Imagine sitting in a train. Take a look at the person on your left hand side. Meet Bob. You don’t know Bob, and you will never get to know Bob, as Bob is staring out of the window with his headphones on. Look straight ahead again. There is a couple sitting opposite of you, sharing a set of earphones and head-banging on music you cannot hear. At the back of the train, you suddenly see your friend Denise, and you call out her name; unfortunately, she does not seem to hear you as she is fully engaged in a new Spotify playlist she just discovered. You decide to pull out your headphones and put on the new album of Mumford & Sons.
Music is everywhere. Music has been everywhere for decades, yet recently, a new technological development disrupted the entire industry; streaming services. Companies such as Spotify, Rdio, Apple Music, Pandora and Tidal are all engaged in fierce competition to attract most paying customers. However, these companies face two problems. Firstly, although customers seem to grow very fond of music streaming services – almost 15 billion numbers were streamed in the United Kingdom in 2014 (The Guardian 2015), and United States music streaming revenues surged to over 1 billion dollars in the first half of 2015 (Statista 2015) -, these services still do not make enough revenue to become profitable. Secondly, artists do not love streaming services as much as users do. We all can recall the moment that Taylor Swift decided to withdraw her music from Spotify, and other artists as Beyonce and Ed Sheeran have also attempted to get around the influence of these streaming services. As can be derived from the ongoing discussion regarding streaming royalties, it seems that artists do not feel treated fairly by these businesses (The Economist 2015).
However, yesterday Pandora announced a takeover that might mark a change in the relationship between artists and streaming services. With its takeover of Ticketfly, an online concert ticketing service similar to Ticketmaster, Pandora will soon be able to directly sell concert tickets to music listeners. Whilst services as Pandora and Spotify were already promoting the sales of tickets through ads leading the listener to third-party websites, Pandora has now decided to move the entire purchase process to within its own ecosystem.
Pandora can use its experience in data collection to specifically target customers that might be interested in concert tickets from a certain artist. Apart from strengthening the ties between listening to music and visiting a concert hence increasing the music experience for users, Pandora also strengthens bonding with artists by this takeover. As concert tickets sales is still booming business (Techcrunch 2015) and has even become the main source of income for artists (Forbes 2015), artists will eventually be able to leverage the enormous user database of Pandora and even specifically target their ideal customer, without having to pay any additional promotion costs.
For Pandora itself, the acquisition of Ticketfly might also create more opportunities to generate revenue, and perhaps turn into a profitable business on the long-run. Pandora seems to have found a unique way to use its massive amounts of data to increase value for both parties simultaneously in its two-sided market, therefore increasing pressure on competitors such as Spotify and Apple Music.
Do you think that with this step, Pandora has revolutionised the music streaming service industry once again, ensuring that Bob can get involved even further with his favourite bands? Do other music streaming services have to follow? Or do you think there is another answer to low profits and weak bonds with artists?
The Economist 2015, The dry stream of musicians’ royalties. Viewed 9 October 2015. Accessible via <http://www.economist.com/blogs/prospero/2015/09/music-business>.
Forbes 2015, Pandora’s purchase of Ticketfly finally good news for shareholders. Viewed 9 October 2015. Accessible via <http://www.forbes.com/sites/bobbyowsinski/2015/10/08/pandoras-purchase-of-ticketfly-finally-good-news-for-shareholders/>.
The Guardian 2015, Streaming: the future of the music industry, or its nightmare? Viewed 9 October 2015. Accessible via <http://www.theguardian.com/technology/2015/jan/02/streaming-music-industry-apple-google>.
Statista 2015, Music streaming revenues surpass physical format sales. Viewed 9 October 2015. Accessible via <http://www.statista.com/chart/3852/us-music-industry-revenues/>.
Techcrunch 2015, Pandora Acquires Ticketfly for $450m to sell concert tickets. Viewed 9 October 2015. Accessible via <http://techcrunch.com/2015/10/07/pandora-acquires-ticketfly-for-450m-in-a-bid-to-sell-tickets-to-live-music-shows/#.db6ey8:pyx4>.
Welcome to the adult world. We love sex. And therefore, we love porn. Although reliable public statistics are difficult to find, porn is estimated to be a $97 billion dollar industry (NBCNews 2015). According to The Guardian (The Guardian 2013), traffic on adult sites easily surpasses traffic on social media- or shopping sites in the UK. And at the same time, Mindgeek, exploiter of amongst others PornHub, claims to attract over 100 million visitors a day who consume over 1.5 terabyte per second (The Economist 2015). According to above, one can easily state that the porn industry is still booming. But what makes the porn industry as successful as it is? From an information technology perspective; nerves of steel.
Before the rise of the Internet, porn used to be exclusive. Amongst others, regulations and taboos ensured that porn was not easily available, which drove the price of porn up. When the Internet got widely available, many traditional industries faced a massive challenge – yet the professional porn industry, contrary to many other industries, quickly picked up the opportunities presented by the Internet to enhance and enrich their business model. The porn industry proved to be extremely technology-driven; according to CNN, many nowadays widely-used online technologies, such as credit-card verification and streaming video, can all “be traced back to innovations designed to share, and sell, adult content” (CNN 2010). Business Insider even states that “the concept of e-commerce (…) owes much of its early existence to porn” (Business Insider 2013). And not only did the porn industry experiment with different types of technologies; several online sales methods can be traced back to the adult industry as well.
On the other hand, the Internet has posed challenges to the professional porn industry, mainly in the form of porn tubes. A massive surge in availability of amateur porn partly contributed to the shift of porn from a speciality good to a commodity good, hence significantly lowering the price of porn. Although professional porn producers have found ways to strategically use tubes to draw customers to their sites, this industry still suffers from lower profits than before.
The porn industry tries to restore its profits by, again, embracing technological innovations and models. PornHub recently announced a crowdfunding initiative for a porn movie (shot in space); an add-free Netflix-like streaming service has been introduced; and options as Virtual Reality and robotics are currently heavily explored.
We all love sex. How do you think that the porn industry should modify its business model through information technology, in order for it to increase profits? What is the future of the porn industry?
Business Insider 2013, Porn: The hidden engine that drives innovation in tech [online]. Available at: http://www.businessinsider.com/how-porn-drives-innovation-in-tech-2013-7?IR=T [Accessed 1 October 2015].
CNN 2010, In the tech world, porn quietly leads the way [online]. Available at: http://edition.cnn.com/2010/TECH/04/23/porn.technology/ [Accessed 1 October 2015].
NBC News 2015, Things are looking up in America’s porn industry [online]. Available at:
www.nbcnews.com/business/business-news/things-are-looking-americas-porn-industry-n289431 [Accessed 1 October 2015].
The Economist 2015, Naked capitalism [online]. Available at: http://www.economist.com/news/international/21666114-internet-blew-porn-industrys-business-model-apart-its-response-holds-lessons [Accessed 1 October 2015].
The Guardian 2013, Porn sites get more internet traffic in UK than social networks or shopping [online]. Available at: http://www.theguardian.com/technology/2013/jul/26/porn-sites-internet-traffic-uk [Accessed 1 October 2015].