Foreign Studies

1. Considering the last two-three decades, digitalization has been a major factor of consumer behavior.
As with all societal developments, digitalization has been producing new ways of life, changing and
replacing the previous ones. We talk about the emergence of a new generational cohort, the Digital
Natives also refered to as Generation Z. Characteristic to this generation is that it is online. Or the life of
this generation is filled with the possibilities of digital communications. It is well-argued to say that the
drastic changes in contemporary consumer behavior are enabled, in particular, by the services of the
Internet. The “Internet-induced” changes can be found not only in human actions but also in attitudes
and ethics (e.g. Cesareo & Pastore, 2014; Simmons, 2008). This turns up in phenomena such as digital
piracy. Digital piracy seems to continuously find new forms and shapes. (Halttunen, 2016)

Reference: Halttunen, V. (2016). A study of Consumer Behavior in Digital Era-General Aspects and
Findings of Empirical Studies on Digital Music with a Retrospective Discussion. Retrieved September 22,
2018, from
https://www.google.com/url?sa=t&source=web&rct=j&url=https://jyx.jyu.fi/bitstream/handle/1234567
89/49620/1/978-951-39-6642-
3_vaitos28052016.pdf&ved=2ahUKEwiZmI2E08XdAhXLK48KHeNfD5QQFjACegQICRAB&usg=AOvVaw32
mjOKb04QNPwnOOqMIavl

2. The music industry’s management and marketing is almost similar to the other cultural goods.
However, during the last decade, the music industry has been experiencing major changes and it seems
that it is the area of cultural industries, where digitalisation is bringing the most changes so far, in the
typical production-distribution-consumption model. The creation of software which enables consumers
to compress and store music and the wide use of the internet’s potential for free distribution have
resulted in altering the relationships between the supply and demand chain. All these technological
advances have raised the problem of music piracy and have brought up issues about the role of the
record companies, the new digital distribution channels and “the peer to peer” (P2P) phenomenon,
which gives the opportunity for free music sharing among internet users. Music piracy can be observed
either as a physical reproduction or digital downloading. The physical reproduction has been troubling
the music industry for nearly a decade and while online piracy gets more public attention, the physical
remains still a major problem in some countries. Music industry was the first industry that had to face
the consequences of the digitalization, but since most of the cultural industries are using the digital
technology, the analyses and interpretation of these consequences could be beneficial not only for it,
but also for these industries as well. (Dilmperi, 2009)

Reference: Dilmperi, A. (2009). A study of Consumers’ Attitudes towards Physical and Digital Piracy.
Retrieved September 22, 2018, from
https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.brunel.ac.uk/__data/assets/fil
e/0006/90645/phdSimp2009AthinaDimperli.pdf&ved=2ahUKEwiZmI2E08XdAhXLK48KHeNfD5QQFjAHeg
QIAxAB&usg=AOvVaw0JDnqt7ErbqCQiI153HM-d.
3. The amount of online music stores increases continuously and e.g. new digital music distribution
methods are being explored constantly. The music selection size additionally increases in the Internet.
Consumers are expecting to find a vast selection of music in the Internet, whereas physical music stores
are having less variety in their offering. Online marketing strategies are gaining a greater importance in
companies, due to increasing amount of online customers. Factors affecting online buying behaviour
have a crucial role in planning online marketing strategies and accordingly this report concentrates on
these factors; using three main stages of the buying behaviour process; prepurchase, purchase and
postpurchase. This report examines the factors affecting each stage of the buying behaviour process
from the general online shopping and online music shopping perspective. It is essential for marketers to
consider these factors, introduced in this report, in online music marketing strategy formulation.
Profitability and market share are dependent on the success of the online marketing strategy as well as
the creation of profitable customer base. Profitable customer bases provide a steady cash flow and
resources for further development and online companies are more prepared to cater changing customer
needs. Many marketers utilize traditional marketing expertise in online marketing strategies, but digital
environment requires different expertise at least into some extent. Online companies need to utilize the
Internet capacity in an efficient way in order to increase the market share as well as profitability.
(Hujala, 2009)

Reference: Hujala, M. (2009). A study of Online Music Buying Behaviour. Retrieved September 22, 2018,
from
https://www.google.com/url?sa=t&source=web&rct=j&url=https://helda.helsinki.fi/dhanken/bitstream/
handle/10227/419/hujala.pdf%3Fsequence%3D2%26isAllowed%3Dy&ved=2ahUKEwiZmI2E08XdAhXLK4
8KHeNfD5QQFjAJegQIAhAB&usg=AOvVaw1LhjPhTimBebeaYmnbLFT8.

