WP1 Dynamic media business models, value chains and ecosystems

Multichannel Multimarket Media Services – WP1
Dynamic media business models, value chains and
ecosystems
Juho-Petteri Huhtala, Aalto SE
Seppo Leminen, Aalto SE / Laurea
Agenda
1)
Key objectives and research questions in MuMuMeSe
2)
How rapid digitalization is affecting on traditional business?
-
3)
Market situation among the virtual learning environments
-
4)
Case Sony Music Entertainment
Trends, market outlook for eReading devices and eLearning
Business models for digital platforms
-
Supplier roles in e-business – Why providing full service is challenging?
-
Case Moodle – Open source business model
Agenda
1)
Key objectives and research questions in MuMuMeSe
2)
How rapid digitalization is affecting on traditional business?
-
3)
Market situation among the virtual learning environments
-
4)
Case Sony Music Entertainment
Trends, market outlook for eReading devices and eLearning
Business models for digital platforms
-
Supplier roles in e-business – Why providing full service is challenging?
-
Case Moodle – Open source business model
Multichannel Multimarket Media Services WP1:
Key objective (Aalto SE & Laurea)
Perspective 1
Virtual environments
and spaces for multimarket online services
Task 1
Business models ,
value chains and ecosystems
in service internationalization

Perspective 2
eReading concepts
for training and
HRD online services

Perspective 3
Scalable architechts
and processes for
multimarket online
services

- Our key objective is to examine alternative e-business models and develop consumeroriented business models for both e-learning and online gaming environment
- We approach this objective from 3 different perspectives: Virtual environments and
spaces for multimarket online services, eReading concepts for training and HRD online
services and scalable architechts and processes for multimarket online services
Multichannel Multimarket Media Services WP1:
Key research questions (Aalto SE & Laurea)
Perspective 1
Virtual environments
and spaces for multimarket online services
Task 1
Business models ,
value chains and ecosystems
in service internationalization
1
Perspective 2
eReading concepts
for training and
HRD online services
2
Perspective 3
Scalable architechts
and processes for
multimarket online
services
3

Key research question(s) for Aalto/HSE from 3 different perspectives are:
1
What is the current market situation among the virtual learning environments
available in Finland?
2
What are the most relevant business models for combining the printed and digital materials
to the various types of services in learning solutions aiming at productization?
3
How should the service concepts be developed so that they are scalable to the
international market? (Master thesis, will be published 31.12.10)
Multichannel Multimarket Media Services WP1:
Current status of the study (Aalto SE & Laurea)
Perspective 1
Virtual environments
and spaces for multimarket online services
Task 1
Business models ,
value chains and ecosystems
in service internationalization
1
What is the current market situation
among the virtual learning
environments available in Finland?
Perspective 2
eReading concepts
for training and
HRD online services
2
What are the most relevant
business models for combining the
printed and digital materials to the
various services in learning
solutions aiming at productization?
Perspective 3
Scalable architechts
and processes for
multimarket online
services
3

