Music Business in a Post-Napster World: Musings about Mathematical Models, the Music Market

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Professor Peter Fader, Wharton School of Business, and expert on e-commerce and the music business, talks about why the music industry needs a new business model to save itself from slumping record sales and negative consumer perceptions, and why he is no longer a fan of downloading music. His work focuses on how radio airplay, music television, and record sales influence each other, and predicts sales patterns and consumer behavior within those markets. The Wharton School is celebrating its 125th year as the world's first collegiate school of business. It recently established the Wharton Media & Entertainment Initiative to groom young men and women prepared to lead these industries.

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Professor Peter Fader, the Wharton School’s Frances and Pei-Yuan Chia Professor of Marketing, will sound off on why the music industry needs a new business model, Monday, August 7th at 5 PM at the prestigious 410 Club in Chicago’s historic Wrigley Building.

Professor Fader’s research centers around building formal models of sales patterns and customer behavior, with special attention to the music industry. His work focuses on how radio airplay, music television, and record sales influence each other.

“There is no industry more hated by its own customers than the music industry,” says Fader. “I look at the practices in the music industry and I have never seen an industry so discombobulated.”     

Fader, an expert in e-commerce, testified on Napster’s behalf in 2000 when the file-sharing service was being sued by the music industry. His work since has caused him to be involved in a number of controversial topics, such as the different roles (positive and negative) that file-sharing may play in influencing music purchasing.

This thought-provoking presentation and Q & A session will cover some of his unique experiences, why he is no longer a fan of downloading, and what he thinks the music business must do to save itself from slumping record sales and negative consumer perceptions. For the more analytical-types and number-crunchers among us, Professor Fader’s talk will also include a brief overview of his published work and ongoing projects using mathematical models to predict buyer behavior.

"They (the music industry) have basically built a moat around themselves to avoid dealing with genuine business issues. They say, 'This is how we've done things for all of these years, and this is what has made this industry great.' So part of it is just inertia. But part of it is fear, because they don't know how to perform the kinds of analyses that I am suggesting, and they don't want to lose control. They don't want MBA types coming in and treating music like a regular business. This is all understandable, but is also contrary to what the shareholders of these companies are demanding," Fader says.

Fader’s work has also recently led to the establishment of The Wharton Media & Entertainment Initiative (WMEI), the preeminent center for thought leadership and management education in the media and entertainment industry. Through ground-breaking research, strategic industry partnerships, and innovative educational programming, WMEI’s mission is to develop leaders who inspire and implement leading-edge business practices in this industry.

The Wharton School was founded in 1881 as the world’s first school dedicated to the scientific study of business and the preparation of business leaders. In its 125th anniversary year, Wharton celebrates the ongoing achievements and contributions to global business.

The event is sponsored by the Wharton Alumni Club of Chicago. Admission is $20 for members, $30 for non-members and guests.

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