Another Technology Transforming the Music Industry: Blockchain
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Another technology transforming the Music Industry: Blockchain Written by Miguel Carvalho Marques Student Number: 152117090 Dissertation written under the supervision of Gonçalo Saraiva Dissertation submitted in partial fulfilment of requirements for the MSc in Management with Specialization in Strategy and Entrepreneurship, at Católica-Lisbon School of Business & Economics April 2019 ABSTRACT Title: Another technology transforming the Music Industry: Blockchain Author: Miguel Marques The blockchain is an emerging technology, receiving increased attention due to its applicability in several different areas of business, among other reasons. One of the possible applications of blockchain is in the music industry. New ventures exploring this subject have been appearing, offering a range of different solutions to some of the most pressing issues in the industry. Past literature focused on the technology and how its specificities can help in changing a culture of lack of transparency and inefficiency in the revenue streams, ultimately harming the artists. This study starts by providing a detailed picture of the music industry, their several actors, their functions and relationships, only then framing blockchain in this network. By collecting insights from different players in the music industry, positioned along the value chain and with heterogenous interests, the research goes further in understanding their vision on the industry. It is learned that there are two contrasting dimensions in it, one of which is seemingly more accessible to the new platforms. Moreover, the pain points identified are confirmed by the music community, even though other issues seem to be more critical. Considering this, the level of attractiveness of the industry for the blockchain projects is assessed and a new limitation to its market penetration is discovered: the lack of knowledge on the subject existing in the music community today. Still, its impact is estimated by providing a new image of the possibly reorganized music industry supply chain. Keywords: Blockchain, Industry Attractiveness, Music Industry, Supply Chain, Technology 2 SUMÁRIO Título: Outra tecnologia a transformar a Indústria da Música: Protocolo de Confiança Autor: Miguel Marques O protocolo de confiança é uma tecnologia emergente, recebendo crescente atenção devido à sua aplicabilidade em diferentes áreas de negócio, entre outras razões. Uma das possíveis aplicações da tecnologia prende-se com a indústria da música. Novos projetos que exploram este tema têm aparecido, oferecendo uma gama de diferentes soluções para alguns dos problemas mais prementes da indústria. A literatura passada focou-se na tecnologia e em como as suas especificidades podem ajudar a mudar uma cultura de falta de transparência e ineficiência nos fluxos de rendimentos, prejudicando sobretudo os artistas. Este estudo começa por dar uma imagem detalhada da indústria da música, dos seus diversos atores, das suas funções e relacionamentos, só depois enquadrando o protocolo de confiança nesta rede. Ao recolher testemunhos de diferentes personalidades da indústria da música, posicionados ao longo da cadeia de valor e com interesses heterogéneos, a pesquisa vai mais além em perceber a sua visão sobre a indústria. É aprendido que há duas dimensões contrastantes na mesma, uma das quais é aparentemente mais acessível às novas plataformas. Além disso, os problemas identificados são confirmados pela comunidade musical, apesar de haver outras adversidades mais críticas. Considerando isto, o nível de atratividade da indústria para os novos projetos é avaliado e uma nova limitação à sua penetração no mercado é descoberta: a falta de conhecimento sobre o assunto existente na comunidade atual. Ainda assim, o seu impacto é estimado ao providenciar uma nova imagem da possivelmente reorganizada cadeia de fornecedores da indústria. Palavras-chave: Atratividade da Indústria, Cadeia de Fornecedores, Indústria da Música, Protocolo de Confiança, Tecnologia 3 ACKNOWLEDGEMENTS First and foremost, I want to thank my parents and my sister, who are the biggest inspirations and role-models I have in life. I will never be able to fully repay all the sacrifices they made to provide me with the finest education and all the great opportunities I had, but I can only try my best to make them proud every day. If anything, I hope this dissertation does just that. My gratitude goes also to my supervisor, Gonçalo Saraiva, whose guidance and valuable insights proved essential to the completion of this work. Thank you to all my colleagues in “The Business Opportunity of New Technologies” seminar for their precious feedback in the earlier stages of this dissertation. And lastly, I want to thank all the kind people that have shown their availability to answer my questions, making up for essential content for the development of this article. Finally, my appreciation goes to all my beloved friends from my hometown Porto, as well as to the ones from Amsterdam and Lisbon. Thanks for accompanying me in this long journey that now reaches a peak that truly makes me proud. That would not be possible without their presence in my life, and the help of all the institutions, professors and colleagues that I encountered throughout this path. My gratitude goes to all of them. 4 TABLE OF CONTENTS ABSTRACT ............................................................................................................................... 2 SUMÁRIO ................................................................................................................................. 3 ACKNOWLEDGEMENTS ....................................................................................................... 4 TABLE OF CONTENTS ........................................................................................................... 5 LIST OF TABLES AND FIGURES .......................................................................................... 7 Tables ..................................................................................................................................... 7 Figures .................................................................................................................................... 7 LIST OF ACRONYMS .............................................................................................................. 8 INTRODUCTION ...................................................................................................................... 9 LITERATURE REVIEW ......................................................................................................... 12 Music Industry ...................................................................................................................... 12 Some facts: data and technology ...................................................................................... 12 The industry’s supply chain ............................................................................................. 15 Pain points ........................................................................................................................ 22 Blockchain ............................................................................................................................ 23 Bitcoin as the genesis ....................................................................................................... 23 Ethereum and Smart Contracts ......................................................................................... 26 Public vs Private and Permissioned vs Not Permissioned ............................................... 26 Blockchain – a definition ................................................................................................. 27 The technology’s potential… ........................................................................................... 28 … and limitations ............................................................................................................. 28 Blockchain in the Music Industry ........................................................................................ 29 Potential applications ....................................................................................................... 29 Limitations in applying the technology to the music industry ......................................... 31 METHODOLOGY ................................................................................................................... 33 Research Approach .............................................................................................................. 33 5 Case Selection and Data Analysis ........................................................................................ 34 FINDINGS AND DISCUSSION ............................................................................................. 36 Case Studies – Interviews .................................................................................................... 36 Industry Implications ............................................................................................................ 41 Supply ............................................................................................................................... 41 Attractiveness ................................................................................................................... 43 CONCLUSION .......................................................................................................................