadvertisements(lappalainen,2010). Thesepreviouslyexplainedandmostcommonlyrecognizeddigitaldistribution modelsareillustratedinfigure1.
12 DigitalDistribution Downloadingstores Subscription Bundled Advertisementfunded single track album downloading streaming downloading streaming streaming Figure1.Digitaldistributionmodels Inadditiontothemostcommonlyreferredbusinessmodels,threeothertypesof servicearepresented.accordingtotheifpi(2008a),videostreamingisoneof themostimportantnewbusinessmodels.streamingactivityhasincreasedinthe recentyearsandin2008,83%ofactiveinternetusersworldwidewerewatching videoclipsonline;thisisanupswingfrom31%in2006(ibid).google syoutube istheoverarchingmarketleaderofvideostreaming,andeventhoughmostofits materialsareuser generatedcontentitalsocarrieslicensedmusic,moviesand televisionprograms(ibid).nearlyhalfofthemostpopularcontentstreamed fromyoutubearelicensedmusicvideos(ibid). HansPandeya,chiefexecutiveofGlobalGamingFactory(GGF),thenewownerof PirateBay,recentlyannouncedGGF snewgiveandtakebusinessmodel(pandeya, 2009).Thebusinessmodelisbasedonsharing,andthemoreuserssharecontent, themoretheywillbeabletoretrieveit(ibid).themajorityofuserswillreceive theservicewithoutcharge,forsomeitwillcostandaminoritywillactuallymake moneywithit(ibid).theirbusinessmodelisexpectedtogeneraterevenuesfrom outsideofactualmusicconsumers, throughadvertisingandbymakingnetwork datatrafficcheaperandmoreefficientforinternetserviceproviders (Pandeya, 2009).Thiswillbedonebylocalizingfilesharingsothatusersinthesamearea couldinterconnectandtransferdataacrossmultipleborders(ibid).
13 MichaelX.Zhang(2009)arguesthatinashortperiodoftimealllossesthatthe companiesaremakingbecauseoftheircontentbeingdistributedillegallyonpeerto Peer(P2P)networksareactuallytransferredtosocialwelfare.Therefore,itis notwisetobanp2pnetworks,becauselikeanyothertechnologicalachievementit willprovetobebeneficialtosocietyasawhole(ibid).however,ifoveralong periodoftimetheproportionofhonestconsumerscannotpaysufficientamounts ofmoneytocoverthefixedcostsofcreatingmusic,musicianswillprobablynot haveincentivestoproducemusicinaprofessionalmanner,withtheresultthat socialwelfarewillactuallydecrease(ibid).accordingtotrifon(2008),inthenear futurebusinessmodelswillberevolvingaroundadvertisingonp2pnetworks,and onasurfacelevelthisseemstobeverypromising.however,atthispointintimeit isimpossibletosaywhetherthistypeofbusinessmodelwillbeabletobring suffientrevenuesandbenefitsforthewholevaluechain(ibid).consideringthe riseofthep2pnetworksandthedownloadingoffreedigitalmusicfiles,itseems reasonabletoassumethatthesenewtechnologicaltoolsmeetcustomerneedsthat wereunmetbefore(dubosson Torbay,Pigneur&Usunier,2004).EricdeFontenay (2008)arguesthatP2Phasalreadylongservedausefulpurposetohelpup andcomingartistsfindtheiraudienceanddeveloptheirfanbase.hecontinuesby sayingthattherearemodelsthatcanbeborrowedfromothernetworked entertainmentsystems,whichcanthenbeappliedtop2pnetworkssothatthose willprovidebenefitsforconsumersandgeneraterevenuesformusicright holders (ascitedinlafferty,2008,p1). AccordingtoDoctorow(2008),fromthelaunchofNapsterittookonlyeighteen monthstogainaround52,000,000individualusersanditisthereforethefastestadoptedtechnologyinhistory.napsterevenmadeasurveyontheirusers' willingnesstopaya$10 $15monthlyfeefortheserviceandfoundoutthata sizableportionwouldbehappytopayit(ibid).throughcourtcasesthecontent industrywasabletodrivenapsteroutofthegame,butsubsequentdevelopments areplayingacrucialroleinthesufferingofthecontentindustries(ibid).onecould easilythinkthatnowwhenthecontentindustriesareagaincontrollingthe distributionoftheirmaterial,theywouldhavealternativesolutionsonhowto replacetheseserviceswithequallycompellingalternatives(ibid).instead,they havebroughtpooralternativestothemarketthatarenotevenclosetothe
