Table of Contents TECHNISCHE UNIVERSITÄT MÜNCHEN Dr. Theo Schöller-Stiftungslehrstuhl für Technologie- und Innovationsmanagement Openness in the music business– How record labels and artists may profit from reducing control Johannes L. Wechsler Vollständiger Abdruck der von der Fakultät für Wirtschaftswissenschaften der Technischen Universität München zur Erlangung des akademischen Grades eines Doktors der Wirtschaftswissenschaften (Dr. rer. pol.) genehmigten Dissertation. Vorsitzender: Univ.-Prof. Dr. I. Welpe Prüfer der Dissertation: 1. Univ.-Prof. Dr. J. Henkel 2. Univ.-Prof. Dr. F. v. Wangenheim Die Dissertation wurde am 09.12.2010 bei der Technischen Universität München eingereicht und durch die Fakultät für Wirtschaftswissenschaften am 11.05.2011 angenommen. i Table of Contents Table of Contents DETAILED TABLE OF CONTENTS .................................................................................................... II LIST OF FIGURES .................................................................................................................................. V LIST OF TABLES ................................................................................................................................. VII LIST OF ABBREVIATIONS..................................................................................................................IX ABSTRACT..............................................................................................................................................XI 1 INTRODUCTION ....................................................................................................................... 1 2 FOUNDATIONS OF PROFITING FROM INNOVATION.................................................... 9 3 FOUNDATIONS OF PROFITING FROM MUSIC............................................................... 44 4 THE MUSIC BUSINESS AS EMPIRICAL SETTING.......................................................... 78 5 EXPLORING THE USE OF DIGITAL RIGHTS MANAGEMENT ................................... 95 6 EXPLORING THE USE OF CREATIVE COMMONS LICENSES ................................. 119 7 EXPLAINING ARTISTS’ ADOPTION OF CREATIVE COMMONS LICENSES......... 167 8 QUANTIFYING THE ADOPTION OF CREATIVE COMMONS LICENSES FOR MUSIC...................................................................................................................................... 214 9 DETERMINING CONSUMERS' VALUATION OF CREATIVE-COMMONS- LICENSED MUSIC................................................................................................................. 228 10 SUMMARY AND CONCLUSION......................................................................................... 241 APPENDIX............................................................................................................................................. 248 BIBLIOGRAPHY .................................................................................................................................. 279 I Detailed Table of Contents Detailed Table of Contents LIST OF FIGURES .................................................................................................................................. V LIST OF TABLES ................................................................................................................................. VII LIST OF ABBREVIATIONS..................................................................................................................IX ABSTRACT..............................................................................................................................................XI 1 INTRODUCTION ....................................................................................................................... 1 1.1 MOTIVATION AND RESEARCH GOAL ........................................................................................... 1 1.2 RESEARCH DESIGN ..................................................................................................................... 5 1.3 STRUCTURE OF THE DISSERTATION ............................................................................................ 7 2 FOUNDATIONS OF PROFITING FROM INNOVATION.................................................... 9 2.1 APPROPRIATING VALUE FROM INNOVATIONS ............................................................................. 9 2.1.1 Use in own products............................................................................................................. 9 2.1.2 Licensing ............................................................................................................................ 10 2.2 PROTECTING INNOVATIONS...................................................................................................... 11 2.2.1 Intellectual property rights................................................................................................. 12 2.2.2 Secrecy ............................................................................................................................... 13 2.2.3 Complementary assets........................................................................................................ 13 2.2.4 Lead time............................................................................................................................ 14 2.2.5 Effectiveness and interactions............................................................................................ 14 2.3 FREE REVEALING AS A RENT -SEEKING STRATEGY .................................................................... 16 2.3.1 Cases .................................................................................................................................. 17 2.3.2 Reasons .............................................................................................................................. 20 2.3.3 Risks ................................................................................................................................... 25 2.3.4 Business models.................................................................................................................. 26 2.3.5 Transition to free revealing................................................................................................ 28 2.4 INDIVIDUAL INNOVATORS ........................................................................................................ 28 2.4.1 Characteristics and contributions ...................................................................................... 30 2.4.2 Theory of motivation .......................................................................................................... 33 2.4.3 Motivations of individual innovators.................................................................................. 34 2.4.4 Free revealing by individuals............................................................................................. 40 2.5 INTERMEDIATE CONCLUSION ................................................................................................... 41 3 FOUNDATIONS OF PROFITING FROM MUSIC............................................................... 44 3.1 INFORMATION GOODS .............................................................................................................. 44 3.1.1 Characteristics ................................................................................................................... 44 3.1.2 Protection mechanisms and value appropriation............................................................... 46 3.2 COPYRIGHT .............................................................................................................................. 47 3.2.1 Characteristics ................................................................................................................... 47 3.2.2 Historic development.......................................................................................................... 50 3.2.3 Importance for value appropriation................................................................................... 51 3.3 DIGITAL RIGHTS MANAGEMENT .............................................................................................. 53 3.3.1 Technological foundations ................................................................................................. 53 3.3.2 Benefits............................................................................................................................... 54 3.3.3 Drawbacks.......................................................................................................................... 57 3.4 DETERMINING THE OPTIMAL LEVEL OF PROTECTION ................................................................ 61 3.4.1 The impact of piracy........................................................................................................... 61 3.4.2 Using DRM to fight piracy ................................................................................................. 64 3.5 CREATIVE COMMONS ............................................................................................................... 66 3.5.1 Goals and origins............................................................................................................... 66 3.5.2 Licenses and Adoption........................................................................................................ 68 3.5.3 Benefits..............................................................................................................................