Purpose – The purpose of this paper is to study the emergence of digital piracy in record industry. The aim of this study is to identify whether and how digital piracy has acted as an innovating factor in the music market, what were the key factors of it and how legitimate business could have used digital piracy for their advantage.
Methodology/approach/design – A qualitative instrumental case study of Spotify is built which presents how legitimate business models can successfully provide viable alternative to digital piracy and use the new transforming market of recording industry.
Findings – The analysis identified that digital piracy has acted as a radical process and market innovation transforming the mature recording industry market dominated by traditional distribution and marketing models into fragmented and multi-platform one with gradually increasing digital consumption. This transformation gave rise to new legitimate digital distribution models such as digital ownership and digital streaming ones.
Research limitations/implications- The findings of this study are limited to recording industry market and can only be applied indirectly to other digital piracy sensitive industries, such as, movie and software.
Value – The paper aims to build a follow up case study using D. Y. Choi and A. Perez paper findings on digital piracy being innovating factor (2007). This study provides a more explicit overview of digital piracy in recording industry and presents Spotify case as a newest legitimate business response to digital piracy.
Keywords – Digital piracy, radical innovation, recording industry, Spotify.