Purpose:The purpose of this study is to investigate the most important factors for creating customer loyalty, which contribute to competitive advantage in the DMP industry.

Background: The emergence of the digital music industry in recent years has resulted in a competitive situation with new digital music portals (DMPs) entering the market. A DMP can be defined as ‘an e-business whose core service is to legally offer digital music by means of stream and/or download’. The industry has experienced rapid developmental changes on the online platform with an outcome of a steady growth in online sales. Customers can choose from a large music assortment and DMPs function as intermediaries between right holders and end-consumers, and customers can easily switch between rivals at low costs.

Method: The research strategy used in this thesis was a qualitative research strategy. Data was collected from eleven interviews, from people working within the DMP industry, using semi-structured questions. The sample was selected through a combination of convenience and snowball sampling. The collected data was later interpreted and analysed. Coding was used as an analysis method, where the authors selected relevant data and created groups of themes related to the purpose and the research questions.

Conclusion: The analysis results show that DMPs have to focus on performance, explicitly performance competing strategies for creation of customer loyalty, which overlaps value and trust creation activities. The most important factors for creating customer loyalty contributing to competitive advantage in this industry are gathered under three concepts: developing innovative new transaction structures, increasing customer affiliation through usability and editorials and to engage the customer in the portal’s service.