1

Experimenting with Business Models in the

Music Industry (part I)

Alexander Osterwalder, PhdAlexOsterwalder.com

Twitter: business_design

the following slides are a very brief excerpt of a 60 minute keynote Iʼm giving at Eurosonic Noorderslag, Europeʼs most important live music industry conference

business models

The Business Model Canvas

to describe, challenge, design, and invent business models more systematically

building blocks 9

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

The Business Model Canvas

the“old”recordlabelmodel

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

The “Old” Record Label Model

hits & wannabe

hitsmass

market

huge sales from few

artists’ albums

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

The “Old” Record Label Model

hits & wannabe

hitsmass

market

Retailers TV

Radio

huge sales from few

artists’ albums

“new” digital channels

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

The “Old” Record Label Model

hits & wannabe

hitsmass

market

Retailers TV

Radio

tours &

concertsmerchandising

huge sales from few

artists’ albums

“new” digital channels

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

The “Old” Record Label Model

hits & wannabe

hitsmass

market

Retailers TV

Radio

tours &

concertsmerchandising

huge sales from few

artists’ albums

detecting & building talent

marketing &

promotion

“new” digital channels

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

The “Old” Record Label Model

hits & wannabe

hitsmass

market

Retailers TV

Radio

tours &

concertsmerchandising

huge sales from few

artists’ albums

portfolio of

star artists

detecting & building talent

marketing &

promotion

copyrighted content

“new” digital channels

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

The “Old” Record Label Model

hits & wannabe

hitsmass

market

Retailers TV

Radio

tours &

concertsmerchandising

huge sales from few

artists’ albums

portfolio of

star artists

detecting & building talent

distribution

channels

marketing &

promotion

copyrighted content

manufacturers

“new” digital channels

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

The “Old” Record Label Model

hits & wannabe

hitsmass

market

Retailers TV

Radio

tours &

concertsmerchandising

huge sales from few

artists’ albums

portfolio of

star artists

detecting & building talent

distribution

channels

marketing &

promotion

marketing &

promotion

royalty paymentssubsidizing

unsuccessful artists

copyrighted content

manufacturers

“new” digital channels

buzzgroup

?assess the business model building blocks of the “old” model /

where are the weaknesses?

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

The Old Record Label Model

hits & wannabe

hitsmass

market

Retailers TV

Radio

tours &

concertsmerchandising

huge sales from few

artists’ albums

portfolio of

star artists

detecting & building talent

distribution

channels

marketing &

promotion

marketing &

promotion

royalty paymentssubsidizing

unsuccessful artists

copyrighted content

manufacturers

“new” digital channels

piracy

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

The Old Record Label Model

hits & wannabe

hitsmass

market

Retailers TV

Radio

tours &

concertsmerchandising

huge sales from few

artists’ albums

portfolio of

star artists

detecting & building talent

distribution

channels

marketing &

promotion

marketing &

promotion

royalty paymentssubsidizing

unsuccessful artists

copyrighted content

manufacturers

“new” digital channels

unbundling of albums into single

songs (iTunes)price of songs

tending towards ZERO

but piracy is the wrong battle to fight!

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

The Old Record Label Model

hits & wannabe

hitsmass

market

Retailers TV

Radio

tours &

concertsmerchandising

huge sales from few

artists’ albums

portfolio of

star artists

detecting & building talent

distribution

channels

marketing &

promotion

marketing &

promotion

royalty paymentssubsidizing

unsuccessful artists

copyrighted content

manufacturers

“new” digital channels

distribution is a commodity, attention is

the new scarcity

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

The Old Record Label Model

hits & wannabe

hitsmass

market

Retailers TV

Radio

tours &

concertsmerchandising

huge sales from few

artists’ albums

portfolio of

star artists

detecting & building talent

distribution

channels

marketing &

promotion

marketing &

promotion

royalty paymentssubsidizing

unsuccessful artists

copyrighted content

manufacturers

“new” digital channels

talent will be discovered by

other mechanisms

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

The Old Record Label Model

hits & wannabe

hitsmass

market

Retailers TV

Radio

tours &

concertsmerchandising

huge sales from few

artists’ albums

portfolio of

star artists

detecting & building talent

distribution

channels

marketing &

promotion

marketing &

promotion

royalty paymentssubsidizing

unsuccessful artists

copyrighted content

manufacturers

“new” digital channels

social networks are what drive music sales

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

The Old Record Label Model

hits & wannabe

hitsmass

market

Retailers TV

Radio

tours &

concertsmerchandising

huge sales from few

artists’ albums

portfolio of

star artists

detecting & building talent

distribution

channels

marketing &

promotion

marketing &

promotion

royalty paymentssubsidizing

unsuccessful artists

copyrighted content

manufacturers

“new” digital channelsbloated cost

structure (talent discovery/marketing)

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

The Old Record Label Model

hits & wannabe

hitsmass

market

Retailers TV

Radio

tours &

concertsmerchandising

huge sales from few

artists’ albums

portfolio of

star artists

detecting & building talent

distribution

channels

marketing &

promotion

marketing &

promotion

royalty paymentssubsidizing

unsuccessful artists

copyrighted content

manufacturers

“new” digital channels

shift of the balance of power

towards artists

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

The Old Record Label Model

hits & wannabe

hitsmass

market

Retailers TV

Radio

tours &

concertsmerchandising

huge sales from few

artists’ albums

portfolio of

star artists

detecting & building talent

distribution

channels

marketing &

promotion

marketing &

promotion

royalty paymentssubsidizing

unsuccessful artists

copyrighted content

manufacturers

“new” digital channels

customer needs are not being satisfied

itʼs all about hits AND the Long

Tail of music

OFFER

CHANNELS

CUSTOMER RELATIONSHIPS

CUSTOMERSEGMENTS

REVENUE STREAMSCOST STRUCTURE

KEYACTIVITIES

KEYPARTNERS

KEYRESOURCES

The Old Record Label Model

hits & wannabe

hitsmass

market

Retailers TV

Radio

tours &

concertsmerchandising

huge sales from few

artists’ albums

portfolio of

star artists

detecting & building talent

distribution

channels

marketing &

promotion

marketing &

promotion

royalty paymentssubsidizing

unsuccessful artists

copyrighted content

manufacturers

“new” digital channels

distribution is a commodity, attention is

the new scarcity

social networks are what drive music sales

unbundling of albums into single

songs (iTunes)price of songs

tending towards ZERO

customer needs are not being satisfied

itʼs all about hits AND the Long

Tail of music

piracy

shift of the balance of power

towards artists

bloated cost structure (talent

discovery/marketing)

talent will be discovered by

other mechanisms

www.businessmodelgeneration.comwww.alexosterwalder.com

www.businessmodelalchemist.com Twitter: business_design

BusinessModelGeneration.com