How should the service concepts
be developed so that they are
scalable to the international
market?
-Study steps done by far:
• Academic literature review of eBusiness models, data collection from additional resources for eLearning market outlook
• Interviews with key participants (WSOYpro, Sanoma Games)
• Definition of the current digital business models through benchmarking cases
- Moodle, Sony Music Entertainment (Aalto SE)
- eReading business model adaptations from Next Media eReading-project (Laurea)
•
In final report:
Roadmap of future business models and revenue logics for virtual environments
• Based on earlier academic research, conducted interviews and benchmarkings
Agenda
1)
Key objectives and research questions in MuMuMeSe
2)
How rapid digitalization is affecting on traditional business?
-
3)
Market situation among the virtual learning environments
-
4)
Case Sony Music Entertainment
Trends, market outlook for eReading devices and eLearning
Business models for digital platforms
-
Supplier roles in e-business – Why providing full service is challenging?
-
Case Moodle – Open source business model
Case Sony Music Entertainment –
Evolution of the music market 1982-2009
1982 – CD
1993 – Mp3
1999 - Napster
2009 - Spotify
2008 – Nokia Comes With Music
2008 – Amazon MP3 Store
2003 - iTunes
1997 - WinAmp
2001 - 1. iPOD
2007 - Rockband
31,70%
23,40%
1998 – 1st MP3 player
20%
15%
11%
2000-> Large amount of P2Pnetworks available
CD era (1982-1999)
1980 1985 1990 1995
5%
Free music era (1999-)
Music eCommerce era (2003->)
2000
2005
Case Sony Music Entertainment –
Strategic milestones1992-2009
2004 – Sony Connect music store
1992 – ATRAC
2001 – PressPlay
1995- CD Focused
business
1999 - SDMI
CD era (1982-1999)
1995
1982 – CD
1993 – Mp3
2008 – Co-operation with Google and
Nokia
2001 – Duet
2009 – Co-operation with Apple and
Spotify
2003 – MusicNet, FullAudio etc.
Free music era (1999-)
Music eCommerce era (2003->)
2000
1999 - Napster
2005
2003 - iTunes
2009 - Spotify
Case Sony Music Entertainment – Revenues
5,7
5,2
5,3
5,6
4,4
5,5
Music integrated with
other digital media
content-segment !
4,3
3,8
3,7
3,0
2,9
2,9
2,3
1,5
1999 – CD focus
CD era (1982-1999)
1995
1982 – CD
1993 – Mp3
SDMI Duet
MusicNet Connect store
Free music era (1999-)
Music eCommerce era (2003->)
2000
1999 - Napster
Wide co-operation
2005
2003 - iTunes
2009 - Spotify
Case Sony Music Entertainment – Business model
Strategy
Old (1992-2007)
•
•
•
New (2007-)
•
•
Dominant player
Monopolistic attitude towards
whole music market
Controls the value-chain
Focuses producing quality music
Being everywhere: strategic
partnerships (Spotify, AT&T, Nokia)
Digital Services
•
•
•
•
•
Digital music in copyrighted ATRACformat (DRM)
No other digital formats
Secure Digital Music Iniative – Mp3
= Piracy attitude
Own platform with Sony mucis
(Connected)
Bundled records
•
•
•
•
•
Mp3 accepted as main format
SDMI suspended
Spotify, Nokia Comes with music
New own online-store launched
09/10: Ariama.com (50 major and
independent labels)
Single songs
Agenda
1)
Key objectives and research questions in MuMuMeSe
2)
How rapid digitalization is affecting on traditional business?
-
3)
Market situation among the virtual learning environments
-
4)
Case Sony Music Entertainment
Trends, market outlook for eReading devices and eLearning
Business models for digital platforms
-
Supplier roles in e-business – Why providing full service is challenging?
-
Case Moodle – Open source business model
Major trends in digital landscape 2010
1) SOCIAL MEDIA
Radical exchange in consumers’ internet experience
2) REAL MOBILITY: eREADING DEVICES, SMARTPHONES AND SOFTWARE
Rapid technological development in both devices and software
3) PAID DIGITAL CONTENT
Increase in digital services demand and willingness to pay for it
eReading devices: single & multi-purpose
Single-purpose eReaders
Multi-purpose eReaders
Single-purpose eReader usage intentions
Online Survey, Q4 2009)
Total U.S. Internet Audience, n=6,870
(Source: NAT Digital Home
Multi-purpose eReader (iPad) usage intentions
If you owned an iPad, how likely would you be to use the
following features of activities on the device?
Internet Browsing
50%
21%
Email
48%
21%
Music
38%
26%
Books
37%
30%
Address books/contact lists
37%
27%
Videos
Photos
26%
Most likely
36%
28%
Unlikely
35%
34%
30%
Newspapers/magazines
30%
32%
Games (card games, puzzles etc.)
26%
Downloading apps
36%
22%
Games (strategy, rpg, shooters etc.)
0%
10%
20%
44%
30%
Total U.S. Internet Audience, n=2,176
40%
50%
60%
Tablets today
(Adapted from various raports such as BCG e-reader survey & PwC market outlook 2010-2014)
 29 % of customers would like to own single-purpose e-reader
e.g. Sony Reader (66 % multi-purpose, e.g. Apple iPad)
 91 % of customers think that ability to purchase content from
different retailers is increasing the usage of e-readers/tablets
 ~11-15 % of finnish consumers are intending to purchase an
eReader/tablet within a year
Single-purpose devices
Finnish consumers willingness to pay:
Inexpensive
Expensive
Current prices in Amazon.de:
Sony Reader Pocket
Kindle DX
Bookeen Cybook opus
Multi-purpose devices
51 €
94 €
90 €
137 €
162 €
Finnish consumers willingness to pay:
Inexpensive
Expensive
Current prices in Amazon.de:
eLocity 7" tablet
Apple iPad Wifi 16GB
Toshiba dual ts
94 €
195 €
267 €
403 €
1300 €
How much eReading device should cost?
(Source: Forrester Research, Inc.)
Global printed and electronic educational book market 2005-2014
45
40
35
30
25
20
15
10
5
0
Printed educational books
2005 2006 2007 2008 2009 2010 2011 2012
37,45 37,897 38,972 39,849 38,911 38,47 38,691 39,34
Electronic educational books 0,186

0,231
0,293
0,372
0,514
0,649
0,884
1,319
2013 2014
40,01 40,712
1,875
PwC projects, that in 2014 5,65% of educational books will be e-books
(PwC, 2010)
2,439
Pricing - Willingness to pay for digital content
(Adapted from various raports such as BCG e-reader survey & PwC market outlook 2010-2014)
 Digital book (Finnish consumers):
• From 5 to 9,40 € for a book on e-readers/tablets
• Case Akateeminen.com: Finnish literature e-book costs ~18-25 €
 Digital magazine (Finnish consumers):
• From 2,90 to 5 € for single copy of digital magazine
• Case Suomen Kuvalehti: single copy costs 5,99 €
 Digital newspaper (Consumers world wide):
• From 7 to 11 € for a monthly subscription
• Case USA Today: 8,7 € a month
E-learning markets 2010 in Finland
4%
2%
2%
2%
1%
4%
1%
Content production, digital
learning materials
e-learning platform services
and development
22 %
Learning@net
5%
Development of social media
tools
6%
Learning games
21 %
12 %
3D-world services for
educational purpose
Translation services
18 %
Netcasting

