4 - Defining the problem.

This section defines the problem researched in this thesis. To be able to properly answer the research question "how can 2AM effectively market their music to fans by using the web?" one must gain a wider perspective on the problem addressed by this research question. What is meant by 'problem' is the current situation and the specific difficulties it presents.

This section is split in two parts. The first part looks at previous research, reports, news articles and expert opinions about the problem. The second part goes more in-depth and explores the problem through quantifiable data. This section provides a context for the next section: solutions. It asks:

How and why has the internet changed the music business for record labels such as 2AM and why is this a communication problem?

The goal of this thesis is to solve this communication problem, which is done in the solution section, after developing a proper understanding of the context and reality of the problem.


The answer to the question "how and why has the internet changed the music business for record labels such as 2AM and why is this a communication problem?" provides the context in which the solution is later developed. The answer is explained in terms of the marketing mix model, which consists of 4 pillars: place, price, product and promotion. This is explained in more detail further on and so is the answer, but in short it boils down to this:

  • Place: a lot has changed. Music is no longer kept in a shop, but it is everywhere. This also means that music no longer has to travel via a publisher or a shop to reach consumers. Artists can get their music to consumers directly, but there is also a lot of consumer-to-consumer exchange. The traditional industry has basically lost control over the distribution of their product.
  • Price: the price has dropped from x to zero. That which is easily reproduced, is now available for nothing.
  • Promotion: the traditional word of mouth has become (a very powerful) word of mouse. Promotion is discussed in much more detail in the solutions section.
  • Product: the physical product has also become digital (note that it has not been replaced). What was rigid before, has become very liquid. What was previously almost only attainable in its official form, has now become massively available in the form of unofficial (illegal) copies. People do not have to go to a shop anymore, people don't even have to download anymore; they can stream the music they want to hear directly. Music has become like water.

4.1 - How and why has the internet changed the music business for record labels such as 2AM in terms of the Marketing Mix?

This section answers the sub-question "how and why has the internet changed the music business for record labels such as 2AM in terms of the marketing mix?" It explores various dimensions of the problem which are referred back to in the section regarding the solution. It investigates the ways in which the internet and the digitization of music have impacted the music business. It uses the model of the marketing mix to analyse these changes.

The Marketing Mix

The marketing mix is a widely-used concept which explains marketing through 4 pillars. These pillars are called the 4 Ps; price, product, place and promotion. These will be analysed in the context of the music industry, but what is generally understood by them is this:

The Marketing Mix
  • Place: this refers to the distribution aspect. Where does the consumer find/purchase the product? How does it get there? Digital, physical, direct or indirect sales? A very relevant pillar in an age of digitization.
  • Price: there are many ways to price something to maximize profit. Some brands and shops price low to sell as high a volume as possible; to outsell competitors. Other brands price high to establish an exclusive image and compensate for selling low volumes. Some brands strategically vary pricing on different products and/or use mulitiple strategies on the same product.
  • Product: "a good product sells itself" is an oft-heard cliché, but it does a great job at displaying the marketing value of good product development. While reading the rest of this chapter, it will become evident how the product has changed, sometimes unbeknownst to the original producers.
  • Promotion: this is usually what people associate with marketing—it communicates a 'unique selling proposition' to potential consumers via mass media or social media, moving from seller-to-consumer, seller-to-consumer-group, consumer-to-consumer, group-to-group etc. Promotion deals with brand management, identity and image.

A unique selling proposition is the identification of that which makes your product unique; why this product and not the competitor's?

Using the marketing mix immediately focuses the research on the communication management aspect of the problem and delivers a clear structure in a blurry field of study. On the basis of these variables (price, product, place, promotion), the following section will analyse the way the digitization of music has impacted the music business.

  • How has place been changed by the internet?
  • How has price been changed by the internet?
  • How has promotion been changed by the internet?
  • How has product been changed by the internet?

4.1.1 - How has the place been changed by the internet?

This section looks at how the marketing mix's place pillar has been changed by the reality created by the internet. Place is not just the static location of the end-product, but also refers to the entire dynamics of the distribution of a product or service, from the creator to the consumer. This has been drastically altered by the internet and has serious consequences for the other pillars of the marketing mix; price, promotion and the product itself, which will all be discussed later. For defining the problem, I consider place the most important part of the marketing mix, because the changes on this level have impacted every other part of the marketing mix as well.


What makes place so important for music is that developments in place or distribution have always determined the product and the business model. Originally, music could only be played live, so the place would be the location at which the music was being played. This was followed by print music (which meant music could be distributed on paper) but the birth of the modern music industry came with the technology to record and play musical performances back.

Historically, the distribution via radio meant royalties and new ways of getting discovered. The distribution of recordings and the advent of mass media and consumerism meant the creation of the enormous music industry we have today. One which spent the latter half of the 20th century setting up huge distribution chains to get music from the producer to the consumer—the primary way being via vinyl, tapes for a while and then CDs.

These developments in place have always created new hybrids in business models, marketing practices and product development, but have also created new ways in which fans and artists could interact. For this reason it is difficult to draw a clear line between the industry of the past and the way things work now, because the marketing mix of the past has been integrated (or evolved) into the marketing mix of the present. The easiest way to show what has changed is by describing the developments in the last 15 years.

The 'list' of places, distribution channels and distribution methods is more or less endless, which is why the most important groups and trends have been highlighted. These groups and developments include the digitization of audio, represented by the MP3, peer-to-peer filesharing networks, their effects on the industry's control of distribution, legal digital music consumption and digital music stores, social networks, blogs and streaming services (both on-demand and internet radio).

One of the most important components of the music business in the last 50 years was the ability to sell music as a copy (live performances, media appearances, music videos, merchandise, etc. often revolved around the copy). For this reason, the problem definition section mainly approaches the problem from this perspective; music as a copy.

The MP3

It all begins with the MP3—consumers' most popular music format (by volume) nowadays I assume, as opposed to the CD in the mid-'90s. What is the MP3 and how has it affected music's distribution?

MP3 technology allows people to compress music into digital files which take a lot less space than the original. So MP3 allowed people to store 5 or 6 CDs in the space of one CD (both in cubic space, as well as in bytes). Originally, the sound quality was often sacrificed for compression, but as encoding technologies develop (such as FLAC), as well as the size of hard drives and portable storage mediums (USB/flash sticks, DVDs, Blueray Discs), and the speed of our internet connections increases, this sacrifice of quality is less and less the case. This change, which is on the level of the product (even though digital music took years to take off as an actual product), had immense consequences on the level of place and distribution, which resonated to all the other fields of the marketing mix, including back to the product itself.