14 advantagesofnapster(ibid).theissueofwhathappenedafternapster's shutdownwasthatthepublicwasnotreadytowaitforproperalternativesfrom thecontentindustryand,therefore,severalnewunauthorizedserviceswere launched(ibid).itisnowover10yearssincetheshutdownoffanning soriginal Napster,andtherearestillnoauthorizedservicesthatcouldcompetewiththe originalnapster(ibid). 2.3Globalmusicmarket ResearchbyCompaniesandmarket.com(2009)explainsthattherecordindustry iscurrentlyinamajortransformationbecausecompaniesfromotherindustry segmentsareenteringthemarketofrecordedmusicdistributionandbecausethe habitofillegalfilesharingcontinuestogrow.anincreasinglevelofcompetition forcestherecordcompaniestorespondtothecompetitors offeringsinthe marketsegmentandalsotodifferentiatetheirofferingsfromothers(ibid). Competitionisthekey drivingfactor,andinthissensetherecordindustrydoes notdifferfromotherindustrysegments(ibid).whennewplayersenterthe marketofdigitalmusicdistribution,itrapidlychangesthestructureandthe valuechain(ibid).theifpi(2009a)estimatedthatnearly95%ofalldownloaded musicin2009wasfromunauthorizedsources.despitetheongoingbattleagainst illegalfilesharing,onlinepiracycouldalsobeseenasoneofthemostimportant drivingfactorsfortheadaptationofnewbusinessmodels(ibid). ResearchbyTheNPDGroup(2009)statesthateventhoughthedigitalsectoris growingrapidly,thecdstillremainsthemostpopularsoundcarrierwithan 80%marketshareglobally.However,theever decliningcdsalesandthegrowth ofthedigitalmarketbringsthesetwosectorsclosertoeachother(ibid). Johnston(2009)pointsoutthatdigitalmusicfirstappearedasastatisticinIFPI s measurementsin2004andatthattimeitcountedonlytwopercentofthetotal musicrevenue(ibid).digitalmusichassteadilygrownforaboutfivepercent eachyearsince2005andattheendof2008digitalmusicalreadyaccountedfor 20%oftherevenuesfromallmusicsalesworldwide,whichwereupby5%from 2007(Ibid).Musiccompanies digitalrevenuesinternationallygrewbyan
15 estimated25%in2008tous$3.7billion(ifpi,2009a).digitalmusicsaleswill equalcdsalesattheendof2010intheusandgloballyby2016(ibid).aarkstore Enterprise(2009)hasestimatedthatdigitalmusicmarketswouldgrowto US$13.74billionin2013.TheestimationmadebytheIFPIandtheRIIAofdigital musicrevenuesasapercentageoftotalmusicrevenuesintheusandgloballyis showninfigure2. FIGURE2.USandGlobalprojectedmajorlabeldigitalmusicrevenuesas percentageoftotalrevenues AccordingtotheIFPI(2009a),theUSwastheleadingdigitalmarketin2009with a47%digitalmarketshareglobally,andthetwomajordistributorsareitunes with83%andamazonmp3with15%marketshare.theifpi(2008)illustrated thatlatinamericaisthefastestgrowingdigitalmusicmarketwith46.6%growth in2007 2008;Europefollowswith36.1%growth,thenAsiawith26.1%growth andtheuswith16.5%growth.europe sdigitalmusicgrowthhasbeenrelatively slowandin2008digitalmusiconlyaccountedfor11%ofthetotalrecorded musicrevenues(ibid).thetopfiveeuropeandigitalmusicmarketsaretheuk, Germany,France,Italy,andSpain(IFPI,2009b).Digitalgrowthmayvarywidely dependingonthecountry(ibid).
