Qualitative Study: The Development of Music Business Distribution Channels to Attract Potential Customers

Abstract

Purpose: This research explores the development of music business distribution channels to attract potential customers based on the current and prior literature. As a result, the research will provide solutions for practitioners in the music distribution channel how they create effective channel in new industry phase which has experienced significant changes due to technological advancement and consumer behavior. Research design, data, and methodology: To obtain textual data in the literature storage, the author conducted content analysis. Even though there are numerous textual resources, selecting only high-quality text data that is only peer-reviewed journal articles and books consistently indicate a high degree of reliability and validity to keep the advantage form content analysis approach. Results: The present study figured out that there are five strategies to attract potential consumers in the music distribution channel, such as (1) 'Marketing Mix', (2) 'Streaming Platforms and Online Music Stores', (3) 'Brick and Mortar Stores and Concerts, and Events', (4) 'Platforms Exclusives and Limited-Edition Merchandise', and 'Partnerships and collaborations. Conclusions: In sum, the practitioners need to consider include building relationships with the fans, studying and understanding their target market, utilizing multiple available distribution channels, embracing new technologies, and analyzing the effectiveness of the adopted distribution channels.

1. Introduction¹²

In recent years, the music industry has evolved significantly, especially with the emergence of digital technology. As the music industry evolves, new music distribution channels continue to emerge. Digital technology has greatly helped develop music distribution channels to attract potential customers. Traditional music business distribution channels such as radio stations and physical stores have lost their dominance in the market. They are slowly being replaced with digital music distribution platforms such as social media and streaming services, which have become the primary means of distributing and promoting music (Andersen et al., 2020). Examples of digital music distribution channels include virtual reality technology, widely used to develop immersive music experiences, such as virtual concerts that offer music consumers and fans an interactive and unique way of engaging with music. Block chain technology creates new music distribution models like peer-to-peer sharing and decentralized streaming platforms. These platforms aim to empower artists and give them more control over their music (Barrow & Newby 2003). However, since the rise of music in these digital distribution channels, the industry has experienced falling total sales revenue.

The rampant growth and proliferation of online and other digital platforms have increased competition, making it challenging for artists and music businesses to attract potential customers. The competition has occurred when the advancement in technology in the music industry has increased availability, choice, and the opportunity for potential customers to purchase music. For example, payper-unit music channels have dominated the industry more than music subscription services. The competition has made it crucial for the music industry to continue developing new distribution channels to attract new potential customers and remain competitive (Bockstedt et al., 2006).

Music distribution channels are the paths the music goes down before reaching the final consumer. Intermediaries characterize these distribution channels. Digital music distribution channels and the Internet have been the latest to enter the industry. They have gained much popularity and usage by many artists and music businesses. Increased computer use has greatly influenced the music industry's growth, particularly through marketing and distribution. Music distribution can be either direct or indirect (Hull, 2011). Direct distribution involves purchasing the music directly from the artists without going through the middlemen. Indirect distribution is the most common, involving the purchase and distribution of music through middlemen. Most artists have increasingly moved to the direct distribution channels of their music without involving the middlemen. Digital music distribution channels have grown, with more artists using digital platforms and every social media network. Although few artists still use historical album sales, they find it less efficient and yielding than in the past. Most consumers opt to go the digital way of downloading their favorite music or albums from the Internet, leading to the obsolescence of other forms of distribution (Bockstedt et al., 2006).

Often, music artists rely on a record label to produce, promote and distribute their music. The artists sign extensive contracts with their record labels leaving them to monopolize their content. The record labels can usually set royalty fees and subsequent retail price levels that are not based on the quality of the music but on the consistency of the consumer's willingness to pay. This move by the record labels has often resulted in consistent pricing strategies and releases that portray that the labels needed not to employ discriminatory pricing policies due to their monopoly power. The pricing mechanism is usually based on history and not competition, although some price dispersion is obvious in music pricing. This research explores the development of music business distribution channels to attract potential customers.

2. Literature Review

In the 1950s, the "45" single was the dominant medium for recorded music distribution which was affordable and greatly consumed by the teenage population (Meisel & Sullivan 2002). Although the record labels still released full-length albums, the production and subsequent sales were the single. As time progressed into the mid-1960s, music distribution in the form of albums became more popular. The record labels created music bundles for more dedicated consumers willing to pay highly for the additional content. Still, despite the popularity or quality of music, the pricing mechanism for full-length albums remained consistent across the artists and the record labels. The evolvement of the digital music industry has also seen it maintain consistent pricing mechanisms which do not largely consider the quality and popularity of the music (Barrow & Newby, 2003). The pricing of digital music is quite different from the pricing of other commodities or electronics online.