The digitization of audio means that anyone can make as many copies of however much music they want and distribute it at an almost negligible cost. This means that while it gets cheaper for record labels to get the music to fans, they no longer have control over the distribution of music. It also has serious implications for the product itself, which is discussed further on in the problem definition.

Filesharing, P2P and the loss of control over distribution

June 1, 1999 saw the launch of Napster, a symbol of the loss of control over distribution. One of the biggest online music stores nowadays, with over 830,000 paid subscribers in 2007 (Napster, 2007), Napster started out as an illegal peer-to-peer filesharing network. "Peer-to-peer" in this context means that the users of a certain network are sharing their bandwidth and granting each other access to certain files on their computers. Filesharing is giving access to certain files, whether music, programs, books, or other, via different media, such as portable mediums (CD/flash sticks) or via peer-to-peer (P2P) networks on the internet. Filesharing is most commonly used to refer to P2P filesharing and will refer to this type of filesharing in this thesis, unless specified.

Napster created an uproar. It let people download a free program they could use to distribute music amongst each other on a worldwide scale. It essentially functioned as the first global music library in history. It gained popularity, notoriety and a lot of publicity. Of course, due to all the publicity caused by lawsuits and famous artists and bands such as Metallica and Dr. Dre speaking out against it, Napster rapidly grew in popularity (Barbra Streisand effect, anyone?). Most people at that time (1999-2001) had never heard of an easy way to share music for free with other people around the world. When Napster was shut down, the world had been changed. Tons of clones and new technologies had been created, most notably BitTorrent, which created a bigger obstacle to stop files from being shared, because the files are turned into small packages of information and distributed within networks of users - never passing by a centralized server. This is why it has been so hard to close down sites like The Pirate Bay or Demonoid, because they're not hosting the copyrighted material on their servers at any time.

Moreover, filesharing is quite a popular activity:

", an Internet monitoring firm, estimates that there are now up to 9 million simultaneous file sharers, up from about 4 million in early 2003." (Oberholzer-Gee, 2004)


People generally don't feed bad about downloading music for free. This would be suggested by the scale of the phenomenon.

Those statistics are from 2004 and exclude BitTorrent users. Also, 'simultaneous file sharers' means that this is the number of people sharing files at any given time - not the total amount of people engaging in P2P filesharing. A 'conservative' estimate dating back to July 2008 suggests that 20% of Europeans engage in filesharing, including via BitTorrent (BBC News, 2008). According to a report by the International Federation of the Phonographic Industry (IFPI), "95 percent of the music downloaded in 2008, or more than 40 billion files, was illegal and not paid for" (Holton, 2009).

What does this mean for the marketing mix's place? Label to publisher to shop to consumer has becomecreator-to-consumer or consumer-to-consumer / P2P. The former still exists, but has to find a way to co-exist with the latter. The latter has actually has made music quite ubiquitous now that many people are able to connect to the internet and listen to music all the time with their mobile devices.

Consumption of Digital Music

As pointed out earlier, filesharing has become increasingly popular in recent years, but not only the number of filesharers has risen. According to the aforementioned report by the IFPI, digital musical sales around the world are up 25%. Digital revenue for the major labels has risen dramatically and is now composing 32% of the total revenue with regards to music sales and airplay, according to the Recording Industry Association of America (2009), as displayed in Figure 1. Note: numbers based on the RIAA's 2008 Year-End Shipment Statistics.

graph: percentage total market value of physical vs digital sales from 2005 to 2008
Figure 1: Percentage of total market value of physical versus digital sales, according to the RIAA (Recording Industry Association of America, 2009).


An important cause of piracy is the desire for convenience.

This graph shows that digital distribution, as place, is becoming increasingly important and the physical 'place' less important. This means that digital channels are becoming increasingly lucrative while physical channels, such as record stores, are becoming less important.

While we all have our personal opinions about the ethics and values of filesharers—which often makes for an excellent debate—it is important not to dismiss filesharers as unwilling to spend money on music. As research by Interpret reveals in Figure 2, music pirates also buy digital music, although less often than ‘cd buyers' (Frommer, 2009). Take into account that it's very likely that there's an overlap in the ‘cd buyers' and ‘illegal downloaders' groups, as the two do not necessarily exclude each other.

graph: illegal downloaders also buy and stream music
Figure 2: Music consumption activities divided in CD Buyers and Illegal Downloaders.

Also interesting in this graph is the fact that illegal downloaders are more likely to stream music online than CD buyers. The reason why I list this in place is because I think piracy has a lot to do with the convenience of certain distribution channels. Also, the creation of these new places (illegal distribution channels) has turned the industry upside down.

A report on music consumption in 2008, by NPD Group Inc., also showed some interesting statistics regarding changes in music consumption and the place.

In 2008:

  • US Teenagers bought 19% less music.
  • Downloads from P2P networks fell 6%.
  • Consumers ages 13 to 17 spent 13% less on music downloads.
  • CD sales fell 26%.

This doesn't mean that teens are consuming less music. The report reveals that:

  • 52% of teens said they listened to online radio in 2008, up from 34% from 2007.
  • 46% used social networking sites to download or stream music—an increase from 26% in 2007. (Satariano, 2009)

Social Networking Sites

social network logos

Social networks are an offspring of new media and the oft mentioned—yet rarely defined—Web 2.0. These concepts are critical to the solution and thus will be explored and defined.

Web 2.0 refers to the social web, where online media and websites become platforms facilitating interaction from user-to-content, user-to-content-creator, and user-to-user.

"Broadly put, Web 2.0 is a paradigm shift in the way the Internet is used. It involves a more open approach to the Internet, and user-generated content in particular, such as blogs, podcasts, social media and special-interest review sites." (Datamonitor, 2008)


Frequent social network users have different purchasing habits than less frequent users.

Social networks are platforms designed to facilitate interaction. They place a heavy emphasis on sociability. Popular examples are Facebook, Twitter and MySpace. As of 2010 all three rank in the top 15 of worldwide traffic (Alexa, 2009). Facebook currently has over 500 million users. Facebook and Twitter are valued at $10 billion and $1 billion respectively (Macsai & Wilson, 2009). Facebook is [was] expected to generate $1 billion in 2010—nearly doubling the $550 million revenue estimate in 2009 (O'Neill, 2010).

This means, as a medium—or place, or communication channel—social networks are big business and are starting to pull away money from more traditional media, like radio or print advertising.

Social networks offer ways to connect with other people, which to artists means connecting with existing or potential fans. Most bands and artists already have a MySpace page, a Facebook fanpage and a lot of them also have accounts on Twitter. This allows them to interact more directly with fans and lets them keep fans up to date on what they are doing from moment to moment.

