Retail

The routes to market for music and intellectual property are changing rapidly. ‘Retail’ in the conventional sense is still important but new formats, distribution channels and business models have transformed the supply chain. It is likely the way people consume music will radically change in the future but as we stand here are some of the methods that people buy music ‘a la carte’ (singles / albums/downloads)

PHYSICAL RETAIL

RECORD COMPANY

DISTRIBUTOR

RETAILER

CONSUMER

Traditionally consumers mostly bought music from shops that specialised in selling records. Until recently the major high street retailers were companies like Virgin Records, Woolworths, and HMV. These companies were supplied by national distributors (see 3.3.4) in the above supply chain. The independent sector has always had its own stores like Rough Trade and Pure Groove in London. The internet had an impact on retail initially through mail order as companies like Amazon entered the market. People began to shop from home and have their orders delivered.

Digital Retail

Digital technologies in terms of formats (e.g. Mp3) have also radically changed the traditional models of music retail. This has presented significant challenges for labels in terms of revenue streams but also opportunities for artists and entrepreneurs. An artist or independent label can now sell direct to consumers without any other the traditional physical barriers. This can massively increase profitability on downloads but most people do still use service companies e.g. aggregators to facilitate this (see 3.3.4).Some of the key digital retailers are 7 Digital, I – tunes, Amazon, Orchard but for a fuller list see Pro Music http://www.pro-music.org/Content/GetMusicOnline/stores-europe.php

Mobile Retail

The mobile phone networks each have music stores so downloads can be bought direct to handheld devices e.g. Nokia Mobile Store http://music.nokia.co.uk/IE/home.aspx and there are also independents in the UK like Indie Mobile http://www.indie-mobile.com/ .

For discussion of new business models and emerging digital markets read IFPI digital report summary 2008 http://www.ifpi.org/content/library/DMR2008-summary.pdf. The key models identified for sales in new music industry were:-

Business Models1

  1. A-la-carte download services - Pay per download remains the dominant digital business model, with iTunes leading in the online sector.

Subscription services - Revenues from subscription services, such as Napster and Rhapsody, grew by 63 per cent in the US between the first half of 2005 and the same period of 2007.

  1. Advertising-supported services - Services mostly based on licensing agreements for streaming music and music videos for a share of advertising revenues E.g. Spotify, We7, Deezer

  1. Brand partnerships - Record companies have created teams specialising in identifying brand partnership opportunities via digital platforms.

 

For more information on retail and the methods available to sell your music contact:

BPI http://www.bpi.co.uk/

AIM http://www.musicindie.com/

1 http://www.ifpi.org/content/library/DMR2008-summary.pdf