16 AccordingtotheIFPI(2008b),onlinedownloadinghasthebiggestshareofdigital musicaccountingfor48%ofthewholemarketwitha29%growthin2007 2008. Mobilemusicaccountsfora42%marketsharewithan11%growthinyears 2007 2008(Ibid).Subscriptionandad supportedbusinessmodelsonlyaccount for6%and2%ofthewholedigitalmarketrespectively(ibid).singletrack downloadsgrewby24%in2008to1.4billionunitsglobally(ibid).digital downloadscameupfrom2%ofallrecordsalesin2005to20%in2008(ifpi, 2008).Singletrackdownloadsstillcontinuetodrivetheonlinemarket,butalso digitalalbumsareontherisewitha37%growthin2008(ibid). TheIFPI(2009b)explainsthatmanyfactorsinfluencethedigitalmusicmarket, suchasbroadbandandmobileadaption,thestrengthofthephysicalretailsector, thelevelofpiracy,creditcardpenetrationandavailablepaymentmethods. AarkstoreEnterprise(2009)statesthattheincreasingadoptionofbroadbandand mobiletechnologiesandthegrowingnumberofsmartphonesandportablemusic playersarealsothekeydriversofthedigitalmusicmarkets. 2.4Finnishmusicmarket ArtoAlaspää(2009)statesthatonlyaminorpartoftheFinnishrecordedmusic distributionisdonebydigitalmeans(ascitedinitviikko,2009).incomparison toothereuropeandigitalmarketareasfinlandlagsbehind,andthegrowthrates havebeenrelativelyslow(ibid).researchbyargillander&martikainen(2009) explainsthatin2008therecordedmusictradevalueinfinlandwasaround90 millioneurosanddigitaldistributionaccountedfor10%ofthewholemarket value.thedigitalmusicmarketinfinlandisdividedintosmallersectorsthat havemarketsharessuchas48%forinternetdownloads,5%forsubscription servicesand47%formobilemusic(ibid).eventhoughthedigitalmarketisstill small,ithasbeengrowinginrecentyears,whileatthesametimetheoverall recordedmusictradevalueisdeclining(ibid).between2006and2007the digitalmarketinfinlandincreasedby100%andbetween2007and2008by 25%(IFPI,2007&2008a).Thechangesinrecordedmusicsalestradevaluein FinlandareillustratedinFigure3.
17 FIGURE3.RecordedmusictradevalueinFinland,2002 2008.(Source:ÄKT) 2.5Broadbandandmobile ResearchbyComScore(2009)studiedsmartphoneowners willingnesstobuy digitaldownloadsandfoundoutthat66%ofiphoneuserswerelisteningto musicontheirmobilephones.othersmartphoneuserswerestudiedasone groupandofthem41%werelisteningtomusicwiththeirmobilephones(ibid). Thedifferencebetweenthisandbasicmobileusers usageofmusicintheir mobilephonesisquitelargewhenconsideringthatonly23%ofthemaremusic functions(ibid).internationaltelecommunicationsunion(itu),anagencyofthe UN,reportedthatoverhalfoftheworldpopulationiscurrentlyusingmobile phonesandthereareanestimated4.1bnmobilephonesubscriptions;thisisup from1bnin2002(citedinjohnston,2009). ResearchbyITU(2009)foundthatnearlyaquarteroftheworld spopulation usestheinternetandthepenetrationhasmorethandoubledfrom11%in2002 to23%in2009(ibid).accordingtoitu(2009),householdbroadband penetrationishighestineurope,northamericaandafewdevelopedasian countries,namelysouth Korea,Singapore,Taiwan,HongKongandJapan.Aclear gapintheusageofinternetcanbeindentifiedbetweendevelopedand developingcountries(ibid).whenlookingatglobalpenetrationofhousehold
18 broadband,itaccountsonlyfor5%onaverage,butthismaybeashighas20%in thedevelopedcountries(tryhorn,2009). InAfricaonly0.7%ofthepopulationhadbroadbandathomein2007,butthey haveseenadramaticgrowthinmobilebroadbandconnectionsintherecent yearsanditisreportedtobethefastestgrowingareaintermsofbroadband penetrationandmobiletechnology(ibid).mobiletechnologypenetrationin Africahasgrownfrom0.5%in2000tonearly28%in2009(Ibid).Developing countriesarenowcountingnearlytwo thirdsofthemobilephonesinuse, comparedwithlessthanhalfin2002(ibid).itualsoreportsthatbytheendof 2008therewerecloseto335millionbroadbandsubscribersacrosstheworld (Ibid).AccordingtotheIFPI(2009a),Europeanbroadbandconnectionshave grownbyalmost95%from2004,whichopensupnewbusinessopportunitiesin thedigitalsector(ifpi,2009b).northerneuropeancountriesgotthehighest penetrationofinternetwitharateof76%onaveragecomparedto45%in SouthernEurope(Ibid). 2.6Digitalrightsmanagement ResearchbyCompaniesandmarket.com(2009)discoveredthatDigitalRights Management(DRM)hasbeenoneofthemosttroublingissueshinderingthe developmentofthedigitalmusicmarket.thisisbecausemusicfilessecuredwith DRMareusuallyincapableofinter operatingbetweenvariousservicesand devices(ibid).drmhadalreadybecomeamajorissueforconsumersbeforethe recordcompaniesstartedtoresolvetheproblem(ibid).ifpi(2008b)explained thatthechangestartedin2008,whenrecordcompaniesfirstbegantolicense musictoonlinestoreswithoutdrm.musicthatwassoldwithoutdrmreceived highlypositivefeedbackfromtheconsumers,becauseitallowsthemtohave morefreedominhowtousethecontent(ibid).apple,thecurrentmarketleader indigitalmusicdistribution,announcedin2009thattheyhadnegotiatedadeal withafewofthemajorrecordcompaniestooffertheircataloguewithoutthe DRMtogetherwithflexiblepricingpoints(IFPI,2009b).Aftertheexampleof Appleotherdigitalmusicretailershavealsostartedtoselldigitalmusicwithout DRM(Ibid).AccordingtoresearchbyCompaniesandmarket(2009),therecord