Digital Music Stores

Aforementioned research (see Figure 1) suggests that digital purchases are on their way to overtake physical purchases, but where are these purchases made? In digital music stores.

Digital music stores sell music online, the defining characteristic of this music being that it's delivered digitally. The four biggest online music stores in terms of catalogue and sales are iTunes, Amazon MP3, Rhapsody and Napster (Routenote, 2009). Others to be considered by 2AM are 7digital, which doesn't distribute in the US, but is fairly successful in Europe, as well as Beatport and Juno Download, the two biggest music stores for electronic dance music, 2AM's main focus.

Ways of distributing one's music to most of these stores, as well as other popular digital music stores are services like Routenote and TuneCore, which, for a certain fee, take care of distributing your music to music stores around the web.

Streaming Services

Previously mentioned research into how US teenagers consume music shows that sales are down, illegal downloads are down, but streaming is getting more popular, but what is streaming?

Streaming is the real-time delivery of content which is not hosted on the recipient's computer. For instance, when one clicks a play button online, the data is transferred as the song plays (instead of downloading it first and then playing it) and then removed from the recipient's computer's memory again. The defining characteristic is that the content is not stored on the recipient's device after they're done streaming.

Streaming sites and services offer people a way to listen to their favourite music, but also a way to discover new music. Music streaming services have various business models, such as ad supported music (like traditional radio), subscription models which allow people to stream in higher quality or quantity, premium models for added functionality, etc. The only limit is entrepreneurial creativity.

Internet Radio

One form of streaming music is internet radio. It distinguishes itself from the above services, because unlike those, it doesn't have an on-demand function. You tune in via the website or by downloading a link to their live stream and you listen live, just like with normal radio. Traditional radio stations nowadays also offer the possibility to stream their channel online, but there are also many web-only radio stations, such as Digitally Imported ( which has a lot of free channels for many different electronic dance music styles. For around $5 per month, listeners can get premium service which offers much higher quality than the free service. From the money they collect through ads and premium subscribers, they pay out royalties to the artists whose music is played.

Music Blogs

There are two main types of music blogs: MP3 blogs (mainly offering MP3s) and music review blogs (mainly offering criticism). On the one extreme there are blogs that post solely links to music files like MP3s with no further added content, while on the other are blogs that post long reviews with pictures and/or videos of the reviewed artist or band.

Most music blogs, however, lie within the grey area between these two extremes and offer a multimedial experience, sometimes with a download or stream of a music file, or embedded video content from YouTube for instance. In this grey area, MP3 blogs write some information about the artists and the songs they offer in the particular posting.

Blogs that are more music review-oriented tend to focus more on the review, but try to offer streaming audio or video so that the readers can preview it themselves. These music blogs thus function as a type of music magazines, but also act as curators. Usually blogs are interactive and allow readers/listeners to comment on specific postings.

4.1.2 - How has the price been changed by the internet?

This section explores how the shifts created by the internet have affected the price of music products. In the previous section regarding place, we already covered a lot of these effects, but now it's time to get into more detail.

Like in the previous section, this part mainly approaches the topic from the perspective of music as a copy. Pricing has always been rather simple and predictable, every new popular album or single costing more or less the same (unless there's some special sale). The changes in place and the distribution of music created new expectations about price amongst consumers. One of the things this resulted in is the one song for one dollar standard as set by iTunes. Trends such as 'feels like free', the economy of abundance and discussions about price versus value now play an important role in the reality of the music business.

Feels Like Free

The first principle at work, as we saw in the previous section, is that it's now possible to copy and distribute at negligible cost. So for many consumers, music has become something which is ‘free'. However, it's not always free, it just feels like it. Not all music consumption which feels like free is actually free. If you watch a music video on YouTube that someone sent you, you'll see some ads. If you discover a new artist through downloading some music from a filesharing network, but become a fan, download his discography and attend a show every time he's in your area, you're still spending money on the artist. This will be investigated further through empirical research. Especially a look into the purchasing habits of music 'pirates' could show interesting results to increase further understanding of this trend.

So what is happening to the price?

Chris Anderson - Free: The Future of a Radical Price

free: the future of a radical price
Free: The Future of a Radical Price

In the book Free: The Future of a Radical Price Chris Anderson explores the marketing opportunities of ‘Free.' He sees a lot of opportunities in the distribution costs of music being almost negligible, or as he refers to it "too cheap to meter". He explains that even though it seems that the reality of 'free' is creating losses; there are big opportunities to make profits.

"Apple's iPod, which gets much of its value from the fact that it can store tens of thousands of songs, only makes sense if you don't have to pay tens of thousands of dollars for that music library. Which, of course, many people don't, since they get their music free from friends or file-trading. So how much of Apple's $4 billion in annual iPod sales should be credited to Free?" (Anderson, 2009)

This does not necessarily seem relevant for 2AM directly, however one should bear in mind that as our internet connections get faster, people will no longer want to store music on their computer, just like they don't store music on CDs. This means that computers and portable devices, like mobile phones, will be streaming music from a service (like Spotify) instead of playing a downloaded copy. Through services like this, royalties can be earned, but there are more opportunities. More about this in the solution section. Also important is that when users pay a monthly fee to a service like Spotify, they don't have to make the purchase decision for every song they listen to. There has been a lot of discussion about the financial cost versus the mental cost of music and this will be touched upon further on in this section about pricing.

David Hornik's comments on Chris Anderson

Another reality created by the price being driven to free, is ‘competing with free'. Before delving into business models, it is important to understand the meaning of having to compete with free.

Aforementioned Chris Anderson has written and spoken a lot about this topic and gets support from many experts. Among them is David Hornik, an intellectual property expert and venture capitalist involved in StumbleUpon, Aardvark, Six Apart, Gravity and other famous new media ventures (August Capital, 2010). After seeing a speech by Chris Anderson, David Hornik commented:

"The basic idea is that incredible advances in technology have driven the cost of things like transistors, storage, bandwidth, to zero. And when the elements that make up a business are sufficiently abundant as to approach free, companies appropriately should view their businesses differently than when resources were scarce (the Economy of Scarcity). They should use those resources with abandon, without concern for waste. That is the overriding attitude of the Economy of Abundance — don't do one thing, do it all; don't sell one piece of content, sell it all; don't store one piece of data, store it all. The Economy of Abundance is about doing everything and throwing away the stuff that doesn't work. In the Economy of Abundance you can have it all." (Hornik, 2006)

What this means for music publishers and artists is that he's saying: publish everything and don't be too selective. Give the choice to your fans, instead of having to make these business decisions yourself, Hornik continues:

"The Economy of Abundance allows business owners to defer choices to the end users. What better way to find out what consumers want than to give them everything and see what they actually buy. That is the paradigm of abundance."