The traditional distribution channels in the music industry mainly consisted of radio stations, music video channels, and physical stores. These channels played a key role in distributing and promoting the music to the consumers and helped the artists achieve commercial success. However, with the growth of digital distribution channels, the traditional distribution channels have lost their dominance in the market, affecting the music businesses still using the traditional channels. Digital distribution channels are fast gaining popularity in the music industry, increasing the number of consumers and customers. Most of the digital distribution channels being used include streaming services and social media platforms (Bockstedt et al., 2006). Streaming services give music consumers an affordable and convenient way of accessing music (Wagner et al., 2015). They provide music fans with a large library of music, personalized playlists, and recommendations based on the prior history of the consumer's taste in music and listening habits. These streaming platforms include Apple Music, Spotify, and Amazon Music. These streaming platforms benefit artists by employing data analytics to understand their consumer's behaviors and preferences, which helps them come up with useful marketing and promotional strategies (Martins et al., 2014). Social media platforms are also important channels for distributing and promoting music. They enable the artists to reach a vast and diverse audience and directly engage with their fans. These platforms also allow artists to create and share content such as live performances, music videos, short clips, and behind-the-scenes footage, which help build a loyal fan base. The most active and widely used social media platforms include Tiktok, Youtube, and Instagram.

Over the years, there have been several changes in the distribution channels in the music industry. Between 1999 and 2003, recorded music sales in the U.S. dropped from $13Bn to $10Bn (Gamble & Gilmore 2013). The rampant growth and popularity of digital music majorly influenced this decline. Digital platforms have become an essential distribution channel and strategy in the music businesses today. Digital platforms such as iTunes have led to an increased number of customers within a short time. The high rise in the customer base in the recent past has indicated the extent to which music distribution has shifted from the traditional album sale to the new digital sale (North & Hargreaves, 2010). For example, the introduction of live streaming has gradually replaced music distribution through compact discs. This indicates that the sale of music will be made through digital distribution channels. This move will be greatly influenced by the development of digital devices that play digital music in the market. The increase in the development of these digital devices will be facilitated by consumers' increased demand for digital music, rendering the other distribution channels invalid. The changes in the value chain in the music industry have facilitated changes in the primary market, and the digital music suppliers have chosen to trade directly with the customers by doubling up as the product owners.

With simple internet distribution platforms, the music industry's key players enjoy the benefits of better and more rewarding deals. In the past, the physical distribution of music involved physical traveling, which was costly and inefficient as it was restraining. The shift from physical music distribution to digital distribution has brought significant changes in the industry that have eased the supply and promotion of merchandise to clients (Ogden et al., 2011). Payments and transactions for the delivered merchandise are also made digitally, easing the process that now involves minimal physical movements. It is to be noted that there are few companies still using the physical distribution of music through album distribution. The record labels and bands usually pay these companies to distribute their merchandise to different retailers in their dominion. Shipping markets are also being used in the distribution of compact discs, but the players are admitting that the market is receiving high threats from the replacement of album sales by song downloads (Yannopoulos, 2011).

Significant differences have also been between traditional distributor pricing and the current digital strategy. Most artists and bands have now shifted from traditional distribution pricing to digital pricing. They have disregarded the old physical release and sale of compact discs as it is no longer viable. Digital music pricing includes the purchase and subscription services and has become an appropriate distribution and pricing strategy in response to the changing music industry. With digital music, clients can purchase their desired songs or subscribe to a monthly streaming plan. These digital pricing strategies have gained popularity among buyers and encouraged the music industry's growth. The digital music platforms have tagged along with other services, increasing sales by about 20 percent. The good reception of digital music has also attracted some threats from other unlicensed digital distributors who distribute music illegally (Hracs, 2012). The music distributed illegally in unlicensed sites does not benefit the artist, crippling the industry. Online music pricing is standardized depending on the ever-changing prevailing consumer preference demand. Most consumers feel that the old music should have a lower price tag than the new music, and this argument has attracted a valid and fair reason to lower the music prices in response to the market demand. New music can be charged at a higher rate to strike a balance within the industry.

This research is very important because the music industry has experienced significant changes in recent years due to technological advancements and changes in consumer behavior. Digital distribution channels have replaced traditional distribution channels and gained much popularity (Dellyana & Simatupang, 2014). The music businesses need to understand how they can create effective distribution channels to attract potential customers in this new industry phase (Easley, 2005). Prior studies have not assessed how music businesses can develop distribution channels to attract potential customers in this highly competitive market (Power & Hallencreutz, 2007). This research will specifically explore how music businesses can employ various marketing strategies to reach and maintain potential customers.

