TuneMan Case Study

The 1998 Digital Millennium Copyright Act requires Internet providers to provide the names of people suspected of operating pirate Web sites upon subpoena. However, the U. S. Supreme Court decided not to become involved in a dispute over illegal downloading of music files. The high court refused to give the recording industry broad power to force Verizon Communications and other Internet service providers to identify subscribers who share copyrighted songs online. The court said it was up to the U. S. Congress, not courts, to expand the 1998 law to cover popular file-sharing networks. Music downloading has become a very controversial subject. The Recording Industry Association of America ( RIAA) argues that 2.6 billion music files are illegally downloaded each month and this law is needed to identify downloading culprits. On September 8, 2003, RIAA filed lawsuits against 261 people for allegedly downloading thousands of copyrighted songs via popular Internet file-sharing networks. These people copied an average of 1,000 songs into their files for free. Many other lawsuits followed those in 2003. Lester Tune, the founder of TuneMan, one of the more popular downloading sites, debated the issue with a corporate regulator on a recent talk show. He brought the audience to their feet after exclaiming “ Well, people listen to music on the radio for free, so what’s the big deal?” In response, the corporate regulator was vehement, “ We want people to stop engaging in the theft of music so that people can go on making it. We need to figure out where customer ownership begins. We are about to destroy the long history of professional song-writers and performers in America. Who’s going to pay the royalties?” Many music downloading providers now require customers to pay a fee while some sites provide free and legal downloads. RealNetworks, for example, sold 3 million songs at 49 cents each during a three-week promotion and then returned to its regular rate of 99 cents per song. iTunes, Napster, Universal Music Group, and others are all struggling to define a value chain structure that is fair to all parties— the creators of the song, the distributors, the Web sites, and the customers.

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Answer the following questions:

Your written assignment should be typed and submitted in Microsoft Word document format. Corel WordPerfect files will not be accepted. Your write-up should be 300+ words in length. For questions one and two you may scan your diagram and submit it as a separate file or create the diagram within your Word document. Submit your Word document using the attach file feature at the bottom of this page. All submissions should be titled with the student’s last name accompanied by their first initial and course title (e.g., SmithJ_BSAD400).

1. Draw the “bricks and mortar” process stages by which traditional CDs are created, distributed, and sold in retail stores. How does each player make money? “Bricks and Mortar” refers to the traditional physical retail format vs. e-commerce/online retailing. This process begins with the sourcing of raw materials all the way to delivering the CD to a physical retail location (as opposed to online retailer) and ultimately the sale to the customer.
2. Draw the process stages for creating and downloading music today. How does each player make money?
3. Compare and contrast the approaches in the previous two questions.
4. Compare the role of operations in each of these approaches.