This ties in well with the solution, where you will read more about the Economy of Abundance later.

Price and Value

In music industry trade group IFPI's Digitial Music Report 2010, the following quote can be found:

"We are in danger of creating a world where nothing appears to have any value at all, and the things that we make...will become scarce or disappearing commodities." (Stephen Garrett, Chief Executive, Kudos)

The concept of something becoming free (or feeling like free) leading to a decrease in value is an often repeated logic in the music business and needs to be addressed. A lot of the common medicine we use now, used to be a lot more expensive, but their value has remained the same or perhaps even increased due to their availability. It has not become scarce or disappearing as their price fell; they became abundant and more widely used.

A report by the trade group Recording Industry Assocation of America reveals that as (physical) CD prices dropped 9% between 1996 and 2006 (inflation-adjusted), concert ticket prices rose 86% (RIAA, 2007), suggesting that that which is easy to reproduce reduced in (commercial) value and that which is not easily reproduced has actually gained commercial value. This has very important consequences for the marketing mix and will be discussed in the solutions.

Some are even suggesting a more radical drop in price for that which is easy to reproduce (this is where the financial cost versus mental cost discussion returns). Rob Dickins, former boss of Warner Music UK and former chairman of the British Phonographic Industry (BPI), suggested that album prices should be slashed to about 1 euro, arguing that:

"If you're a fan of REM and you've got 10 albums and there's a new album coming out, you've got to make that decision about whether you want it or not. If we lived in a micro-economy, that wouldn't be a decision. You'd just say ‘I like REM' and you'd buy it."

In the same article, music manager Jonathan Shalit retorts:

"Right now if you buy a bottle of water it's £1. A piece of music is a valuable form of art. If you want the person to respect it and value it, it's got to cost them not a huge sum of money but a significant sum of money." (Youngs, 2010)

Again, the cost/value point is made, but refuted by San Francisco Weekly's music editor, Ian S. Port:

"Several have argued that selling an album for less than a cup of coffee or a bottle of water would devalue the art of music. But people — at least, young people who don't buy much music anyway — don't judge the artistic value of music by what it costs. If they did, they would look down on artists who give away free MP3s and whose albums were obtainable on file-sharing sites. They don't.

The devaluing-the-art argument misses two other important points: First, coffee and water bottles can't be downloaded quickly and anonymously at no cost, while digital music can. Second, paying $3 or $4 for a tangible good (i.e., a cup of coffee you watched a person make especially for you) seems intrinsically reasonable in this day and age, even, I would guess, to a 13-year-old. But paying $10 to download a digital file that's a copy of a copy of a copy — all of them made at no additional cost — somehow doesn't." (Port, 2010)

How much does your love cost? - Love is free! - Don't you value love?!
Price vs. Value #comic by Nina Paley

More about pricing in the solution section.

4.1.3 - How has promotion been changed by the internet?

Something else that has been changed is the way labels (can) promote their catalogue. For the sake of problem definition, this section will be short. The change in the way promotion works is not much of a problem, unless you're investing huge sums of money in traditional marketing and are not going to see the same return on investment as before.

This section takes a quick look at how promotion has been changed, but the way in which promotion has changed will be discussed in much more detail in the solutions section. Quite simply put, the way in which promotion has been changed by the internet has hardly contributed to the communication problem, but has immense consequences when it comes to the solution.

Word of Mouse

hand using computer mouse

The digitization of music, the reality of filesharing and social networking sites have increased the importance of 'word of mouth' promotion and have changed it to 'word of mouse.' Unlike word of mouth, which worked from person to person, word of mouse uses aforementioned networks to broadcast to groups of people. For example, an artist you follow on Twitter posts his new music video, where he has 2,000 followers. You check it out on YouTube and decide to favourite it. It is then broadcasted to your network of friends on YouTube (50), Facebook (200), Twitter (1,000) and any other social networking sites which you have connected to your YouTube account. With just one mouse click. This is word of mouse.

The reach of one particular bit of media (which a promotional video or ad is), has thus been increased a lot. Let's say someone does indeed have the aforementioned network size mentioned between brackets. This video would then reach a potential of 1,250 more people, on top of the original 2,000 and that's if only 1 of the artist's followers decides to share. More about this in the solutions section.

New promotion channels

The channels of distribution are also channels for promotion, since they offer ways to get discovered. This used to be all about getting your music on the radio or on TV. Now, we have digital music stores, social networks, internet radio services, blogs; all of these are potential promotion channels which are used by record labels. A further investigation of how they do that is included in the solutions section.


One negative consequence might be that the means for promotion have been democratized, which means every artist can (and probably does) now promote him- or herself. Personally, I see more opportunities in this than that it really creates a problem. First of all, artists do not rely on getting a contract with a major label for promotion anymore. Second of all, if it really gets too saturated, artists and fans both can venture further down into a niche.

For further discussion about this topic, have a look at this thread on Quora:

4.1.4 - How has the product been changed by the internet?

The previous 3 Ps have all had their impact on the most fundamental P, the Product (and in the solutions section, this will become even more apparent). The most fundamental way in which music has changed is that it has gone from physical to digital. As shown in the section about place, this means that the amount of unofficial (illegal) copies has exploded (one group claimed that it's 95% of all copies), but it also means that it's now possible to 'stream' music without ever holding or 'owning' a copy. Music has gone from a rigid product, to one that is very liquid.

Music Like Water


Developments show clearly that as a successful musician, you no longer have your CD in just a few shops per city. You no longer even have your music on one computer in every so many households.Your music will be all over the internet, in different qualities, channels, formats (streaming/download), etc. So what was once a rigid chain has now become a very liquid matter.

Media futurist Gerd Leonhard (2008) calls the concept 'music like water':

"Music is no longer a product but a service. Music became a product with the advent of recording (records, tapes, CDs) and the formation of an industry that quickly figured out that selling the bottle can make a lot more money than only selling the wine."

Besides music like water, there are a lot of other trends in product innovation. These are all attempts to solve the research problem, so they will be discussed further in the solutions section. This solutions section explores the solutions that have been found for the communication problem described throughout this section. Even the most basic product innovations suggest a fundamentally different approach and writing about them now would drastically alter the scope of this section. For the sake of focus and clarity, some of the product innovations and their effects have been placed in the solutions section.

Indie versus major

The only other thing pertaining to the product that I would like to discuss here is the public's attitude towards buying music from unsigned artists or artists signed to indie labels compared to that of the artists of major labels. I have not been able to find any research into this, but over the course of doing this research I have participated in multiple group discussions about the music business and most 'consumers' were more sympathetic towards unsigned artists than major label acts. For this reason, I want to test the two hypotheses listed in the blue box.

