Newly vulnerable markets in an age of pure information products: an analysis of online music and online news

Abstract

We describe the emerging competition between music companies and their star acts, and the role of online distribution in this industry. We then contrast this with the lack of competition newspapers will face from their reporters, writers, and photographers, but does identify other possible competitors for newspaper publishers. We examine what resources have previously enabled record companies to lock in their star acts and ways in which technology has altered artists' ability to reach the market independently and thus their dependency upon record companies. We examine which resources have been eroded in the newspaper industry and the remaining value that the newspaper company does still create, other than bundling stories, adding advertising, and printing and selling the papers. We consider what part of the business is vulnerable, if any, and where threats may arise. We combine the resource-based view of competitive advantage to examine which industry may have become newly easy to enter; and the theory of newly vulnerable markets to assess which industry may actually have become vulnerable as a result. Our analyses are then used to create a computer simulation model to make the implications more explicit under a range of assumptions.