Table 1: Supporting idea why this research is needed.

3. Study Design

To obtain textual data in the past and current literature storage, modern researchers may conduct content analysis. Even though there are numerous textual resource warehouse, prior studies which are already proven to collect high quality text data have strongly suggested only peer-reviewed journal articles and books that consistently indicate a high degree of reliability and validity to keep the advantage form content analysis approach (Seong, 2022; Woo & Kang, 2020; Phommahaxay et al., 2019). Previous studies further stated that newspaper articles, conference papers, and internet sources may not provide adequate quality of instrument which is mandatory and deeply summarized abstract for scientific journal articles (Richard & Kang, 2018). Finally, researchers may be able to answer the question based on the past and current literature review that why the current literature has a certain type of research gap and how the present study can fill out this gap.

Data collection procedure is made up of three steps for the current research. First, the selection step conducted to investigate the high degree of journal articles and books in the famous database, such as google scholar, Scopus, and web of science. After this step, the screening process was followed to eliminate prior studies that could not meet the requirements of the quality standards (No presenting the quality of instrument or presenting the low degree of quality of instrument, and No conference papers and dissertation). And then, the current author tried to delete some duplicated resources based on the as a final step because this research used three databases as mentioned earlier so some journal articles and books were overlapped, searching three databases simultaneously (Nguyen et al., 2022; Kang, 2020; Hong, 2022).

Figure 1: Selection Procedure of Literature Resources

4. Findings Based on the Literature Contents

4.1. Distribution strategies

Distribution and marketing in the music industry can be defined as planning and executing music development, pricing, promotion, and distribution to create exchanges that are satisfactory to the consumers or the industry's objectives (Osterwalder & Pigneur 2010). The music business can employ four main distribution strategies to attract potential customers. In the marketing mix, these strategies encompass the place, the price, the product, and the process.

Place refers to how the product or service reaches the consumer at physical locations such as home delivery, brick-and-mortar stores, or the Internet (Sparrow, 2006). There has been a drastic decrease in traditional compact disc sales, which risks traditional music stores quitting the business. Price refers to the financial costs and the nonfinancial outlays, such as the physical effort, waiting time, mental effort, and sensory experiences. Product refers to the main benefit of the consumer in acquiring the product or the service and the additional services related to the acquisition, delivery, and consumption. The process includes the steps in the service and the delivery performed by the customer or the service provider and can be regarded as an extension of a product or service. People refer to the individuals who deliver the service (Ogden et al., 2011).

4.2. Digital Distribution (Streaming Platforms and Online Music Stores)

Over the years, the Internet has drastically altered music production, distribution, and consumption. Digital music distribution is the primary and most popular way for listeners to discover and consume music (Waelbroeck, 2013). It makes it essential to modern artists' releases and promotional strategies. Record labels and artists today distribute their music with the help of distribution companies, streaming platforms, and online music stores (Crosno et al., 2007). Music is being released on popular streaming platforms such as Spotify, Tidal, and Apple Music, increasing the artist's accessibility and visibility to potential customers (Asai, 2008). Online music stores such as iTunes. Google Play and Amazon Music are used in selling digital downloads and provide an additional revenue stream for artists. Music distributors are dispersing their music to online download platforms and streaming services by attaching payments, contracts, or subscriptions (Wagner, et al., 2015; Wlömert & Papies, 2016).

Once the music is distributed, the song is made available for streaming or downloading and gains mechanical royalties. The distribution companies then take the earned royalties from the songs distributed and use these royalties to pay the record label or the artists. Popular streaming platforms such as Apple Music and Spotify pay royalties two to three months after the streaming of the songs. It is important and beneficial for music creators to have distribution services. Working with music distributors helps musicians create an audience, increase credibility and develop a regular revenue generation stream for their music. New artists and seasoned musicians need music distributors to help them attract potential customers and get their music to current and future listeners (Ahn & Yoon 2009) Connecting with the music distributors enables the artists to earn money through the streaming royalties earned per play. When musicians distribute their music online, they build their online presence and profiles, establishing their credibility (Bhattacharjee et al., 2009). Most credible and well-established artists use music distributors to create a good music profile. Streaming platforms and online music stores also help artists build a strong fan base which attracts other potential customers. Some apps like Tiktok are now being used for content creation, and when artists' music is used in the content, it spreads across the globe to millions of fans (Lin et al., 2013). Additionally, these streaming platforms help the key players in the music business gain information about where the listeners are, the types of songs with the most streaming time, and how frequently a song is being streamed (Cherry, 2001).