This difference in willingness to buy from major labels compared to unsigned acts is relevant for 2AM, because they're an independent label that has had their work released via major labels, but it has a lot of flexibility in terms of image. If it seems that people are more inclined to spend money on something that has been branded 'independent' or 'unsigned,' then it might be interesting for 2AM to strengthen that image.

4.2 - The problem analyzed empirically (N = 362)

In order to add more depth to the problem and solution, I conducted empirical research for this thesis. This section further investigates the problem in terms of data and correlations. The research in this part explores the problem in more detail and serves as a jump board into approaching and defining the solution to the problem. Since the previous section showed that there is significant overlap of the 4 Ps, this section is not strictly divided into place, product, price and promotion. Making this division will reduce the quality of the information retrieved from the research, which is highly dependent on cross-relations (the reason why is explained in the methodology). What's more is that it would create 4 sections with many cross-references all throughout the text which would make reading the pages in numerical order impossible. Instead, whenever something is clearly connected to one or more of the 4 Ps, this will be mentioned and the keyword—place, product, price or promotion—will be bolded, linked, or parenthesized so that the part is essentially 'tagged.' Tagging is common practice on social bookmarking sites (like StumbleUpon and Delicious), on blog platforms (such as WordPress and Tumblr), and on social networks like Twitter (which uses #hashtags). It's a non-linear way of categorizing. This non-linearity will be referred back to in the solutions section.

4.2.1 - Common assumptions (hypotheses)

During my research I've spoken to a lot of people about the music business—both insiders and absolute outsiders. Everyone seems to have their own assumptions about what the problem in the music business is and how it works. The first thing I wanted to design my survey for was to test these assumptions. Most of the assumptions are carried over from the hypothesis blocks throughout Others cannot be specifically linked to a particular piece of the theoretical framework.

Assumption: Young people buy less music than other age groups. (place)

Figure 3: Last Time Buying Physical CD vs Age Group

A few trends become clear when researching this assumption. It was tested by asking when the last time people bought either physical or digital music was. It's on the product level, but also has implications on the place level. First of all, the assumption is simply not true. Actually, it seems that 15–19 year olds buy physical CDs more frequently than 20–29 year olds. However, the trend that clearly shows when it comes to purchasing physical CDs is the size of the orange block (Never) that increases the younger the age group gets. This indicates that with every generation, there are more people that have never bought a physical CD at all.

Apparently, what is true for physical is also true for digital. People aged 30 and over do most of the consuming.

One would assume that it's mostly young people buying digital music, because of being digital natives and perhaps being more comfortable with buying music online, but this is not true.

graph: digital music buying frequency vs age group
Figure 4: Frequency of Digital Purchases vs Age Group

Assumption: Fans of electronic dance music buy music in different places than the average consumer.

As shown before, there are all kinds of places where people can get their music now. When comparing the people that specifically indicated liking electronic dance music with the survey average, the following three digital music stores stood out as being more popular:

Top Electronic Genre Music Stores

  1. Beatport—specialized in electronic music, so not a big surprise. 7.4% more popular than with the survey average.
  2. Juno Download—also specialized in electronic dance music. 3.1% more popular than with the survey average.
  3. iTunes—not specialized in any particular genre. 1.5% more popular than the survey average.

Assumption: Music blog readers are more likely to purchase music, because music plays a bigger part in their lives than for the average consumer. (place)

graph: blog reading vs buying physical copies
Figure 5: Blog Reading Frequency vs Last Time Buying CD
graph: blog reading vs buying digital copies
Figure 6: Blog Reading Frequency vs Frequency of Digital Purchasing

Clearly, music blog readers are more likely to purchase music. This is true for both physical and digital copies (which are, of course, products). Respondents were asked to indicate whether they agreed with the statement "I regularly read blogs about music." As can be seen in Figure 5 and Figure 6, people that read blogs about music regularly, also purchase music more regularly.

What stands out is that the difference between people who say they regularly read blogs and the other groups, is noticeably bigger when it comes to purchasing physical copies, than with digital copies.

Assumption: People generally don't feel bad about downloading music for free. (place)

According to some music industry reports I've read for this thesis, music piracy is a huge problem. An important way in which the music industry wants to fight piracy is by educating consumers. This basically comes down to (sometimes government-funded) programs in schools and universities to change consumers' attitudes towards filesharing. If anything, this fact indicates that today's consumers don't feel all that bad about filesharing. The scale of filesharing, as talked about earlier, suggests the same.

Several different figures show that the above assumption is true. When presented with the statement "downloading music illegally is not as bad as the music industry makes it out to be," nearly 60% agreed, whereas only 18.5% opposed. This, by itself, says nothing, but when more context is added through other statements, a pattern emerges.

Table 1 - Music consumption attitudes tested

Statement Agree Disagree
1 - If I have the possibility to download music legally (financial/practical/etc.), then I get all my music that way. 54.1% 26.8%
2 - It's more important to me to attend an artist's live show than it is to acquire their music legally. 54.7% 19.1%
3 - It's important for me to buy music from unsigned artists. 30.6% 41.4%
4 - It's important for me to buy music from artists signed to major labels. 9.4% 68.5%
5 - One US dollar ($1.-) is not too much to ask for a song. 40.9% 37.3%

The first statement shows that when asked, most, though only 54.1%, of the people are willing to buy music online. (place)

Statement 5 reveals that people have differing expectations regarding the price of music. Groups are about equally divided. This needs to be taken into account for the solution.

Statements 3 and 4 partly speak for themselves (one assumption brought up in the product section was that people are more sympathetic (financially) to unsigned bands, than major label acts), but what's more interesting is what happens when they're linked to another tested statement. People were asked if they generally know what label their favourite artists are signed to. The assumption mentioned in the product section was that people generally don't know what label artists are signed to, but the amount of people that said they don't know, was equal to the amount that said they do, with 16% being undecided.

When people that claim they do know what label their favourite artists are signed to were confronted with statement 3 and 4, the results changed quite a bit.

Table 2 - Music consumption attitudes from people that claim they generally know what labels their favourite artists are signed to

Statement Agree Disagree
It's important for me to buy music from unsigned artists. 44.4% 27.2%
It's important for me to buy music from artists signed to major labels. 11.9% 62.3%

This reveals that people that have a sense of what labels their favourite artists are signed to, feel more strongly about purchasing music, than those people who don't. This is investigated further in the solutions section.

People don't buy music online, because...

