THE ECONOMICS OF THE MUSIC BUSINESS

1
THE ECONOMICS OF THE MUSIC BUSINESS

• Competition Law and Intellectual Property
  Protection in the Music Industry

2
Overview

• Key industry characteristics
• Implications for competition in the music
  industry
• Impact of digital downloads?
• Future possible competition law issues

3
Music Industry is Highly Dynamic

• Technological developments
• New music products released almost every day

4
The Music Industry is Characterised by

• Highly differentiated products
• Demand is highly variable
• Demand is often short-lived

5
The Music Industry is also Characterised by

• High fixed costs / low marginal costs
• Prices can not be related to manufacturing /
  distribution costs
• Protection of IP rights is extremely important

6
Implications for Competition

• Non-price factors are an important parameter of
  competition
• Pricing is complex and non-transparent

7
The Internet and its Implications for Competition
Changes in Music Distribution
8
What is the Impact of Piracy?

• Pricing constraint?
• Demand impact?

9
Future Possible Competition Law Issues

• Mergers
• What lessons from Sony / BMG?
• Apple the next MS?
• Network effects?
• Interoperability?