Network Perspectives on the Relevance of New Revenue Streams in the Digital Era Music Industry

Abstract

long with the shift in the distribution of prerecorded music from retail outlets to online and satellite sources engendered by digital technology came changes in the roles of the various participants and the introduction of new participants. With displacement taking place, the authors wish to assess the relative importance of newly created revenue streams in the digital era. This study focuses on the economic implications of changes in network relationships fostered by digitized music and consequently the method of analysis is Social Network Analysis (SNA). This is the first study of its kind to assess the relevance of the revenue streams from a network perspective. Results show that traditional agents in the music industry (songwriters, artists, music publishers, record labels) have retained their relatively strong positions since the year 2000. However, some new agents (revenue streams) in the digital era are significantly reorganizing the network as a whole. When weighted for economic impact, digital aggregators/interactive service payments, digital performance royalties/ SoundExchange, the YouTube Partner Program, as well as crowdfunding, rank in the top half of economic relationships. The study offers quantifiable validation to its findings and informs us that the "new" revenue sources have not yet achieved their full economic potential but are already well positioned to undermine the dominance of the more traditional revenue streams in the music industry.