According to the music industry lobbies, digital music sales are not enough to replace the physical sales loss. A lot of different people in the public arena have mentioned a lot of different reasons for why this is. The respondents that indicated that they would never download music legally were asked why (the 26.8% from statement 1).

graph: reasons
Figure 7: Reasons For Never Having Bought Digital Music

There's a lot to read from graph, but one thing absolutely stands out. Just over 30% of the people that have never bought digital music cite that it's easier to download via peer-to-peer (P2P) filesharing networks. Convenience is the way consumers look at the 4 Ps' place.

In terms of the marketing mix, the top reasons mainly pertain to place, with the exception of those who think it's too expensive which refers to price. Streaming mainly refers to the way music is delivered (place), but might also have to do with price and product (since streaming products are often free).

4.2.2 - Groups and segments.

The way in which the survey was spread (see the methodology for more info) has created a non-representative sample of the global music consumer. For this reason it is useful to zoom in further and create groups and cross-relations, because those relations can provide more accurate insights than pure averages (besides, the pure averages can be found in prior research). The total of 362 valid cases leaves enough room for manoeuvring without ending up with very small samples, which would lead to inaccurate conclusions.

Three different groups have been made. These groups are not mutually exclusive. A group is simply a category within the 362 valid cases.

The 3 groups are:

  1. 20 to 24 year olds = 2AM's main current demographic
  2. 'Pirates'
  3. Social network users

These groups have been chosen for different reasons, which will be explained per group. One reason which goes for all of the groups is that I've tried to look at the more digitally-oriented respondents, because of the topic of this thesis, but also because they're easy to reach with limited means and might be ahead of the curve in the digitization-trend. This means that their behaviour is more likely to become the standard for future generations and those who are not yet so 'connected' (online).

These groups will be nicknamed and referred to throughout the thesis from here onwards. Especially the music discovery part of the solutions section will contain a lot about these groups, but first to find out more about the problem.

Group 1: 20–24 year olds (n = 150)

The primary reason for analysing survey results specifically for 20–24 year olds is because of 2AM's current demographic. The below graph shows information about the Facebook fanbase of Star Tattooed, 2AM's most successful project, based on a sample of roughly 750 people.

Figure 8: 2AM's Star Tattooed Facebook fans statistically.

Unfortunately, when filtering it down to 20–24 year old Bulgarians, only 14 cases were left, which would not be a representative sample to base assumptions on. Therefore the group includes all nationalities. This group is composed of exactly 150 respondents, composed of 62 females (41.3%) and 88 males (58.7%). One could keep this in mind whenever certain averages are mentioned. The results have not been standardized.

What is it about this group that gives more insight into the problem?

The most important information has to do with the way these 20 to 24 year olds consume music.

The respondents were asked to indicate where they listen to music attentively. The two places most of the 150 20–24 year olds surveyed indicated most often: when they're at home (88%) and when they're commuting (75%). They were then asked how they listen to music exactly.

Favourites At Home

  1. Downloaded music on a computer (76%)
  2. Streaming music on a computer (46%)
  3. MP3 player / mobile device (34.7%)
  4. CD player in computer or stereo (17.3%)
  5. Television (12.7%)
  6. Radio (10%)
  7. Other: vinyl (2.7%)

Note that traditional channels (place, but in some cases also product) have almost completely been replaced with new means. More about this in the solutions section. This reconfirms the statements about the marketing mix's place having changed drastically. The same goes for commuters, but not as heavily (yet).

Favourites While Commuting

  1. Music player, such as an iPod or MP3 player (58%)
  2. Car radio (23.3%)
  3. Car CD player (17.3%)
  4. Music stored on mobile device (16.7%)
  5. Radio via mobile device (6.7%)
  6. Car digital music player (4.7%)
  7. Streaming music via mobile device (2%)
Respondents were allowed to tick between 1 and 3 answers, which is why the percentages in these lists amount to over 100%.

More about this group is discussed in the solutions section.

Group 2: Pirates (n = 237)

People that frequently use filesharing networks to download music are often labelled 'pirates.' This group would not have existed without the developments in distribution. My assumption is that pirates are probably digital natives and slightly ahead of the curve, which is why I wanted to take a closer look. In this thesis, 'pirates' is defined as people that use peer-to-peer filesharing networks at least monthly. This amounts to 65% of the survey's respondents, who are almost evenly split up in three groups of (almost) daily users, people that fileshare 2–5 times per week, and people that fileshare 1–5 times per month.

last time buying physical cd from an online or offline store
Figure 9: Pirates and Non-Pirates Compared: Last Time Buying CD

A pirate cannot be defined by music purchasing behaviour, as can be seen in Figure 9 and Figure 10 (which are place and product intertwined). Actually the chart above seems to indicate that there are two groups of pirates (maybe more). One group is on the left side of the chart and the other on the right. The group that is on the left-side buys music more frequently than people who use filesharing networks less than once per month. However, the group on the right side is more likely to have not bought physical copies of music in the last year or even in their lifetime.

frequency of buying music from online stores
Figure 10: Pirates and Non-Pirates Compared: Frequency of Buying Digital Music

With digital music, this changes. Pirates buy digital music about as frequently as non-pirates (except when you add the sporadic buyers that only purchase 'a few times per year').

More research into pirates in the solutions section.

Group 3: Social networkers (n = 121)

This group consists solely of people that use social networks at least daily and whose first preference either lies with MySpace, Facebook or Twitter (note that this means that this group is formed on the basis of place; communication channels). I've chosen to look further into this group, because it reflects the networked generation of digital natives, which are the people you will reach first when executing an online communication strategy. I chose to nickname them 'social networkers'. I felt the phrase 'social network users' might cause confusion, since it seemingly doesn't exclude less than daily social network users not included in this analysis. 'Social networkers' does not mean that the people actively network (eg. meet a lot of new people online). The only definition of this group is the definition given above; daily social network users whose first preference either lies with MySpace, Facebook or Twitter.

In the following charts, music consumption is displayed by social network. It also lists the averages for the users of Twitter, Facebook or MySpace (listed as Socnet Average) and the averages for people that don't make use of social networks daily. The specific social network groups (Twitter, Facebook, MySpace) are each composed of people that indicated that that particular social network was their favourite, although they also might use other networks.

Figure 11: Social Networkers Compared: Last Time Purchasing a Physical CD Organized Per Social Network

The above graph shows the following things:

  • Daily social network users purchase physical CDs more often than people who don't use social networks every day;
  • MySpace users are least likely to have purchased a CD in the last year, Twitter users the most;
  • Facebook users are the most likely to have purchased music in the last month.
Figure 12: Social Networkers Compared: Last Time Purchasing a Physical CD Organized Per Social Network

The above graph shows the following things:

  • Daily MySpace users are the most frequent buyers of digital music, Twitter users the least;
  • People that don't use social networks daily also purchase digital music less often than daily social network users.