4. According to music industry professional Tom Silverman, “97 percent of the world never buys music
—
not even Adele.” He goes on to say the trend is more common in 18-24 years old (Hampp, 2013).
Reference: Hampp, A. (2013, January 26). MIDEM Panel Explores ‘$100 Billion Music Business’ with
YouTube, Spotify, Samsung, Sony Execs. Billboard.

5. According to music industry professional Tom Silverman, “97 percent of the world never buys music
—
not even Adele.” He goes on to say the trend is more common in 18-24 years old (Hampp, 2013).
Reference: Hampp, A. (2013, January 26). MIDEM Panel Explores ‘$100 Billion Music Business’ with
YouTube, Spotify, Samsung, Sony Execs. Billboard.

6. The streaming service does attempt to redeem itself by offering features such as “Discover Weekly”
— a playlist compiled of similar music a user has listened to. This feature provides a new playlist to users
each week, specific to each users’ preferences. It offers users a variety of new artists or songs to listen to
that attempts to make up for the lack of some of the biggest albums of recent years (Porter and Langley,
2016).
Reference: Porter, J., & Langley, H. (2016, September 9). Which is the best music streaming service for
you? Techradar.

7. Intellectual property establishes proprietary rights over original forms of intellectual production or
“intangibles” and gives the holder the right to exploit the work through licensing its copying in return for
compensation (Yar, 2005).
Reference: Yar, M. (2005) The global ‘epidemic’ of movie ‘piracy’: crime-wave or social construction?
Media, Culture & Society, 27(5), 677-696.

8. In the past, music was purchased from a retail store in exchange for a physical copy of music in the
form of an 8-track tape, cassette tape, Compact Disc, or vinyl record. In today’s world of digital
technology, music can be purchased on a cell phone, computer, or tablet, just as long as there is an
Internet connection. The next significant change the recording industry faced was the advent of iTunes
and the iPod. Ten years after Steve Jobs created Apple technologies they are the most prominent digital
products in use. iTunes was created as a place to store a music library, and to promote the iPod, but it
quickly began selling more music than expected.

Although people began buying music digitally via iTunes, the iPod made transporting any type of
downloaded music easy, causing a significant decrease in revenue. Labels offered their support of iTunes
in late 2003, agreeing to have all of their music available in the digital store. This made iTunes the first,
all-inclusive shop for digital music. iTunes was created in 2001, and by February 2010 the music retailer
had sold ten billion songs (Harris,2011).

Reference:

Harris, M. (2011). iTunes Store History – The History of the iTunes Store. Retrieved February 22, 2012
from http://-mp3.about.com/od/-history/p/-iTunes_History.htm

9. The digital music sales have had a significant impact on t he music industry in the way musicians,
labels, and managers are able to earn profit for their work.New media driven by user-generated content
is starting to displace traditional media in terms of the way consumers learn about products and
services, and even how they consume them. The music industry is a bellwether for this revolution,
where social media are increasingly used for sharing information about music albums and songs—and
alsofor the sharing of the music itself. Traditionally, users discovered music either through radio play or
from their friends and consumed it through album purchases (Peitz & Waelbroeck, 2004).

Reference:

Peitz, M., & Waelbroeck, P.(2006). Why the music industry may

gain from free downloading—the role of sampling. Journal of Industrial Organization, 24(5), 907-913.
10. All the cultural and leisure sectors are today involved in a process of deep re-articulation of ther
elationships between content and materialmedia. In this sense, music represents an emblematic case
for analysing some ofthe features of the ongoing process of digitalization of people’s consumption
practices in the cultural and leisure sphere.While the changes occurring in music listening practices have
been partiallyaddressed from productive, legal or economic perspectives, their consequenceson the
sociocultural level and the level of consumer practices still need to befully considered. Often, the
changes affecting musical consumption practices areanalysed in terms of loss of relevance of music
materiality, and great emphasis isplaced on the different ways music consumption has become free and
limitless, giving space to the metaphor of music circulation as the ‘water that flows from the sink’ (Kuzek
and Leonard, 2005; Rodman and Vanderdonckt, 2006). While it is clear that changes have occurred in
music materialities and that technologies have deeply influenced the ways in which people consume
music, yet it also have to recognize that interpreting these changes as a loss of relevance in the role of
material objects in shaping people’s habits and cultures may be somewhat misleading.