19 industryhasmadeabigefforttoraiseconsumerawarenessoflegitimatedrmfreesitesandbydoingsotheytrytoboostthedevelopmentofthedigitalmarket. IntheUKdigitalmusicretailersanddistributorsevenlaunchedanewMP3 compatiblelogothataimstohelpconsumerstoindentifyplacesthatselldigital downloadswithoutdrm(ibid). 2.7Informationeconomy AccordingtoDoctorow(2008),theinformationeconomycannotbebasedon sellinginformation,becausetechnologymakescopyinginformationeasierand easier.theworldismovinginadirectionwherewearehavinglessandless controloverdataanditwillnotbecomeanyhardertocopyinformationfromnow on(ibid).therefore,theinformationeconomyiseverythingelsethanselling information(ibid).shirky(2008)explainedthesamephenomenonfromaslightly differentperspectivethandoctorow.becauseoftechnologicaldevelopmentinthe recentyears,thebarrierstogroupactionhavecollapsed,andwithoutthose barriersweareabletoexplorenewwaysofcommunication,contentconsumption andcollaborativeworking(ibid).electronicnetworksareenablingmultipleforms ofcollectiveactionandthebirthofcollaborativegroupsthataremorewidespread thaneverbeforeinthehistoryofmankind(ibid).inaddition,non institutional groupsareabletorunprojectsbythemselvesandthiscreatesachallengetothe statusquo(ibid).movingimages,soundsandwordsusedtobedifficultto distributefromcreatortoconsumerandmostmediabusinesseswerestructured aroundthisproblem(ibid).mediabusinessesinvolvedexpensiveandcomplex managementsystemsofthatpipelineproblem,whetheritwasaquestionof runningaprintingpressorarecordlabel(ibid).inreturnforhelpingovercome theseproblems,mediabusinessesgainedconsiderablecontroloverthemediaand extractedconsiderablerevenuesfromthepublic(ibid).thecommercialviabilityof mostmediabusinessesinvolvesprovidingthosesolutions,sopreservationofthe originalproblemsbecameaneconomicimperative(ibid).nowthattheproblems ofproduction,reproductionanddistributionaremuchlessserious,thecontrol overthemediaislesscompletelyinthehandsoftheprofessionals.(ibid)
20 3RESEARCHPROBLEM&QUESTIONS Therecordindustry'stransformationfromsellingrecordstothemanagementof artistsandrightshasbeengoingonforthelastdecade.duringthisperioda majorpartofrecordcompanies marketvaluehasbeenlost.themainfactorsfor theturbulencearetechnologicaldevelopment,illegalfilesharingandchangesin consumerbehaviour.however,therecordindustry,likeanyotherindustry,tries toadapttothenewmarketdemand.moreover,thesituationisdifficultbecause ofwidelyspreadunauthorizedfilesharing,unexpectedconsumerbehaviourand increasingcompetitioncomingfromotherindustrysectors.digitalisheretostay andthereforetherecordbusinessisalsomovingtowardsdigitalplatforms.some regionaldigitalmarketareasaredevelopingmoreslowlythanothersand especiallythedevelopmentinfinlandhasbeenslow.meanwhilemusicisbeing usedmorethaneverbefore,butatthesametimerevenuesfromrecordsalesare decreasing.therecordindustryistryingtoresolvethisparadoxicalissueby launchingseveralnewservices. TherecordbusinesshaschangedfromsellingmusiconCDstothemanagement ofseveralsmallerrevenuestreams.thenewtypesofbusinessmodelsalways comefromtheindustrysideandarenotperhapsalwayssuitableforthemarket demand.asthedigitalsectorinfinlandonlyaccountsforaminorshareofthe totalmusicrevenues,it,therefore,couldbeseenasanundevelopedand untappedpotential.inordertofindthereasonsbehindtheissueoflowdigital musicmarketshareinfinlandthisstudyaimedtomeasurethequalityofcurrent digitalmusicservicesbyusingcustomers perspectiveandtodrawestimations onwherethedemandismoving. Thefollowingresearchquestionswereinthemainfocusofthisstudy: 1. InwhatwaysdoconsumersinFinlandpresentlyacquirerecordedmusicin digitalformat? 2. HowdoconsumersinFinlandperceivedigitalmusicservices? 3. HowwouldconsumersinFinlandprefertoaccessdigitalmusicservices?