4.2.3 - Conclusions: what does the empirical research reveal about the problem?

This section looks at the results from the empirical research that looked into the problem. It's a recap with added explanations and interpretations. It has been divided in the 4 Ps of the marketing mix. Obviously there are some overlaps here and there, but I've made sure to indicate these overlaps whenever relevant. After this recap, these results are carried over into the complete conclusion of the problem section, which integrates the theoretical framework with the survey results and provides an answer to the first research question.


  • As hypothesized in the Digital Music Stores part of section 4.1.1, different niches have different places. This is shown by the fact that fans of electronic dance music buy music in different places than the average consumer. iTunes being more popular than the survey average with people who like electronic dance music, could indicate that these people are more likely to buy digital music than the average respondent.
  • Convenience matters. What stood out in reasons for never having bought digital music was the fact that it's easier to get it illegally. It's not primarily a money thing, it's a convenience thing. This corresponds with what was already hypothesized in response to Figure 2—an important cause of 'piracy' is the consumer's desire for convenience.
  • For 20 to 24 year olds, the traditional channels for listening to music have been replaced with new channels: computers and portable devices. This ties in to the concept of Music Like Water, mentioned in section 4.1.4, but also with the paragraphs about the consumption of digital music in section 4.1.1, where it was shown that the physical 'place' and medium was decreasing in importance, while digital media such as streaming music was becoming more important.
  • Daily social network users buy physical and digital copies of music more frequently than those who don't use social networks daily. This confirms the hypothesis mentioned in the social networks part of section 4.1.1. The why remains unknown, but for digital copies it might be due to the fact that people who don't use social networks daily spend less time online, or on computers in general. For physical copies, it might be that daily social network users are easier to reach through promotion.
  • In figure 5 music blog readers showed a higher likeliness to have recently bought a physical CD than people who don't read music blogs regularly. This was not the case for digital music (figure 6). One explanation for this could be that it is likely that avid music lovers read more blogs, but also like holding a physical copy of a recording more than the not so avid music lovers. In other words, they are more likely to see a physical copy as something with value, which, to them, would be a reason to buy it. This confirms the hypothesis mentioned in the music blogs part of section 4.1.1.


  • Music sales might be down, but they have not stopped altogether. People over 30 buy the most, followed by those under 20 (see figure 3 and figure 4). However, more frequent purchasing does not necessarily mean they're spending more money on music than other age groups (think live shows, think streaming subscriptions, think t-shirts and other merchandise, etc.). Also, section 4.1.1 showed that the under 20 group is shifting from downloading copies (legally or illegally) and buying CDs, to streaming. As was noted, streaming (as a distribution method) is set to become an increasingly important source of revenue in the future.
  • Most people think it's not important to buy music, as shown by statements 3 and 4 in table 1. I can make some guesses why this is, but I'm not sure. A lot of people in the music industry seem to hold an assumption that it's people's obligation to purchase music (instead of pirating it), but apparently people don't think it's important for them to purchase music. This rhetoric from the music industry can be seen in the discussion about price versus value in section 4.1.2, where music manager Jonathan Shalit insists that a piece of music should cost more than a bottle of water, no matter what consumers feel the right price is. In my eyes, the most logical explanation for people thinking it's not important to buy music, is the behavioural economics concept of the selfish consumer. The idea is that consumption is generally a selfish act and you thus have to motivate a consumer to buy a product for their own benefit. The way the statements were phrased (it is important for me to buy music from unsigned artists / artists signed to major labels) perhaps suggested an altruistic act instead of a selfish one, which is what the music industry does when it uses its PR to tell people to buy CDs because the artists need it. This will definitely be considered and carried over into the solutions section.
  • The fact that people regularly engage in peer-to-peer filesharing ('pirates') does not mean they don't purchase music. There's a chunk of pirates who buy physical copies of music more regularly than non-pirates. This is seen in figure 9 and figure 10. With digital music this chunk seemed to be absent and digital music purchasing seemed to be about the same as with non-pirates. Perhaps the difference between physical and digital is that pirates are more likely to already own a digital copy and thus don't see a point in buying. With a physical product, this is different. This reconfirms the statement in the consumption of digital music part in section 4.1.1, that "it is important not to dismiss filesharers as unwilling to spend money on music".
  • Figure 3 and figure 4 show that the ratio of people who have never bought a CD increases per generation. This is most likely due to the fact that per generation, it has become increasingly unnecessary to purchase a physical CD in order to enjoy music. This corresponds with the numbers in section 4.1.1 which showed declining CD sales, especially amongst teenagers.
  • The same figures show that people over 30 are more likely to frequently purchase music. Perhaps this is because they have more disposable income or because they have formed a habit of music purchasing. Among 20 to 29 year olds there was a small, but noticeable, dip in music consumption. Perhaps they are a 'lost generation', because they grew up in a time when the music business still had to adapt to the new reality, or maybe they simply have less disposable income.


  • People have different expectations and desires when it comes to the price of music, as can be learned from statement 5 in table 1. There is a plethora of reasons for these different expectations. One reason might simply be the difference in disposable income. Another reason is that people grew up at different times, so where the 35+ generation is used to paying 15 euros for a copy of an album, younger people might find it very unreasonable to pay such a price just for a copy. Personally, I think for a communication strategy, being aware of the fact that these different expectations and desires exist (and are not going away) is more important than the specific reasons. This fact needs to be taken into consideration in developing the solution; a one-size (one-price) fits all album release is probably not the best idea nowadays. For some people 12 to 15 euro for a new album is fine, but for others the right price is 'feels like free'.


  • Table 2 shows that people that know what labels their favourite artists are signed to also think it's more important to buy their music. This correlation could be explained by the connection between the artist and fan, which would explain both the fan's increased willingness to buy, as well as their awareness of the artist's label. This is further explained and explored in the solutions section.

Now let's take a look at these results integrated with the theoretical framework in order to answer the research question.

4.3.1 - How has place been changed by the internet?

Loss of control

One of the biggest impacts of the internet is the loss of control of distribution. Unless it's a review of an album or gossip talk, most of the stories about the music business in the news have something to do with this loss of control.

Piracy and convenience

Statistics in section 4.1.1 of the theoretical framework showed that in 2004 there were 9 million people engaging in filesharing online at any time. An IFPI report, mentioned in the same section, claimed that 95% of the music downloaded in 2008 was illegal. Piracy is huge and it is the biggest symbol of the loss of control mentioned before. However, the respondents of the survey conducted for this thesis have indicated that the main reason for never having bought digital music, is because it is easier to get it illegally. This convenience has to be played into in the solution.