4.3. Physical Distribution (Brick and Mortar Stores and Concerts, and Events)

While digital music distribution has become increasingly popular, physical distribution still has a place in the music business and industry (Waelbroeck, 2013). Physical music distribution has been essential to the record label and artist development. Physical distribution involves selling compact discs, vinyl records, and merchandise at concerts, events, and brick-and-mortar stores (Kjus, 2016). These physical distribution platforms provide music consumers with a tangible way of supporting an artist and help in increasing their customer base. Physical copies of music are sold in brick-and-mortar stores such as retail chains and record stores. Vinyl sales have continued to grow, and independent retail stores have been opened and expanded across the globe, which is encouraging for the future of physical music distribution (Wikström, 2012).

The physical music distribution process involves three key steps: production, shipping and warehousing, and sales and marketing. In the production stage, the music is first recorded and mastered. Once it is ready, it is taken to a manufacturing plant, where it is pressed onto compact discs, vinyl records, and other physical formats. The physical formats are then shipped to a distribution center, stored in a warehouse, and distributed to retailers and other distribution partners. The music is then marketed and sold to consumers through various channels, such as at concerts and events, in record stores, and online retailers (Essling et al., 2017). Physical music distribution is an important aspect of the music business for attracting potential customers. It provides a critical revenue stream for the artists and the record labels and accounts for a significant part of music sales.

The physical formats provide the consumers and customers with tangible products they can collect and display. Most music consumers, especially the older generation, enjoy the experience of interacting and browsing record stores and discovering music in person. The physical formats also allow the artists to brand and sell merchandise such as posters, t-shirts, and other products at events and concerts, and this helps them build their brand, attract more customers, and increase their revenue. Additionally, collecting and listening to the physical formats creates a sense of nostalgia and a deeply personal and emotional experience for music consumers.

4.4. Exclusive Releases (Platforms Exclusives and Limited-Edition Merchandise)

Exclusive releases can take many forms, such as releasing special edition vinyl, a behind-the-scenes documentary, and a limited-time digital download. By offering these exclusive releases, artists and other key players in the music business can bring excitement to the public and attract more customers (Haddad & Sirois, 2014; Shekhar, 2021). Merchandise such as t-shirts can attract customers interested in acquiring branded and unique items. Before releasing the music, artists should register with the right agencies to ensure that they receive full royalties and that their sales are properly reflected in the charts. They should also invest in unique music identifiers such as catalog numbers, barcodes, and ISRC codes, especially for physical formats such as compact discs.

4.5. Partnerships and Collaborations (Brand Partnerships and Collaborations with Other Artists)

Partnering with reputable brands for sponsored content, events, or goods can grow an artist's reach and increase their customer base. Collaborations with local and international artists and features on each other's tracks or co-headlining tours can help attract new potential customers and help grow the artists' audience. Music collaboration happens when two or more artists collaborate to produce a music project. Collaborations and partnerships are important in the music business and can occur at different stages of the creative process. They are fundamental forces driving the music industry and business today (Tschmuck, 2003).

Collaborations enable like-minded artists to share ideas and exchange their different skills and experiences. To improve the quality of their music, artists should collaborate with skilled songwriters, music producers, singers and audio engineers, and other relevant people in the industry. These collaborations also provide the artists with complementary skills and ideas and help improve their knowledge in the industry (Sullivan, 2010). Music collaborations and partnerships improve productivity. Working with other people and sharing responsibilities helps save time and cost and increases productivity. Sharing these duties allows the artist to engage in other important aspects of the industry, such as improving their social media presence and developing their brands and promotion strategies. Through collaborations, artists learn new techniques. These partnerships and collaborations help the artists identify their strengths and work on their weaknesses, placing them at a strategic level in the industry that attracts more customers (Oklobdžija, 2015). Artists are also encouraged to address the limitations that might hinder their penetration in the industry, which helps them push their boundaries, reach new potential customers, and grow their customer base. Collaborations and partnerships help people in the music industry receive helpful feedback and constructive criticism. Feedback from the fans helps the artist have a fresh perspective on their music, present fresh ideas, uncover problems that need fixing, and help the artist make informed decisions (Sullivan, 2010).