Reference:

Kuzek, D., & Leonhard, G. (2005). The Future of Music: Manifesto for the digital music revolution.
Boston, MA: Berklee Press.

Rodman, G.B., & Vanderdonckt C. (2006). Music for nothing pr, I want my mp3: The regulation and
recirculation of affect. Cultural Studies, 20(2-3), 245-61.

11. In a study by Cruz, Pauso, & Sison (2011), results showed that OPM physical album sales dropped
from Php 2.7 billion in 1999 to Php 699 million in 2010. In terms of digital music sales, data showed an
increase by 400% from 2005 to 2010. However, the sales in digital format cannot make up for the loss of
the physical record sales. The study conducted by Cruz et al. (2011) also highlights music piracy as a
major cause of the decline in OPM album sales.

Reference:

Cruz, E., Pauso, K., & Sison, J. (2011). Original Pinoy Music In A Changing Game: An

Industry Analysis of the Philippine Recording Industry, 26. Retrieved September 21,

2018, from http://www.scribd.com/doc/63622212/Industry-Analysis-Music

12. Byungwan Koh(2010) stated that the availability of iTunes like legal channels for digital music has
blunted the effect of online music piracy on physical album sales, and in the presence of those legal
channels for digital music, digital music, not online music piracy, substitutes for physical album sales.

Reference: Koh, B. (2010).Shift in Demand for Music:

Causal Effect of Online Music Piracy and Digital Music on Album Sales. Retrieved September 22, 2018,
from http://misrc.umn.edu/wise/papers/4b-1.pdf
13. During digital translation, there are elements which are not present especially in the external
features such as the notations, color, type, and impressions-elements unlike physical products which are
complete. (Varnalis-Weigle, 2016)

Varnalis-Weigle, A. (2016). A Comparative Study of User Experience between

Physical Objects and Their Digital Surrogates. Retrieved September 22, 2018 from
https://elischolar.library.yale.edu

14. Digitization of content and goods reduces the impact of production on the environment.
Furthernmore, digital goods helps improve the consumer's welfare but may face potential limits in
terms of cognition in this increasingly mobile and liquid world. (Atasoy, O., Morewedge, C., 2017)

Atasoy, O., Morewedge, C., (2017). Digital Goods Are Valued Less Than Physical Goods. Retrieved
September 22, 2018 from
https://www.google.com.ph/url?sa=t&source=web&rct=j&url=https://www.researchgate.net/profile/C
arey_Morewedge/publication/319976271_Digital_goods_are_valued_less_than_physical_goods/links/5
9c46b01458515548f219ac5/Digital-goods-are-valued-less-than-physical-
goods.pdf&ved=2ahUKEwiisvbwkc_dAhWCgI8KHduqCpcQFjAAegQIARAB&usg=AOvVaw1qD3ofk3Q9zCN
Iy_kLaANL

15. The study showed that digital products usually have lower price compared to physical products. (Pei,
Klabjan, and Karaesmen, 2013)

Pei, J., Klabjan, D., & Karaesman, F., (2013). Pricing of Digital Goods vs. Physical Goods. Retrieved
September 22, 2018 from
https://www.google.com.ph/url?sa=t&source=web&rct=j&url=http://home.ku.edu.tr/~fkaraesmen/pdf
papers/Pei_Klabjan_Karaesmen_pricing.pdf&ved=2ahUKEwif9uzcks_dAhXJPI8KHddSCGwQFjAAegQIBRA
B&usg=AOvVaw1ga2QeVxhXJmpyhw4yrQGV

16. The advent of music downloads has increased the competition among internet CD retailers ad the
total sales of physical CDs have decrease. The introduction of iTunes provided as part of online music
sales. Contrary to the rapid decline of sales of physical CDs, digital downloads enjoyed a continuous
increase during past years, (Sisario, 2011, p. 3).

17. Digital music revenue was 4.6 billion in 2010, up 6 percent from the year before. In2009, itgrew 12
percent from the year before, and in 28 it was up 25 percent. According to a Nielsen and Billboard
report, digital music purchases accounted for 50.3% of music sales in 2011,(Segall, 2012, p.3).

18. For the first time in history, digital music sales topped the physical sales of music. The British
Phonographic Industry (BPI) reveals that digital music accounted for 55.5% of total music sales in the
first quarter of 2012, (Sweney, 2012, p.3).