J Ö N K Ö P I N G I NTERNATIONAL B U S I N E S S S CHOOL JÖNKÖPING UNIVERSITY A business model shaped by technology - A case study of EMI Records Bachelor Thesis within the field of Marketing Authors: Adam Tapper 850522 Johan Sjöberg 840311 Tutor: Börje Boers Jönköping December, 2009 Acknowledgements We would first of all like to thank our tutor, Börje Boers, for his guidance and feedback. We would like to express our gratitude to the people at EMI in Stockholm, especially to Paul Sonkamble, Ulrik Cahn and Stefan Blom for the valuable information and help we got from you. A big thanks goes to the interviewees at Aftonbladet, Statoil, Spotify and the MMTC centre of JIBS, thank you for your time and for giving us a better understanding of the case we have been studying. Last but not least, we would like to thank Christian Algotsson, former student at JIBS for encouraging us to keep on struggling and our fellow students for all the feedback during the seminars. _________________ _________________ Adam Tapper Johan Sjöberg Jönköping International Business School 2009-12-09 i Bachelor Thesis within Business Administration Title: A business model shaped by technology: A case study of EMI Records Authors: Sjöberg, Johan; Tapper, Adam Tutor: Börje, Boers Date: Jönköping, December 2009 Keywords: Business model, technological change, drivers of change, record company, music industry, EMI Abstract Background: The record companies have experienced a major change in their industry due to technological changes. Ever since 2001, the music industry has lost a third of its global sales. Technology has opened up new distribution channels, both legal and illegal. Since the mid 1990s, when internet became a part of our lifestyle, people have been using these new channels. The music industry is facing a significant environmental and structural change. As a result of this change, record companies are now being forced to change the traditional business models which they have used for many years. We found it interesting to investigate if one of the major record companies in the world has been able to adapt their business model to these technological changes. Purpose: The purpose of this thesis is to study and analyze the record company EMI, and to investigate how their business model has evolved as technology has opened up for new markets. Method: A qualitative approach has been selected in order to complete a case study of EMI’s business model and to fulfil our purpose. Interviews have been conducted in a semi-structured manner with mainly new internal actors in EMI’s business model. As well as interviews with employees at EMI, an interview has also been conducted with an independent researcher in the field of media. To gain an external view of these changes, Patrik Wikström, a researcher at MMCT has been interviewed to avoid ending up with a biased study. Conclusion: The music industry has been through major changes. The driver of change behind this has been innovations in technology. This research has shown that EMI had problems with adapting to these changes and their business model was too inflexible. As a result of these changes EMI have been forced to re- structure their traditional business model and adapt it to the movements on their market. Important actors such as physical record stores have diminished while new actors have grown to become crucial for EMI’s business. ii Kandidatuppsats i Företagsekonomi Titel: A business model shaped by technology: A case study of EMI Records Författare: Johan Sjöberg Adam Tapper Handledare: Börje Boers Datum: Jönköping, December 2009 Nyckelord: Business model, technological change, drivers of change, record company, music industry, EMI Sammanfattning Bakgrund: Skivbolagen har tvingats till stora förändringar i musikindustrin på grund av teknologiska framsteg. Sedan 2001 har musikindustrin förlorat en tredjedel av deras totala försäljning. Den nya tekniken har öppnat nya sätt att distribuera musik, både lagliga och olagliga. Sedan mitten 1990-talet då internet blev en del av vår livsstil har människor använt sig av dessa kanaler. Musikindustrin står framför radikala förändringar i både struktur och omgivning. Resultatet av detta är att skivbolag är tvungna att förnya sina traditionella affärmodeller som tidigare fungerat så bra. Vi tycker att det är intressant att undersöka hur ett av världens största skivbolag har lyckats att förnya sin affärsmodel efter de teknologiska framstegen som gjorts. Syfte: Syftet med denna uppsats är att undersöka hur skivbolaget EMI Records har förändrat sin affärsmodel efter att tekniken har öppnat upp för nya marknader. Metod: Till denna uppsats har en kvalitativ undersökningsmetod valts för att kunna studera EMI’s affärsmodel och följfölja syftet. Intervjuer med EMI’s interna aktörer och EMI själva har genomförts på ett halvt strukturerat sätt. En intervju med Patrik Wikström, en självständig forskare inom media på MMTC har genomförts för att få en extern bild av musikindustrin. Detta för att undvika att presentera en ensidig bild. Slutsats: Musikindustrin har genomgått stora förändringar. Den drivande faktorn har till detta har varit innovationer i teknologin. Vår undersökning har visat att EMI haft problem att anpassa sig till dessa förändringar och deras affärsmodel har inte varit tillräckligt flexibel. På grund av dessa förändringar har EMI blivit tvingade att förnya sin affärsmodel och anpassa den till hur marknaden har förändrats. Viktiga aktörer som fysiska skivaffärer har minskat medan nya aktörer har uppkommit. iii Table of Contents 1. Introduction................................................................................................................................... 2 1.1 Background ............................................................................................................................................2 1.2 EMI Records............................................................................................................................................3 1.3 Problem Statement ..............................................................................................................................3 1.4 Purpose....................................................................................................................................................5 1.5 Definitions ..............................................................................................................................................5 2. Theory.............................................................................................................................................. 6 2.1 Business Model......................................................................................................................................6 2.1.1 What is a business model? .............................................................................................................6 2.1.2 Components of the business model ............................................................................................7 2.1.3 Product .................................................................................................................................................9 2.1.4 Customer interface........................................................................................................................ 10 2.1.5 Infrastructure management....................................................................................................... 11 2.1.6 Financial aspects............................................................................................................................ 12 2.2 Factors of change............................................................................................................................... 13 2.3 Fit for technological change........................................................................................................... 15 3. Method...........................................................................................................................................17 3.1 Choice of strategy .............................................................................................................................. 17 3.2 Research approach ........................................................................................................................... 18 3.3 Quantitative and Qualitative study ............................................................................................. 19 3.4 Data Collection ................................................................................................................................... 20 3.4.1 Primary and secondary data...................................................................................................... 21 3.5 Interview structure........................................................................................................................... 22 3.6 Credibility, generalizability and trustworthiness.................................................................. 23 3.7 Ethics ..................................................................................................................................................... 25 3.8 Interview guide .................................................................................................................................. 25 3.9 Transcribing and analysing data.................................................................................................