(The) dynamics of online music industry

Abstract

Due to the rapid technological innovation, online music industry is undergoing significant changes in their music service platforms. Especially, due to the fast penetration of smart devices and mobile service technology such as LTE, more and more music streaming services are wide spread in current music market. However, there is no study that examines how this introduction of new technology affects online music consumption, although new technology introduction is significantly affecting music industry’s value chain, pricing, market shares, etc. In this study, we examine whether music streaming service a substitute or complement for music downloading service considering the moderating effects of mobile technology. We use data-mining techniques to collect unique dataset on online music market for 248 weeks in Korea. The results suggest that music downloading service is complement to music streaming, however, this complementary relationship is negatively moderated by the LTE service. In addition, major distribution and major genre music are positively related with streaming service. On the one hand, broadcasting system is positively related with downloading, but price policy decreased downloading. In other words, consumers listen to music what is exposed and promoted through the media.