Research work · 2023
Appropriability and Competition between Complementors: Copyright and Music Business Models
Charles W. F. Baden‐Fuller, Nicola Searle
Academy of Management Proceedings
Abstract
Business model competition between downstream complementors can undermine the profits of innovators, even when appropriation conditions are strong. Analysing the relationship between music labels (innovators) and user-facing complementors in the music industry, we explore how competition between complementor business models can moderate innovator profits despite strong intellectual property rights (copyright). The pace of technological change in the digital economy has led to tumultuous years for music innovators, with a dramatic drop in music revenues accompanied by a diversification of complementor business models. Profiting from innovation in the digital economy has become increasingly difficult. Using a deep analysis of 25 years of music industry business models, and an analysis of 400 music industry publications, we construct a detailed picture of music innovators and their relationships with complementor business models. We draw important conclusions for refining our understanding of the profiting from innovation framework of David Teece, as it relates to the digital age, and for our understanding of ecosystem development and competition.