Case | HBS Case Collection | February 2008 (Revised February 2014)

MP3 Portable Audio Players and the Recorded Music Industry

by Willy Shih

Abstract

The emergence of the MP3 file-based music format not only disrupted the market for portable audio players, it also had a huge impact on the business models of major record labels. Modularity, and the commoditization spill-over enabled by modularity in the personal computer industry, was a major force in the development of the market. While Apple's iPod today holds the dominant market position, new forces of commoditization continue to drive shifts in the value chain. The case examines the commoditization cycle and contrasts integrated solutions such as the iPod-iTunes software-iTunes Music Store with emerging competition from other MP3 players and the Amazon.com Music Store.

Keywords: Customer Value and Value Chain; Disruptive Innovation; Technological Innovation; Information Technology; Music Industry; Technology Industry;

Citation:

Shih, Willy. "MP3 Portable Audio Players and the Recorded Music Industry." Harvard Business School Case 608-119, February 2008. (Revised February 2014.)