4.3 Model test and basic simulation
4.3.4 Basic simulation
From the result of the simulation, the trend of purchase behavior (album sales volume) was similar to historical albums sales volume. In 2000, online music platforms and digital music emerged, the albums sales start to drop. During 2003 and 2004, the IFPI Taiwan started to accuse the music platform and the illegal music file users of infringing the copyright which made the dropping become slower. However, after 2004, the ADSL installed widespread and the new music player emerged (e.g.,
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mp3 player, ipod), which made the development of digital music inevitable. Although that will cause more people to contact music, it may also cause the change of purchase behavior.
1. Purchase behavior (albums sales volume)
In the purchase behavior and historical sales volume comparison, the simulation result was higher than the historical data before 2009. The most possible reason was this study has overestimated the quantity of the network music user. After all, TV and concert/autograph session channel grew stable (followed the growth rate of population). Also, another reason to explain the different was the number of population has double-counting. Although the simulation had some errors, that wasn’t create an inaccuracy which was unable to ignore with the historical data. Furthermore, the result of the forecast showed the albums sales volume will increase. The result was the same as Nielsen Soundscan Company1 which published the first half of 2011 album sales report.
1 According to Nielsen's report, the first half of album sales in the United States is about $ 55.5 million, compared with the same period last year, 53.9 million, though it only slightly increased by about 1%, but at least no longer a straight line decline. Also, there are 660 million singles, and the number grew by 10% than before. If the report joined the singles into album sales (10 songs as a record album), the number will reach the amount of 21.5 million, total sales rose 3.6%.
Figure 4-9 The simulation result of Purchase behavior 2. Consumer average purchase volume
In 2000, online music platforms emerged and made consumer changes the purchase behavior which was used to purchase the albums although those were illegal.
Consumers started to search music file on the Internet and purchase album was not the only way to get music. That means not only illegal music platform emerged but also
“Network Externality” influence both of them to make the album average purchase volume keep dropping.
Figure 4-10 The simulation result of consumer average purchase volume
Purchase Behavior (album sales volume)
40 M
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Time (Year)
volume/Year
"Purchase Behavior (album sales volume)" : Current 1 1 1 1 1 1 1 1 1
"Purchase Behavior (album sales volume)" : Historic albums sales volume 2 2 2 2 2 2 2
consumer average purchase volume
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Time (Year)
volume/population
consumer average purchase volume : Current 1 1 1 1 1 1 1 1 1 1
consumer average purchase volume : Historic albums sales volume 2 2 2 2 2 2 2 2
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3. Music platform member
The population of network user was calculated by music platform member. The population was inferred by ADSL and music market growth rate. The quantity of platform members was almost the same as government survey report in 2008. The report indicated that there are 6.5 million members (KKbox and ezPeer+) in the top two music platforms in Taiwan. The total members are rising until it reaches the limit.
Figure 4-11 The simulation result of music platform member
4. Accumulate revenue
Although the music industry’s report showed that the digital music makes the music industry revenue decrease, further to make it a deficit. However, the result of simulation showed the accumulated revenue increases slower, but it continues rising.
Music Platform Member
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Time (Year)
population
Music Platform Member : Current 1 1 1 1 1 1 1 1 1
Figure 4-12 The simulation result of accumulated revenue
5. Purchase intention by tradition channel
As this study’s expected, the traditional channel still grows stable until now, and without obvious fluctuation. The population of traditional channel growth rate is changed to follow the total population growth rate to change.
Figure 4-13 The simulation result of purchase intention by traditional channel
6. Purchase intention by music platform
The purchase intention by music platform in basic simulation showed the
Accumulated Revenue
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Time (Year)
$
Accumulated Revenue : Current 1 1 1 1 1 1 1 1 1 1
purchase intention by traditional channel
4 M
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Time (Year)
population/Year
purchase intention by traditional channel : Current 1 1 1 1 1 1 1
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information of music platform. From 2000 to 2002, the unauthorized (illegal) music platforms attracted a lot of payment members (they are only charged NT$99 /month).
However, in 2003, the music platforms were accused by IFPI Taiwan that causes the considerable payment member to fall. Until 2004, KKbox built the operation pattern with music companies, and music platform started to be legally developed stably in Taiwan, but the music platform payment users are the minority.
Figure 4-14 The simulation result of purchase intention by music platform
7. Purchase intention by digital piracy
The development of digital technology made people easily search anything they wanted on the network. The more people use the Internet, the stronger will the network externality effect will be. That made the population of piracy to increase massively and also made was music was widespread listened rapidly. Digital music can cause population of purchase intention to increase, further to make the people to purchase albums and others relevant products.
purchase intention by music platform
400,000
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Time (Year)
population/Year
purchase intention by music platform : Current 1 1 1 1 1 1 1
Figure 4-15 The simulation result of purchase intention by digital piracy
8. Population of piracy
Before the digital age started, although you can find venders selling entity pirated anyway, there are still many restrictions to prevent piracy. However, while digital technology has been integrated into the life, the population of piracy is following the development of digital technology, and rising rapidly.
Population of Piracy
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Time (Year)
population/Year
Population of Piracy : Current 1 1 1 1 1 1 1 1 1 1
Figure 4-16 The simulation result of population of piracy
purchase intention by digital piracy
8 M
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Time (Year)
population/Year
purchase intention by digital piracy : Current 1 1 1 1 1 1 1
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