6.1 Managerial implication
This research applied an aspect of productivity to investigate the impacts which were made by the new digital technologies, lawsuit strategies and the business model innovation on the performance of the global music industry, and made a comparison between the effectiveness in different business strategies which intrinsic music firms played during the environmental change. Furthermore, researcher also identified the key factors affecting the productivity, and portrayed a process that strategic decisions working on the performance of music industry.
The empirical results of Tobit models in the whole scope of music industry show that digital music technologies are negative related and filing a lawsuit against piracy is positive related to the productivity change of music industry.
However based on the whole scope of music industry Tobit models, result shows that launch a new business model like Apple’s iTunes Music Store is not necessary for the improvement of productivity in every music related industries. For further investigation in particular music related industry, evidences support that productivities of music retailers and producers are significantly worsened in the period of Apple’s iTunes business model launching, and productivities of music publishers are improved in such period. Hence the reason of insignificance in our third hypothesis test is concluded as a relocation of interests happened while the Apple’s iTunes business model launching: some industries are benefited from this change, but some are not. Moreover, the two-tails Mann-Whitney tests appear significance in the MPI and FS indices, this result represents hypothesis that filing a lawsuit against piracy do no more impact on the productivity than launching a new business model is rejected. Besides the productivity vantage of filing a lawsuit against piracy is mainly coming from the superior improvement of frontier shift, implying the lawsuits may cause a greater improvement of external environment.
According to these findings in this study, music piracy in recent years was confirmed as a serious problem which can reduce the productivities of music firms directly. Hence the development of digital music technologies, such as MP3 and P2P software, that promotes a new song is the same that steals it away. Piracy rate increased significantly, in the events period of MP3 and P2P technologies, since these digital music technologies, without copyright protecting, encouraged the
spread of piracy music. Through an increasing of piracy rate, the productivities of music firms were therefore severely deteriorated by these kinds of copyright-protection-lacking digital music technologies, and deteriorations caused by music piracy even did much more affection than the benefits of technical efficiency improvement. Henceforth fighting against music piracy and creating a legal digital music transaction platform were becoming critical solutions for reversing the recession of music industry in productivity.
Filing a lawsuit against music piracy was confirmed an effective solution for reducing the music piracy rate and therefore improving the productivity significantly. However in the long run, especially in the circumstance of external environment is change, creating a brand-new sustainable business model was confirmed a better way to convert music piracy into a reasonable purchasing behavior, and enhanced the productivity of music industry. Apple’s iTunes Online Music Store may bring about a redistribution of interests within music industry, threatening some intrinsic firms, and changing the composition of music industry, so the effectiveness of this business model fall short of our expectation. However since the external environment of music industry is change, creating a “correct”
business model is more reasonable for consumers than just filing lawsuits against piracy; therefore managers should still endeavor to create their own blue ocean by finding out a reasonable new music trading model in the era of digitalization.
6.2 Contribution
Differ from the previous research (Navissi et al., 2005) which adopted event study to investigate the lawsuits influence on the short-term security prices of music firms; this study applied an aspect of productivity change to examine the impacts made by environmental change and different business strategies, and compared the effectiveness of different business strategies. This long-term productivity study also added the externalities into consideration, thus the environment variations can be reflected in our model. Furthermore, this thesis portrayed a process that strategic events affect the music industry by the external factors, such as the piracy rate change and the internet scale change and the internal factors, such as sales change, labor scale change, and the capital change.
Hence clarified the key factors affecting the productivity of music industry, and suggested managers a direction to improve the performance of music firms. Finally, our findings confirmed the effectiveness of anti-piracy lawsuits, meanwhile reinforced the importance of providing a new business model in a harsh
circumstance, encouraging managers to create their own blue oceans for keeping their companies not only sustainable, but superior, in an era of digitalization.
6.3 Further Research
This study also opens up prospects for future research. As for the Malmquist productivity analysis, several factors, such as market structure and intangible-assets-creating-abilities of music firms, are worthy to take into consideration in the DEA model for getting further inspirational implications.
Since the DEA Malmquist productivity analysis can work with a wide set of variables, reduce the complexity into an outcome which can be easily understood, and at the same time reflect the long-term reaction of industries, this tool can also be applied on other contents industries, such as e-books, digital movies, digital television, and online games industries.
Aside from applying a long-term DEA productivity approach to investigate the process of strategic impacts, there are many other ways, such as financial ratio analyses, short-term events study, and TSP models, can be employs to confirm the robustness of our research. Moreover for operational applications, based on our empirical implications, it is a critical task for future study that researchers should find out a better business model to promote the legal digital music market, and other contents industries as well.