Digital distribution of music : the role of networks and knowledge in the Norwegian recorded music industry

The impact of technologies facilitating digital distribution of music on the recorded music industry has in the last few years received much attention in the popular press, and to some extent in the scholarly literature. However, there have been few attempts to explore the underlying factors explaining differences in innovative capabilities among record companies. This thesis proposes that social networks and specific knowledge areas are important factors that can explain these differences among Norwegian record companies. The study therefore investigates the role of social networks and knowledge and their systemic properties related to innovation within digital distribution in the Norwegian recorded music industry. The most important factors are identified using data from a questionnaire surveying the Norwegian record companies’ social network activity, knowledge levels, and innovation activities. This dataset is complemented by interviews with industry representatives. Using both quantitative and qualitative analysis, a set of factors are recognized as important drivers for innovation within digital distribution in the Norwegian recorded music industry. These are the relationship between record companies, relations between record companies and foreign firms, record companies’ knowledge about digital distribution opportunities, and record companies’ affiliation with Phonofile, with the latter emerging as the most significant of these factors. The study also reveals that the geographical clustering of Norwegian record companies does not appear to have a direct effect, but rather an indirect effect, on the record companies’ knowledge levels or innovation related to digital distribution. In the final argument it is proposed that this may have some theoretical and policy implications with regards to the application of a cluster model as other factors may at times deserve equal attention from both analysts and policy makers