Additionally, working with other people in the industry helps ignite inspiration and motivation and triggers new ideas. Expanding the fan base and network through collaboration is beneficial for the artists. Tapping into the audience of another artist helps the artist reach new customers and fans and expand their exposure. The potential reach becomes even higher if the other artist is well-established in the music industry. Collaborations and partnerships could also lead to getting more music featured on popular online streaming platforms, more promotional and marketing opportunities, connection to record labels, and creating greater recognition and credibility (Vaccaro & Cohn 2004; Graham et al, 2004).

Table 2: Research Findings based on the Literature Data

5. Discussions

The development of music business distribution channels is an important aspect of the practitioners seeking to attract potential customers. Some of the implications that the practitioners need to consider include building relationships with the fans, studying and understanding their target market, utilizing multiple available distribution channels, embracing new technologies, and analyzing the effectiveness of the adopted distribution channels. Before developing music distribution channels, the practitioners need to understand their target market. They should study the factors such as their preference for digital versus physical music and preferred online streaming platforms that could influence their music consumption behaviors. Music business practitioners should utilize multiple distribution channels to reach a wider market.

They could combine physical and digital music distribution channels to cater to diverse consumers' needs and attract more customers. They could also promote and encourage partnerships and collaborations, which also help expand the involved artists' fan base. With the constant evolution of the music industry, the involved practitioners must embrace the new advancing technologies. They should be open to new distribution channels and marketing strategies, such as virtual concerts and block chain music platforms.

Moreover, as practitioners strive to attract new potential customers, they should strengthen their relationships with existing customers. This relationship can be strengthened through frequent interactions on social media platforms, exclusive and branded merchandise, and the offering of the fans the opportunity to connect with their favorite artists through events and concerts. The music industry practitioners should also regularly measure and analyze the distribution channels' effectiveness. They could do this by monitoring their social media engagement, conducting customer surveys to understand their preferences and behaviors, and tracking their sales data.

The connections between the music practitioners could be used to improve profitability for the business companies. Music practitioners could protect the intellectual property of the music. They should ensure they register the trademarks and copyrights and take stringent legal actions against copyright infringement (Frith, 1988). Registering their work helps the companies and the artists feel properly compensated for their work. Companies could also invest in the identification and development of new talents. They should ensure they are a good inspiration and motivation for the new and upcoming artists who can increase revenue streams in the future. Music practitioners and companies could do this by providing training and education, offering mentorship programs, and creating opportunities for upcoming artists to showcase their new talents. The companies could also consider diversifying their revenue streams to reduce their reliance on traditional sources of revenue, such as live performances and music sales. Examples of other revenue streams that could be employed include creating television shows, selling other goods and merchandise, partnering with various brands for endorsements and sponsorships, and licensing music for film use.

Several limitations were encountered in developing music business distribution channels to attract potential customers. First, the research sample size may have been small and not a true representation of the entire population. The limited sample size could affect the generalizability of the findings. The data on purchasing behaviors and music consumption patterns was also limited. This data availability limits the ability of the researcher to make conclusions and recommendations based on the data. With the rapid changes in the music industry, it has become difficult for the research findings to remain relevant. The technologies employed in the music industry are also rapidly changing and advancing, affecting the research findings. Measuring the impact of music distribution channels on customer attraction is also very challenging. This is because other factors, such as branding, product quality, and marketing, may influence customer behavior.

Additionally, music consumption habits and behaviors can vary across different cultures and religions, making it difficult to make relevant conclusions and recommendations applicable across diverse markets. There are also very limited studies available on the current music distribution channels (Passman, 2014). The limited research available can limit the depth of understanding and analysis of their potential to attract potential customers. Since this research relies on self-report data, it may be subject to bias. It may not be a true representation and accurate reflection of the actual behavior of music consumers.

The music industry's research on developing music distribution channels to attract potential customers is fundamental. Based on the findings of this research, it can be noted that there are several effective distribution channels for attracting potential customers, which vary depending on the target customers and their preferences. Digital music distribution is the primary and most popular way music listeners discover and consume music. It makes it essential to modern artists' releases and promotional strategies. While digital music distribution has become increasingly popular, physical distribution still has a place in the music business and industry. Physical music distribution has been essential to the record label and artist development. Physical distribution involves selling compact discs, vinyl records, and merchandise at concerts, events, and brick-and-mortar stores. Other important distribution strategies for the music business to attract potential customers include partnerships, collaborations, and offering exclusive releases. From the findings, it is recommended that the music business seriously looks into developing a strong online presence through streaming platforms and social media while maintaining a presence in the traditional physical distribution channels.