According to Suomen Oppimiskeskus ry (2010) 150 e-learning firms are existing in Finland
(77% of firms are less than 10 person micro companies)

Overall revenues were about 248 million € (59% comes from the fifth largest content
publishing companies in Finland) (Suomen Oppimiskeskus ry, 2010)

Revenues from electronic content were 54 million € and revenues from platforms were roughly
52 million €
Agenda
1)
Aalto/HSE key objectives and research questions in MuMuMeSe
2)
How rapid digitalization is affecting on traditional business?
-
3)
Market situation among the virtual learning environments
-
4)
Case Sony Music Entertainment
Trends, market outlook for eReading devices and eLearning
Business models for digital platforms
-
Supplier roles in e-business – Why providing full service is challenging?
-
Case Moodle – Open source business model
The supplier roles in e-business
1)
Content providers
•
•
2)
Application providers
•
•
3)
Offers hw for digital content, not learning specific in most cases
E.g. Sony, Apple, Nokia (both)
Service platform providers
•
•
5)
Offers applications and often co-operates with content providers
E.g.Gateway Multimedia (e-learning), SC5 (online league)
Hardware providers
•
•
4)
Offers predetermined content (Standardized or individualizable)
E.g. Otava (e-learning) SM-Liiga (online league)
Offers digital service platform, which complement the mediation of digital content by
applications
E.g Moodle and Blackboard
Full service providers
•
•
Offers all-in-one solutions, comprises products and services in relation with the whole elearning system
E.g. WSOYpro (?)
Why providing full service is challenging?
1
Content
provider
Possible
eLearning value chain
Support activities
Learning process related services
Distribution
Promotion
Bundling
Hardware provision
Software provision
Didactic planning
Content generation
Pricing
Product design
5
Full service
provider
Why providing full service is challenging?
Other publishers
Consulting service
providers
Content creators
Labor unions
Teleoperators
Media
Teachers
Hardware developers
Newmedia houses
Muncipalities
Free platforms
Software developers
Free
professional
material
portals
Free content
providers
Case Moodle – Briefly

Open source web application designed for producing Internet-based courses and websites

Written in PHP, runs nearly any server platform, used with any web browser

Translated into over 70 languages including Finnish

Currently 49597 registered sites in 210 countries, 3.7 million courses held by 1.1 million teachers
Case Moodle – Key groups
1)
Moodle trust
• The core company that maintains and coordinates the Moodle project
2)
Moodle partners
• Selling support / consulting services for Moodle clients
• Paying to Moodle Trust for certified partnership
3)
Moodle clients
• Buying services from Moodle partners
• Services are e.g. system implementations, new installations, consulting, training
• Buying certain extra features from Moodle Trust
4)
Moodle developers
•
Spread across the globe, some work for institutions that use Moodle
•
Some are funded by Moodle trust, some are paid by other companies
•
Majority work on a voluntary basis
5)
Moodle community – ”Moodlers”
•
Testing features and providing ideas for new features
•
Organizing and attending MoodleMoot-meetings
•
Entirely voluntary
•
Information is shared mainly through Moodle community forums
Case Moodle – Business model
Moodle
developers
-€
+€
Moodle
community
Moodle
trust
+€
Annual fees + royalties
Free
Extra features
Moodle
+€ partners
Muncipalities
-€ -€
-€
Free
+€
Schools
= source code
= product
= service
Case Moodle – Advantages
1) Robustness

Infinite number of Mooble developers, many testers in Mooble community -> number of bugs
minimized
2) Flexibility

Flexibility of mixing and matching Mooble on existing software sollutions
3) Community support

Constantly evolving platform, community highly motivated to solve problems / answer questions
Case Moodle - Disadvantages
(ITC Distance education survey 2009 - Administrators & faculty of American Community Colleges, n=226)
Case Moodle - Disadvantages
Case Moodle - Disadvantages
(ITC Distance education survey 2009 - Administrators & faculty of American Community Colleges, n=226)
Last words
1)
In digital landscape companies need to forget their status in traditional market and start to
rethink and reshape their business models
2)
Today digital landscape is business model playground – time tells, which one(s) succeeded
3)
Setting the rules and controlling the whole value chain in digital lanscape business is more
challenging than in traditional market, because of the amount of different actors
4)
eLearning solutions needs to developed so they can be easily consolidated and integated
to any LSM platforms / eReading devices possible (iPad is not the last and only format out
there)
5)
eReading hype is on, larger markets will follow - In order to be widely used/accepted
device, the price of the eReading device must be much lower than todays multi-purpose
devices
6)
Future is blended learning (Traditional + digital) – Big question is, how off-line and on-line
content should be bundled?