Digital music consumption

Then what about the 5% of music that is consumed legally (as claimed by the IFPI)? Here the trend amongst young people is that the traditional channels are being replaced by new mediums; with a noticeable decrease in traditional media usage per generation (see figure 3, but also the NPD Group research in the digital music consumption part of section 4.1.1).


The fastest growing type of channel seems to be streaming services. This has to do with convenience again, because if you can just click a play button and the song starts playing, that's much easier than making a purchase, downloading a song, loading it into your media player and then finally clicking the play button to hear it.

Social networks

This streaming plays an important part on social networks as well, where streaming audio seamlessly embeds into pages and users can broadcast their favourite songs to one or all of their friends (and anything in between). These social networks also offer a platform for artists and fans to connect. The research conducted for this thesis showed that daily social network users purchase more music (both physical and digital) than people who don't use these networks daily (see figure 11 and figure 12).

Music blogs

Another phenomenon of the social web are blogs. They're a relatively new type of distribution channel; a way to get discovered and to connect and the conclusions in the empirical research showed that music blog readers are more likely to have recently purchased a physical CD.

Digital music stores

The internet also created digital music stores, where you buy digital copies instead of CDs and just like with physical record stores; different niches have different places. When looked at a specific genre (electronic dance music) the fans of this music bought their music at different stores than the average respondent.

4.3.2 - How has price been changed by the internet?

Feels like free

The loss of control and the fact that music is freely available has given a lot of consumers the feeling that music is free. Streaming services like internet radio channels, YouTube and in the past offer users music at seemingly no cost. All wanted in exchange, was your music listening data. YouTube manages to pay for licensing fees by featuring small (usually non-obtrusive) ads in videos. Internet radio channels have different models; some are ad-funded, some manage to fund the free service by offering a higher quality service as a premium and a lot of them combine the two. The most important, from the consumer's perspective, is that it feels like free.

Economy of abundance

Because of the previous trend, the music business has changed from marketing scarcity, to a place where one can market abundance. According to David Hornik (see 4.1.2) this means that one can now publish everything to the consumers and see what they actually buy. One could then choose to market that specific 'product', but I'm getting ahead of things, because the solution is discussed in the next section.

Price and value

Shown in section 4.1.2 is a good example of this abundance/scarcity marketing and pricing. CD prices dropped, but concert ticket prices rose spectacularly, which suggest that that which is easily reproduced (abundant) reduces in (commercial) value and that which is not easily reproduced (scarce) has actually gained commercial value. This is perhaps one of the most profound findings and is essential to the solution discussed in the next section. However, there are also worries about the image of music and the value a consumer connects to music when the prices drop.

Varying expectations

One of the realities of the internet is that it created the $1.- song. When I tested if consumers thought this was a reasonable price they were evenly split, suggesting varying expectations regarding the price (see table 1). In other words, the willingness to pay a certain price for a song differs from person to person (or group to group perhaps). The solution needs to play into this fact.

4.3.3 - How has product been changed by the internet?

Music like water

This trend flows over from the loss of control and feels like free trends mentioned earlier. Internet has turned a rather rigid supply chain into a very liquid reality; music is no longer in a few shops, on the radio and TV - it is all over the internet, on mobile devices, available at any time. Media futurist Gerd Leonhard argues that this means music is no longer a product, but a service.

Selfish consumers

As mentioned in the conclusions of the empirical research, most respondents thought it was not important to buy music. This ties in to the price versus value discussion, where people in the music industry suggest that music needs to have a certain price to maintain its value, but what the solution section has to look at is how it can make music consumption more satisfying for the 'selfish consumer'. The focus has to be on the consumer, not the artist or the industry.

Pirates as consumers

For the music industry, the prototype 'selfish consumer' is the music pirate. Research in the theoretical framework already showed that filesharers (often labelled 'pirates') do spend money on music. The research conducted for this thesis actually shows that there is a sizeable a group of pirates that actually spends more money on music than non-pirates.

From physical to digital

This trend also ties into the music like water trend. The primary research showed that the ratio of people who have never bought a CD increases per generation. While the CD is not a dead medium, it is becoming marginalized. Whether it will actually die, remains to be seen, since about 3% of the 20 to 24 year olds surveyed indicated listening to vinyl (not by multiple choice, but by filling in vinyl in the 'other:' field, which is another 'outdated' medium).

4.3.4 - How has promotion been changed by the internet?

New channels

The internet has created a lot of new promotion channels. Social networks, paid digital ads, digital music stores, newsletters, blogs, content-sharing sites like Soundcloud or YouTube and much more. This presents a challenge in terms of establishing a clear presence, but it also presents an opportunity, because now any artist (big or small) is actually able to establish a presence.

Word of mouse

This is the key trend in my eyes and after reading the solutions section, you will understand why. In the past we had word of mouth, which was slow compared to word of mouse. Word of mouse lets people broadcast their 'content' (thoughts, essay, music, video, whatever) to many people at once. Personally, I can instantly reach a few hundred people, but for every person this number is different. This doesn't matter though; good content spreads beyond the one person, throughout many interconnected networks.

Majors versus unsigned

The survey showed that there is a clear bias towards unsigned artists when compared with artists signed to the major labels. In the price section above the 'selfish consumer' was mentioned. Many respondents thought it was not important to buy music, but there is a slight difference between artists who are unsigned and those who are signed to the majors. Only about 10% of respondents thought it was important to buy music from artists from a major label, but three times as many people thought it was important to buy music from an unsigned artist. 2AM could take this into account for the way they brand their acts. This is discussed further in the solutions section.

Obviously there is a lot more to say about promotion, but the opportunities that have arised in promotion actually form the key to the solution. Instead of writing the same things twice, most of what is to be said about this P is said in the solution section.

4.3.5 - How and why has the internet changed the music business for record labels such as 2AM and why is this a communication problem?

The internet has radically changed the music business for labels such as 2AM. What was a rigid environment before (at least in comparison to the current situation) has become a very dynamic environment. On the one hand, the internet has created massive 'piracy', but it has also created a great word of mouth environment. Music is shared more than ever before and there is nothing 2AM can do about it.

The fact that people are trading files for free doesn't mean they only want free, but a lot of their music experience should definitely feel like free.

The problem lets itself be explored through a typical communication model. Obviously, the big issue at play is one on a societal level, but I firmly believe for most record labels such as 2AM, this problem can be solved through a good communication strategy. The trends mentioned above must be played into. The realities created by the internet must be integrated into a broad marketing strategy. One that adopts the new paradigms and does not try to push traditional measures into the radically different reality created by the internet, because as can be read on the previous pages; it simply does not work that way.