The Music Industry and Digital Music

1. Resume

This thesis carries out a value network analysis, which identifies characteristics of technology

development in the recorded music industry, and explains how and why technology-related

characteristics have weakened incumbent firms, defined as the four major record labels, in the

music industry.

The analysis carries out a comprehensive Quality Function Deployment analysis, which

hierarchially identifies the most important changes in customer needs. The analysis identifies

four important customer needs as a result of the technological developments, namely

convenience and quality as the two major customer needs, and pricing and social connectivity

as two subsequent customer needs.

The data from the QFD analysis is applied in a product platform analysis, which identifies

some major differences between competing product platforms. In general, illegal platforms

deliver an efficient bundle of such complementary services, which can explain the initial

popularity of such sites. Traditional product platforms are not linked with actual customer

needs. Furthermore, new entrants such as Apple Itunes tend to deliver an efficient bundle of

service characteristics, specifically based on convenience, which explains Apple's success in

the music market.

The disruptive technology of digital music has occurred outside the industry's existing