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Examine the structure and functioning of the music industry and give an assessment of the attractiveness of the industry.

1. Examine the structure and functioning of the music industry and give an assessment of the attractiveness of the industry.
2. What are the advantages and disadvantages of the three different online music business models (P2P, Subscription based and Pay per Song based)?
a. How will these differences affect the development of the online music industry?
b. Is Steve Jobs right about buying music and "good karma"? Are customers really hungry for a legal way to buy music?
3. What are the key resources that are at the root of iTunes and Apple's position in the online music business?
a. How valuable are these resources? How rare are these resources?
b. How sustainable is Apple's position in online music? What are iTunes critical resources? What are the biggest threats to iTunes?
c. Can potential entrants like Microsoft, RealNetworks, and Dell imitate what iTunes does well? Applying the VRIO framework, will iTunes be able to sustain its advantages?
4. Given the level of competition in the businesses of digital distribution of music, which direction is the iTunes Music Store headed in? If you were sitting at the Apple headquarters, what strategy framework would you design to ensure that iTunes sustains the growth momentum it picked up in mid-2003?

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1. Examine the structure and functioning of the music industry and give an assessment of the attractiveness of the industry.
The music industry across the world is divided into three segments. That is the creation of music, the marketing of music and its distribution. The music creators are the artists and the marketers and distributors are the nexus of record labels, distributors, retailers, broadcasters and DJs/clubs. The labels play an important role by providing finance and marketing expertise to the entire process. The music marketing takes place through branding and communicating. There are many middlemen in the industry between the artists and the consumers. These middlemen add to the cost of the music. The record companies dominate the industry and they have long time contracts with the musicians. The selling of CDs had several problems, the album must contain a certain number of songs and the price was pegged at $15 onwards. A little later there was the proliferation of the Internet and the facility to download individual songs. This opened up three possibilities, there could be peer-to-peer transfer of songs, there could be pay per song download and there could be a subscription that would allow the down loaders unlimited facility to download. The internet based digital sales has advantages like the songs can be sold singly, the songs can be downloaded on a portable player like an iPod and played at leisure or the song can be burned on to a CD. This makes the industry attractive, because the music lover wants to download songs officially and pay for them. They don't want the illegal option of peer-to-peer file sharing.
2. What are the advantages and disadvantages of the three different online music business models (P2P, Subscription based and Pay per Song based)?
The advantages of P2P is very low prices, easy download and unlimited access, disadvantages are that the quality of the download is substandard, it is illegal and is unethical. The subscription based download allows unlimited access to music once the subscription is paid, it allows access to popular songs, and is legal. On the other hand the subscription based offering has disadvantages, the subscription is believed by many customers to be very high, there are often software problems and there are some restrictions on downloading. The pay per song based offering has the advantages that only the song has to be paid for, it allows good quality download, encourages purchase of songs legally, on the other hand the ...

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