21 4METHOD&METHODOLOGY Theaimofthisthesiswastostudyparticularphenomenaandthereforethemost suitablemethodwastoconductitasresearch.researchbasedthesesaremost oftendonebyusinganapproachofquantitative,qualitativeorthecombination ofboth(hakala,2004).theobjectivesofthisthesisrequiredtheusageofmixed methods.accordingtocreswell(1998),aqualitativeperspectiveofstudyis usefulwhentherearenoexistingtheoriesandthetopicitselfneedstobe examined.thisismainlythesituationwithconsumerbehaviourandits perspectivesinonlineenvironments.themixedapproachofthisthesisconsisted oftwoparts:aquestionnaireandaninterview.thequestionnairehelpedto developframeworkandquestionsfortheinterviewand,therefore,theorderof thesemethodswasassuch.moreover,theinterviewprovidedanindepthview intothesubjectsthatcameoutfromthequestionnaire.accordingtohirsjärvi, RemesandSajavaara(2009),thebasicprinciplesofaqualitativestudyarethat thesettingforcollectionofmaterialshouldbeasneutralaspossibleandalsothe formofthestudyshouldbeunbiased.inmostcasesqualitativestudiesare constructedbyusingpeopleasthetooltocollectthematerial.thesekindsof situationsshouldalsobetreatedasindividuallyanduniquelyaspossible(ibid). Hakala(2000)explainsthattheentirethesisprocesswithallitssub phasescould bedividedintothefollowingcategories:selectionofthetopic,searchingfor literature,planningthegeneralcontents,planningtheresearchanddevelopment task,readingandmakingnotes,acquiringdata,selectingandlearningpotential researchmethods,analysingthematerial,reportingandevaluating. Customers behaviourandtheirperspectivesareimportanttounderstand,inorder todeveloptherecordindustryintosuchdirectionthatsupportsallthepartsinthe valuechain.thisresearchwasbuiltuponthefindingsofkatrisuomineninher researchsearchingforcommonground:theviewsofmusicindustryprofessionals andconsumersonthedistributionofrecordedmusicinfinland,whichfoundthat theviewsoftherecordindustryandconsumersmeettosomeextentand"the methodsofdistributionforrecordedmusicwillcontinuetobediverse"andall partiesshouldbeinvolvedinthecreationofnewdigitaldistributionmodels.
