MP3 Portable Audio Players and the Recorded Music Industry

The emergence of the MP3 file-based music format not only disrupted the market for portable audio players, it also impacted the business models of major record labels. Modularity, and the commoditization spillover enabled by modularity in the personal computer industry, was a major force in the development of the market. While Apple's iPod held a dominant market position, new forces of commoditization continued 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 ultimate shift towards streaming.