MP3 Distribution Company

Key Innovation
MP3 music files distribution over the internet.

Problematic background and context
The situation in the world of marginal music has been troublesome in the recent years. Everywhere in the world small record labels are experiencing difficulties just as the majors are, with the exception of having a much smaller budget to run things. Marketing, especially in electronic music, is all about word of mouth, because of low budgets and customers used to hearing about new artists from friends instead of from the radio, etc. Live gigs are not that common, because of the culture being so DJ oriented. With studio quality being in everyone’s reach, due to lowering of prices in the software market, the market has become saturated with releases of dubious quality. This, alongside piracy, has been said to be the reason why vinyl distributors are going out of business, and now there are less and less channels for underground music to be released. There are several non-profit players in the market, but they bring no income to the musicians themselves and only serve as a way of getting recognised by the public.

Solution description
The solution, www.foryourears.com, addresses these problems by being a channel of distribution and providing a shopping place for small record labels to sell their products. There are two kinds of needs in this case and they are those of the buyers and those of the sellers. The buyers want to hear new kinds of music that the world of mainstream music cannot offer and to be on the cutting edge as they say. The sellers want to release their products, in www.foryourears.com this can be done without spending too much money on the marketing and production of the physical products, since they are in data form. The solution works much in the same way as traditional distribution companies. The music label sends their music to the company, music gets treated a little bit to ensure homogenous quality of sound, and it gets published. What differentiates it from the traditional model is the logistics, or rather the lack of it. This means less natural resources being spent on sending products from a country to country, and of course no resources are spent on making the physical products either.

Timeframe
The solution was launched in the summer of 2004, but the planning of it started in the summer of 2003.

Development phase
Diffusion:
The solution is based on the idea of a traditional distribution company, but the context is completely new. There are some companies around the world offering a similar service, but the solution is amongst the very first ones in the world, so the diffusion is somewhere between a unique case and low diffusion.
Maturity:
The solution has been running quite smoothly for the time it has existed. There have been some minor technical improvements, but due to extensive planning, there has been no need for major changes.

Revenue/costs model
Customers pay 0.99 Euros per track, and less if they buy a whole release. – Half of this remains in the company and half goes to the labels.

Social evaluation
The society becomes more democratic due to the availability of the recordings to everyone instead of only the first ones who get to the record store. The possibility for label owners and musicians, which in electronic music are often the same people, to get their music published at all. The negative things include the decreasing of social communication between small record store owners, who are often the best experts in the field, and the buyers.

Environmental evaluation
Environmental benefits include the fact that no oil is used to make the physical products (vinyl or CD) and the loss of logistics. The latter one is a bigger issue than it seems at first, and constitutes a major environmental improvement. In the traditional model the logistics are as follows: the label sends the music to a pressing plant, the pressing plant sends the records to the distributor, the distributor stores the records and sends them to shops and smaller, more local distributors, which then send the records to their local shops.

Economical evaluation
While the logistics take up natural resources, it also means longer times for the labels to get paid. So, this model of distribution becomes profitable for the label owners, and therefore the musicians as well. Many of the traditional distribution companies have been known to rip-off smaller labels and the labels have no financial possibility to do anything about this, because they are often situated in another country and the legal battles are expensive and the legislation is unknown. In the solution provided by Symptom Distribution, the money gets transferred to the label monthly, and this means that in the case of fraud, the label can terminate the contract a lot quicker to avoid further damages.

Authors
Miro Holopainen / University of Arts and Design – Helsinki / Finland