22 However,Suominen sstudywassomewhatlimitedassuchasitfocusedprimarily ononeaspectofdigitaldistribution(digitaldownload),thesurveysamplesizewas quitesmallandtherespondentswerenotrandomlyselected.therefore,the presentstudyaimedtodrawadeeperlevelofunderstandingoncustomer perspectivesofdigitalmusicdistributionandtogainalargersampleacrossa broaderspectrumofconsumersinfinland. Thepresentsurveywentonlineon2 nd November2009;itwasopenforanswers altogetherfor14days,andthetotalnumberofrespondentswas142.the questionsinthesurveywereformedinsuchawaythattherespondentswouldbe abletoanswerthequestioneasilyandthattheacquireddatacouldbeeasily collectedandanalysed.inthesurveytherewere13questionsandasectionfor comments.theanswerchoiceswereformulatedinsuchawaythattherewasno optiontogivetotallyneutralanswers.thiswasdonebecauseoftheneedtogain resultsthatwouldtrulyreflectpersonalopinions.insteadofhavingfiveanswer choices,thesurveyconsistedoffour.mostoftherespondentsansweredallofthe questions.toviewthefullquestionnaire,seeappendixa.thesurveywasaimed forconsumersinfinlandinordertogainthemostviableresultsaboutmusic consumptioninfinland.theaimwastodistributethequestionnairewithaletter ofintentthroughseveralonlinefinnishforums.thiswasdonebecauseofthe possibilityforawidesamplesizeandarandomselectionofrespondents.the intentionofthesurveywastoidentifyhowconsumersinfinlandpresentlyacquire digitalmusic,whattheirperceptionsofcurrentmusicservicesareandhowthey wouldliketoaccessdigitalmusic. Byusinganonlinequestionnaireitwaspossibletoreachasmanymusic consumersinfinlandaspossible.atthebeginningofthequestionnairethe purposewasclearlydefinedandinstructionsweregivenonhowtoanswerthe questions.theintentionwastobeasclearaspossibleinordertoreceivethe mosthonestanswerstothequestions.thequestionnaireitselfwasonlinebased andthedatawascollectedintoachartforfurtheranalysis.thefirstpartofthe questionnairecontainedthebasicpersonaldata,suchasageandgender.therest oftheactualquestionswereplacedafterthefirstpart.thequestionnaireaimed
23 toberelativelyshortsoastoavoidfrustrationandtoencourageanswerswith reliablecontent. Itwasdecidedthatforconductingthepresentsurvey,aweb basedservicecalled GoogleDocswouldbeusedtocreatethequestionnaire,collecttheresponsesand analysetheresults.googledocsisaninternetbasedprogramthat,amongst otherfeatures,allowsthecreationofsurveys.peoplerespondingtothesurvey camefromonlineforums,whichweretargetedwiththeinformationaboutthe questionnaire.theaimwasthatthroughthisrandomselectionmethod,abroad sampleofthemusicconsuminghabitsinfinlandwouldbediscovered. Afterthesurveyitwasdecidedtoconductaninterview.Basedontheresults fromthesurvey,theinterviewhadsomekeyareasofconsiderationandtherefore ittookasemi structuredform.theinterviewwasconductedwithlauri Rechardt,themanagingdirectorofFinnishRecordingIndustryAssociation/IFPI Finlandry.Theaimoftheinterviewwastodrawadeeperlevelofunderstanding onthetopicscoveredandresultsgainedinthesurvey.ericdrever(2003)states thatasemi structuredinterviewinvolvestheinterviewertodecideuponthe basicstructureincludingthemostimportantquestionsandthedesired informationtobeextracted.themaincharacteristicsofasemi structured interviewarethatitisaformalmeetingonasubjectagreedbeforetheactual settingandthatthemainquestionsthattheinterviewerhascreatetheoverall structurefortheinterview(ibid).theinterviewwasconductedbyusingasemistructuredmethodwithpromptsandprobes,anditwasrecordedontape. Promptsareusedtoencouragebroadcoverageonthesubjectandprobesto exploretheanswersindepth(ibid).hirsjärvi,remes&sajavaara(2009)explain thattheadvantageofconductinganinterviewisthatitusuallyprovideshighqualitydataandindepthanalysisonthesubjectmatter.ericdrever(2003) statesthatasemi structuredinterviewingeneralyieldsrichinformationanda goodcoverageofthetopic. AccordingtoSaaranen Kauppinen&Puusniekka(2010),ifthesubjectforasemistructuredinterviewiswellfocusedandnarrow,theinterviewermayonlyusea partialtranscriptionofthewholeinterview.asemi structuredinterviewoften includesunnecessarydatafortheresearchpurposesand,therefore,someparts
