New OECD Report on Digital Music: Opportunities and challenges (click on title to access report)
Broadband access is now starting to lead to innovative creation and use of content and stimulating the rise of new technologies in PC and consumer electronics. These trends have lead to the rapid creation of online music services. Unauthorised sharing of copyrighted works and new commercial digital delivery possibilities have thus far been a disruptive technology for the music industry. Still, the outlook for the music market in 2005 is positive due to rapidly increasing sales of (mobile) digital music services. Digital music is also a driver for the global technology markets. Furthermore, the new digital music value chain produces an array of new digital intermediaries (e.g., digital rights management DRM). Finally, the availability of online technologies opens up possibilities for content created by network users. Music is thus an area in which the transformative impact of digital distribution, file-sharing and new online business models is strong for both the supply side (artists and the music industry) and on the demand side (new music lifestyles, users as content creators).
However, business and policy challenges analysed in the study need to be addressed if the full potential of online music distribution is to be reached. In sum, regulatory frameworks which balance the interests of suppliers and users, in areas such as the protection of intellectual property rights, and digital rights management, without disadvantaging innovative e-business models are called for.
A key requisite for the creation of efficient online music delivery is a competitive and wide-spread access to broadband infrastructure. The delivery of online content also necessitates new technologies and an environment that facilitates the creation, acquisition, management and delivery of content. Effective and secure (micro)-payment systems are needed.
Alliances between content providers, broadband and technology providers that come up with new business models play a critical role in driving the adoption of licensed content services.
A diversity of interoperable content, standards and hardware are likely to prove most beneficial to efficient online content markets. With vertical integration, lock-in of consumers to certain standards, and difficult access to certain content, an environment where small and innovative players can compete should be maintained.
The OECD notes the importance of government actions to take steps to address online piracy. Around one third of Internet users in OECD countries have downloaded files from P2P networks. While, in principle, file-sharing software is a new and innovative technology, piracy is an important impediment to legitimate online content services. The most important is to find equilibrium of available legitimate and innovative uses of new technologies and the necessary protection of associated intellectual property rights (i.e. copyrights).
The Internet already provides new forms of advertising at lower cost, lower barriers to entry for artistic creation and lower costs of finding new talent. However, the effects of authorised and unauthorised file-sharing and digital music services with pay-per track offers on artists and the music supply are not yet obvious and need further study.
This study is part of the OECD Project on Digital Broadband Content (www.oecd.org/sti/digitalcontent).