Convert your enemy into a friend : Innovation strategies for collaboration between record companies and BitTorrent networks

Abstract: Problem: Record companies are facing a downturn in sales of music. This is seen as consequence of the growth of distribution of music through Internet by file sharing networks such as BitTorrent networks. On one side there are record companies who feel threatened of the illegal file sharing, and on the other side file sharing BitTorrent networks has increased dramatically in number of users since they first approached. Some record companies have responded by taking hostile actions towards the BitTorrent networks and their users with lawsuits and penalties for illegal file sharing. Other record companies and artists have joined forces with BitTorrent networks and see them as an advantage. Purpose: The purpose of this paper is to explore and analyze if, and how record companies can collaborate with the BitTorrent networks. Method: A hermeneutic inductive approach is used, in combination with qualitative interviews with both record companies and BitTorrent networks. Conclusions: It is argued that record companies can find a way in communicating and cooperating with BitTorrent networks. Instead of adopting hostile approaches and trying to restrict the technologies adopted by end users, companies should open themselves up and accept the current changes initiated and developed by BitTorrent networks. Thus, it was concluded that companies have to concentrate around collaborating with BitTorrent networks rather than fiercely protecting old business models. By opening up to the users, record companies will adopt open innovations approach that is characterized by combining external and internal ideas, as well internal and external paths to market, thus obtaining future technological developments. As for the BitTorrent networks, by going from outlaw to crowdsourcing mode, the networks’ creative solutions can be further harnessed by record companies. Finally, strengthening relationships between customers and music artists can be considered as beneficial for both record companies and BitTorrent networks. Thus, giving opportunities for customers to win special items, tickets for concerts, watch sound check, eat dinner backstage with the group, take pictures, get autographs, watch the show from the side of the stage, etc. can lead to valuable relationship in a long run.