24 ofitcouldbeleftoutofthefinaltranscription(ibid).thepurposeofthe interviewwastofindoutmusiccompanies perspectivesonthecurrentsituation, toestablishwhethertheyareabletocommunicatewiththemarketinthemost efficientmannerandtofindouttheirlevelofflexibilityforchangesinmarket demand.onlythesepreviouslymentionedaspectsoftheinterviewwere transcriptedandanalyzed. Thefirstphaseofthisresearchwastoselectthetopicandtostatetheresearch questions.forthepastfewyearstherehasbeenagreatdealofdiscussiononthe changesinwaystoconsumemusicandthetransformationofmusicdistribution, thereforethetopicforthepresentthesiswasjustified.thesecondphaseofthis researchwastoreviewtheliteraturepertainingtothestateoftheglobaland Finnishrecordingindustries.Thepurposeofthiswastocreateanindepth pictureofrecordedmusicdistributionmethods,businessmodelsandthe balancesbetweendifferentdistributionsectorsinordertoconductthesurvey andinterview.thethirdphaseofthisresearchwastoselectandtofindpotential researchmethods.thisparticularphaseinthethesisprocessrequiresagreat dealofreadingandunderstandingofseveralpossiblemethodstoconduct research.themethodschosenforthisstudyseemedtobethebestalternatives inordertobeabletoreachtheobjectives.thefourthphaseofthisresearchwas toconductasurveyamongconsumersinfinland.thepurposeforthiswasto identifyconsumerhabitsandperceptionsofdigitalmusicconsumption.thefifth phasewastointerviewaprofessionalworkingintherecordindustry.the purposeofthiswastostudyhowtherecordindustryisabletoadapttothe changingmarketdemands,newconsumerhabits,andtheindustry sabilityto communicatewiththemarket.thesixthphaseofthisresearchwastoanalyze thematerialcollected,createawaytoreportitinthemostcomprehensive mannerandtoevaluateit.thelastphaseofthisresearchwastopresentthe limitationsofthesubjectandtogiverecommendationsforfurtherstudies.
25 5RESULTS 5.1Surveyresults Forfullresults,seeAppendixB. Inquestionnumberonetherespondentswereaskedabouttheirgenderandage. Thedivisionsofrespondents ageandgendercanbeseenfromfigure4. FIGURE4.Distributionofrespondents ageandgender Theresultsgainedfromquestionnumberoneshowthatmostoftherespondents weremalesbetweentheagesof22 31yearsold.Thedivisionbetweengendersis highlymaledominatedinalltheagegroupsandfemalesaccountonlyforaminor shareofalltherespondents.oneoftherespondentswasunder15yearsoldand sixoftherespondentswereover40years.highlydominatingageandgender groupsweremalesintheageranges15 21,21 31and32 40. Inquestionnumbertwo,therespondentswereaskedtothementiontheirplace ofresidence,basedonfiveregions.figure5illustratesthedivisionofplacesof residence.
26 FIGURE5.Distributionoftherespondents placeofresidence Resultsgainedfromquestionnumbertwoshowthedivisionoftheplacesof residence.themostdominatingplaceofresidenceissouth Finlandwitha64% shareofalltherespondents.however,thisfigureisnotasunbalancedasitmay firstappear,asuusimaaregion,whichisnearlythesameasthesouth Finland areaaccountsforover30%offinland spopulation(uusimaafacts,2010).the otherfourregionsaccountedforbetween6%and11%oftherespondents. 5.1.1Digitalmusicacquisitions Inquestionnumberthree,therespondentswereaskedtoannouncehowoften theyacquiredrecordedmusicfromtheinternetbasedonfivecategoriesgiven. Figure6illustratesthedivisionofconsuminghabitsamongsttherespondents.
27 1% 9% 3% 20% 67% Daily 2 4timespermonth 5 10timespermonth Onceorlesspermonth Notatall FIGURE6.RegularityofdigitalmusicacquisitionfromtheInternetbyall respondents Theresultsgainedfromquestionnumberthreeshowthedivisionofdigitalmusic acquisition.67%oftherespondentsacquirerecordeddigitalmusicdaily,20%5 10timespermonth,3%2 4timespermonth,9%onceorlesspermonthand1% donotacquirerecordedmusicatall. 5.1.2Mobilemusic Mobilemusicconsumptionwasexaminedinthesurveyquestionsfour,fiveand six.theresultsofdivisionsofmobilephoneswithaninternetconnection,mobile musicfeaturesandmobilemusicconsumptionareasfollows.55%ofthe respondentshaveamobilephonewithaninternetconnection.65%ofthe respondentshaveamobilephonewithamusicfeatureand8%ofallthe respondentshavebeenacquiringmusicdirectlywiththeirmobilephone. 5.1.3Satisfactionwithdigitalmusicservices Inquestionnumberseven,therespondentswereaskedtostatehowthecurrent musicservicessatisfiedtheiracquisitionneeds.fouranswerchoicesweregiven:
28 verywell,quitegood,somewhatpoorly,andnotatall.verywellpresentsthe mostpositiveperspectiveandnotatallpresentsthemostnegative.figure7 illustratestherespondents satisfactionwiththecurrentlyavailablemusic services. FIGURE7.Satisfactionwithcurrentservicesavailablebyageandgender Theresultsgainedfromquestionnumbersevenwereasfollows:35%werevery satisfiedwiththecurrentoptions,36%werequitesatisfiedwiththecurrent options,20%somewhatpoorly,and21%notatall.overall,allthegenderand agegroupsweresatisfiedwiththepresentmusicservices,exceptfemaleover40, whereonlyoneanswerwasgiven. Inquestionnumbereighttherespondentswereaskedtoannounceiftheywere abletofindnewmusicfromonlineservices.fouranswerchoicesweregiven: verywell,quitegood,somewhatpoorly,andnotatall.verywellpresentsthe mostpositiveperspectiveandnotatallpresentsthemostnegative.figure8 illustratestherespondents answers.
