Evaluating the impact of the internet on barriers to entry in the music industry

Abstract

Purpose Music can be copied and distributed almost without cost via the internet, while payment and distribution technologies are reducing the transaction costs of its commercial exchange. In the case of MP3 the cost of swapping music files is negligible, for both the supplier uploading the file and the receiver who is downloading the music. In light of these developments, this paper seeks to put forward the proposition that the main barrier to entry in the music sector has been the ownership and protection of artistic content in the supply chain. Design/methodology/approach The paper focuses on a review of the concepts relating to “barriers to entry”, since entry into the music industry is central to the explanation of the incumbents’ strategic responses. The pre‐ and post‐web supply chains are also assessed from a “barrier to entry” perspective. Findings This paper argues that the internet is destabilising the supply chain for music by challenging the pre‐web role and domination of the music industry supply chain; and by changing the primary entry barrier in the sector from the incumbents exploiting their ownership of copyright to one of trying to protect it. Originality/value The paper contributes to understanding the strategic responses of music industry incumbents, as well as presenting some of the implications for consumer welfare.