Innovations in Channels of Digital Musical Content Distribution

<p align="center"><strong>Abstract</strong></p><p>This research was focused on revealing and evaluating a possible solution for a new distribution channel for the digital music industry.</p><p>This paper analyzes the problem of possible inefficiency of the current music distribution channels and lack of correspondence to the current technological progress level.</p><p>The subject of this research is the digital music market.</p><p>The object of this research is revealing the distinguishing qualities of the market and its distribution channels.</p><p>The goal of this research is to reveal and describe the qualities of a new possible distribution channel for the digital music industry, that will be capable of generating profits</p><p>The objectives of the research are:</p><p>1.&nbsp;&nbsp;&nbsp;&nbsp; Desribing the distinguishing qualities of the digital music market</p><p>2.&nbsp;&nbsp;&nbsp;&nbsp; Analyzing the existing distribution channels of the industry</p><p>3.&nbsp;&nbsp;&nbsp;&nbsp; Revealing key inefficiencies or opportunities for a possible new distribution channel</p><p>4.&nbsp;&nbsp;&nbsp;&nbsp; Suggesting a possible solution based on the analysis</p><p>5.&nbsp;&nbsp;&nbsp;&nbsp; Modelling key dependencies of the market</p><p>6.&nbsp;&nbsp;&nbsp;&nbsp; Evaluating the suggested solution</p><p>A multinomial model was suggested to analyze the research problem. The first step of the analysis was finding the model equilibrium under the current conditions. Next step was to adjust the parameters of the model for the results to be more corresponding to the reality. Finally, the suggested new distribution channel was added to the model and the new equilibrium was found. Comparing the profits in the two equilibria allowed to determine whether the suggested solution is efficient.</p><p>The main problem revealed from the market analysis suggested that none of the available distribution channels could fully substitute the illegal sollutions, therefore blaming piracy</p><p>The outcome of the profit maximization estimated that adding the new distribution channel would allow to increase the profit of the industry by 50 to 100% The equilibrium price for the new service was estimated to be $12 to $14</p><p>&nbsp;</p>