29 11% 14% 36% Verywell Quitegood Somewhatpoorly Notatall 39% FIGURE8.Respondents abilitytofindrelevantmusicfromonlineservices Theresultsgainedfromquestionnumbereightwereasfollows:36%ofallthe respondentsansweredverywell,39%quitegood,14%somewhatpoorly,and 11%notatall.Ingeneralconsumersseemstobeverylikelytofindrelevant contentinmusicservices. 5.1.4Preferencestoacquiredigitalmusic Animportantpartofthesurveywastostudytherespondents preferencesfor accessingdigitalmusicservices.asithasbeenindentifiedintheliteraturethat newdigitalbusinessmodelsrevolvingaroundadvertisementsandsubscriptions aregainingthemostpopularity,thispartofthesurveyfocusedonlyonthese aspects.inquestionnumberninetherespondentswereaskedtoanswerwhether theywerewillingtoreceiveadvertisementsinexchangeforgainingmusicfor free.fouranswerchoicesweregiveninquestionnumbernine:absolutely,quite likely,notthatmuch,andnotatall.absolutelypresentsthemostpositive perspectiveandnotatallthemostnegative.figure9illustratesthedivisionof therespondents willingnesstoreceiveadvertisements.
30 27% 14% 34% Absolutely Quitelikely Notthatmuch Notatall 25% FIGURE9.Respondents willingnesstoreceiveadvertisements,inexchangefor gainingmusicforfree Theresultsgainedfromquestionnumberninewereasfollows:14%were absolutelywillingtoreceiveadvertisements,34%werequitelikelytodoso,25% notthatmuch,and27%notatall.theresultsseemtoindicatethatamajorpart ofconsumersarenotinterestedinmusicserviceswithadvertisements. Inquestionnumbertentherespondentswereaskediftheywereinterestedin subscriptionservicesinwhichmusicismadeavailableforamonthlyfee.four answerchoicesweregiven:absolutely,quitelikely,notthatmuch,andnotatall. Absolutelypresentsthemostpositiveperspectiveandnotatallthemost negative.figure10illustratesthedivisionoftherespondents interestin subscriptionservices.
31 26% 31% Absolutely Quitelikely Notthatmuch Notatall 18% 25% FIGURE10.Respondents interestinsubscriptionservices Questionnumbertengavethefollowingresults:31%wereabsolutelyinterested insuchservices,25%wereinthecategoryofquitelikely,18%notthatmuch, and26%notatall.theresultsfromquestionnumbertenseemtoimplythata majorpartoftherespondentsareinterestedinsubscriptionmusicservicesin whichtheyareabletogainasmuchmusicaswantedwithamonthlypayment. 5.1.5Methodsforacquiringdigitalmusic Intheopen endedquestionnumbereleventherespondentswereaskedto describetheirdigitalmusicacquisitionhabits.fromtheanswersgivenafew generalpointscouldbefoundaboutwhererespondentsacquiredrecorded digitalmusic.quiteanumberofrespondentsmentionedthattheywere downloadingmusicfromp2pnetworks.however,someofthemmentionedthat thisbehaviourisdecreasingbecausethesedaystherearemoreauthorized alternativesavailable.itisnoticeableherethatmanyoftherespondents mentionedthatatleastsomepartofthemusicbeingdownloadedfromp2p networksislegalandhasbeenuploadedtherebythebandsthemselves.from manyoftheresponsesitcouldalsobefoundthatsubscriptiontypesofservices wereespeciallygainingpopularity.themostcommonlyusedstreamingservices