Handbook on the Digital Creative Economy
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Handbook on the Digital Creative Economy

Edited by Ruth Towse and Christian Handke

Digital technologies have transformed the way many creative works are generated, disseminated and used. They have made cultural products more accessible, challenged established business models and the copyright system, and blurred the boundary between producers and consumers. This unique resource presents an up-to-date overview of academic research on the impact of digitization in the creative sector of the economy.
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Chapter 5: Business models

Nicola Searle and Gregor White


The emergence of business models as a research topic has coincided with the growth of online markets and changes to commercial practices in the digital era. As digital distribution, production and payment mechanisms have resulted in decreased transaction costs, business models previously economically unviable have become profitable. These decreased transactions costs have enabled innovation and experimentation in new business models, especially in the creative industries, where the ability to produce, distribute and sell digital media via the Internet has led to significant changes in business models and market structure. This chapter presents an overview of business model theory and reports on research that examines changing business models in the digital media industry. As business model methodology matures, the literature moves towards a consensus on the definition and interpretation of business model theory and practice. The weaknesses of business models as both a method and an applied practice are discussed. The research focuses on firms based in the United Kingdom (UK), but the global nature of the Internet translates research themes internationally. The study examines three sectors of the creative industries: music, television and computer games. Case studies in each sector highlight the role of business models, innovation in business models and the overall change in the marketplace.

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