The forms of value creation in music intermediaries Intermediation and disintermediation in the music industry Student Name: Andreas Periklis Metaxas Student Number: 469691am Supervisor: Dr. Erik Hitters Master Media & Business Erasmus School of History, Culture, and Communication Erasmus University Rotterdam Master's Thesis June 2018 1 The forms of value creation in music intermediaries Abstract This thesis project aims to research and analyze the changes that digitalization brought to the music industry while in particular; the research focuses on the forms of value creation in music intermediaries. Accordingly, the qualitative research’s target is to investigate the means that music intermediaries use in order to create value, remaining relevant in the era of digitalization and online distribution, where physical record sales tend to disappear. Moreover, the research was designed and based on two theoretical arguments. On one hand a number of writers and researchers that indicate the end of music intermediation as emerging technologies remove the barriers between artists and listeners. For them, this new era of independents, eliminates traditional monopolies in music production and consumption such as the record labels and the radio. On the other hand, many suggest that digitalization brings new aspects in the music industry as it creates new necessities. Therefore this projects aims to dive deeper in the changes that digital technology brings in the field of music intermediation as well as the transformations that music intermediaries have to confront. Thus, through a holistic approach to music intermediation, the research tried to investigate how music intermediaries continue to create value in an uncharted period where new models of music consumption, such as Spotify or YouTube, emerge. Furthermore, the research approach was based on the importance of traditional or new gatekeepers in the field of music business as well as the elements that help them to remain sustainable for the industry. Thus, through ten exploratory expert interviews, relevant questions based on a given literature were asked. Subsequently, music intermediaries from several types of companies such as record labels, music media, radio or live events operators were contacted and answered questions based on given themes. Hence, concepts like the “digitalization of record industry», the “necessity of contemporary intermediation” and the” positive or negative aspects of digital transformation in music intermediaries”, were explored throughout the interviews. Ultimately, besides the methods that music intermediaries use in order to remain relevant in the music industry, this project also wants to fuel the conversation regarding intermediation in the larger spectrum of media, culture and entertainment. Similarly, as the web creates new frames in creation and distribution, it challenges simultaneously, the role of intermediaries not only in music but in several fields such as media and creative industries. Keywords: digitalization, intermediaries, intermediation, music, media, digital transformation, music industry, music business 2 Table of Contents Introduction ........................................................................................................................................ 5 The music industry in the digital era- A new need for intermediation. .......................................... 5 Research problem ........................................................................................................................... 6 Research question .......................................................................................................................... 6 Social relevance ............................................................................................................................. 7 Scientific relevance ....................................................................................................................... 7 Theoretical framework .................................................................................................................... 10 Cultural intermediaries as an entity ............................................................................................. 10 Traditional intermediation in the music industry ........................................................................ 11 Disintermediation ........................................................................................................................ 12 Re-intermediation and value creation .......................................................................................... 12 Piracy ........................................................................................................................................... 13 Re-intermediation and value creation .......................................................................................... 12 Streaming services, aggregators, and the new digital market ...................................................... 15 Social media and a new space for music consumption ............................................................... 16 The rise of independent music and the new music management................................................. 17 The "360-deal" as a new revenue stream for intermediates ........................................................ 18 Live music intermediation ........................................................................................................... 19 Method ................ ............................................................................................................................... 20 Research design ........................................................................................................................... 21 Sampling ...................................................................................................................................... 21 Operationalization ....................................................................................................................... 22 Data collection ............................................................................................................................. 23 Limitations, Validity and Reliability ........................................................................................... 23 Interviews .................................................................................................................................... 25 Analysis ....................................................................................................................................... 25 Coding ......................................................................................................................................... 25 Results ................ ................................................................................................................................ 27 Transformation of music intermediaries ..................................................................................... 27 Digital Adaptability ..................................................................................................................... 34 Current necessities ....................................................................................................................... 34 Web utopianism and access to stardom ....................................................................................... 37 Conclusions/Discussion ..................................................................................................................... 43 References .......................................................................................................................................... 51 Appendix ........................................................................................................................................... 58 3 ACKNOWLEDGEMENT I would like to express my honest appreciation to my thesis supervisor Dr. Erik Hitters of Erasmus School of History, Culture, and Communication, who gave me the confidence to achieve any given task while he listened and evaluated my ideas with respect and understanding. Ι would like to thank the interviewees for their time and the valuable insights they offered. Furthermore, I have to acknowledge my classmates from the Erasmus University of Rotterdam for turning Netherlands into my second home. Finally, I must express my gratitude to my family for literally giving everything they had in order to help me follow my dreams. I will always be grateful. In loving memory of Spiros Metaxas Andreas Periklis Metaxas, June 2018. 4 1. Introduction 1.1 The music industry in the digital era - A new need for intermediation. The music business has been a crucial part of creative industries since the release of the first phonograph models by T. Edison and Columbia in 1896, while sound recording has also been a constantly growing form of mass media (Gronow, 1983). Subsequently, in the past century, music businesses reached a maximum trade value of $27.3 billion in 1999((Klein, Meier & Powers, 2016). Significantly, from the beginning of 21st century, the traditional channels of music products’ distribution and monetization have been challenged by the rise of digital files and online distribution. Simultaneously, the growth of peer-to-peer networks and the emergence of streaming services shrank the record sales as the Recording Industry Association